More than 200 of the country’s top executives in the retail, footwear and fashion industries have come together in hopes of steering Washington away from imposing tariffs on Vietnam.
Yesterday, CEOs from athletic giants including Adidas and Nike, designer labels such as Kenneth Cole and Steve Madden, as well as apparel chains J.Crew and Gap sent a letter addressed to President Donald Trump, whom they implored not to slap punitive levies on goods coming from the Southeast Asian country, which is considered the second largest supplier of shoes to the United States.
Among the signatories were Adidas America Inc. president Zion Armstrong; Aldo US Inc. CEO David Bensadoun; Caleres Inc. CEO Diane Sullivan; Capri Holdings Ltd. chairman and CEO John Idol; Crocs Inc. CEO Andrew Rees; Deckers Outdoor Corp. president and CEO Dave Powers; Designer Brands Inc. CEO Roger Rawlins; Fila USA Inc. president Jennifer Estabrook; Gap Inc. CEO Sonia Syngal; J.Crew Group CEO Libby Wadle; Kenneth Cole Productions chairman and CEO Kenneth Cole; New Balance Athletics Inc. president and CEO Joe Preston; Nike president and CEO John Donahoe; Steven Madden Ltd. chairman and CEO Ed Rosenfeld; Tapestry Inc. CEO Joanne Crevoiserat; and Under Armour Inc. president and CEO Patrik Frisk.
“We agree that our trading partners must abide by global trade rules, and we support enhanced bilateral engagement with Vietnam to resolve concerns,” they wrote. “However, responding with tariffs would undermine American global competitiveness and harm American businesses and consumers at a time when they can least afford it, as they are struggling from the impacts of COVID-19.”
Late last summer, the Department of Treasury found that Vietnam had manipulated its currency in a specific trade case that involved tires. The Office of the U.S. Trade Representative soon launched an investigation into the country’s “acts, policies, and practices that may contribute to the undervaluation of its currency and the resultant harm caused to U.S. commerce.” In so doing, Washington used Section 301 of the 1974 Trade Act — the law it used to impose tariffs on China, which ultimately launched a protracted trade war between the world’s two largest economies.
Many retail leaders have expressed concerns that the cost of imports from Vietnam — from shoes, clothing and accessories to travel goods, furniture and tech components — could skyrocket amid an ongoing global pandemic that has already decimated thousands of businesses across the U.S.
The athletic sector, among others, could likely be hit even harder: Over the past several years, sneaker behemoths like Adidas and Nike have been steadily moving production out of China amid rising labor costs and the escalation of the Washington-Beijing trade dispute. For instance, within a decade, Adidas has cut in half the share of footwear it makes in China, with most of that manufacturing now done in Vietnam. The country has also become Nike’s main shoe producer.
Should those duties get the green light, more than half of all apparel and footwear sold in America could be hit with cumulative tariffs as high as 25% to 50%. What’s more, trade groups are preparing for possible retaliatory tariffs if the Trump administration ends up taxing Vietnamese products. According to the International Trade Commission, U.S. textile and apparel exports to Vietnam rose by $97 million from 2015 to 2019, while U.S. footwear exports increased by $170 million.
“Many companies shifted sourcing to Vietnam as a direct result of the China 301 tariffs and supply chain diversification efforts,” added the letter. “Placing tariffs on imports from Vietnam would punish those companies who made the sourcing shift as the administration had asked.”