A new proposal by the U.S. Customs and Border Protection could mean U.S.-based shoe firms will pay higher duties on certain footwear products.
The CBP recently recommended the reclassification of some fashion footwear as athletic footwear — a move that some trade groups argue could dramatically raise the duty rate imposed on certain products.
According to a CBP policy that dates back to October 25, 1993, athletic footwear — which spans “tennis shoes, basketball shoes, gym shoes [and] training shoes” among others — does not include a “slip-on” and “shoes that resemble sport shoes but clearly could not be used at all in that sporting activity.” The category also excludes “sneakers with sequined or extensively embroidered uppers.”
However the new proposed modification by CBP suggests certain fashion footwear shoes are “suitable for athletic activity” because they share basic traits with high‐performance athletic footwear, including “flexible outsoles with traction, cushioned insoles and a secure closure” — and therefore should be tariffed as such.
Arguing that athletic footwear is generally tariffed at a higher rate than fashion footwear, the American Apparel and Footwear Association on Friday wrote a letter to CBP stating that revoking the previous policy “would overturn decades of precedent, industry-best practice and basic common sense.” The organization further argued that virtually all footwear such as dress shoes, casual shoes and women’s pumps exhibit some combination of features that CBP had surfaced.
“I don’t see anyone playing soccer in their dress shoes or going running in their pumps — and they never would,” wrote president and CEO Rick Helfenbein. “The same applies to the fashion sneakers in question. The average consumer would never wear fashion sneakers for a long walk or short run or to play basketball or soccer… They are worn as a fashion statement, which is the primary intent of purchasing a fashion sneaker, while at the same time providing the wearer a little comfort.”
He added, “I urge CBP to immediately withdraw this proposed revocation and continue to classify the shoes in question — and all related fashion sneakers — as nonathletic footwear. Further, I urge CBP to engage the trade in a larger conversation on fashion versus athletic footwear.”
While imported consumer goods are taxed at an average rate of 1.9%, the Footwear Distributors and Retailers of America reports that existing duties for shoes average 11% and go up as high as 67.5%. Additional duties, including tariffs on Chinese imports, are anticipated to have a negative effect on the U.S. economy and can lead to increased prices for American consumers.
The FDRA, which wrote the CBP in 2016 seeking stronger clarification of the criteria that determines whether a shoe is athletic or nonathletic, also submitted a letter opposing the recent proposed modification.
“The proposed change appears ‘out of the blue,’ ” wrote President and CEO Matt Priest. “If [the] CBP decides to proceed with the proposed revocation, it should first amend the definition of athletic footwear that has been in place for over a quarter century.”
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