Nike, Adidas call tariffs ‘catastrophic’ in open letter to Trump

Nike, Adidas call tariffs ‘catastrophic’ in open letter to Trump

 Nike Inc., Adidas AG and other footwear giants urged President Donald Trump to reconsider his tariffs on shoes made in China, saying the policy would be “catastrophic for our consumers, our companies and the American economy as a whole.”

Adidas AG

140.22

-2.39

-1.67%

NIKE, INC.

-1.72

-2.03%

WOLVERINE WORLD WIDE, INC.

-0.23

-0.78%

SKECHERS U.S.A., INC.

-0.17

-0.60%

In all, 173 companies signed an open letter to the president, dated Monday and posted on the industry trade association’s website. It was also sent to Treasury Secretary Steve Mnuchin, Commerce Secretary Wilbur Ross and National Economic Council director Larry Kudlow.

“On behalf of our hundreds of millions of footwear consumers and hundreds of thousands of employees, we ask that you immediately stop this action to increase their tax burden,” the group said. “Your proposal to add tariffs on all imports from China is asking the American consumer to foot the bill. It is time to bring this trade war to an end.”

The ongoing trade tension between the U.S. and China has escalated as Trump threatens to impose tariffs as high as 25% on Chinese goods. Last week, the U.S. Trade Representative’s office released a list of about $300 billion worth of products that could see higher import duties, including all types of footwear, from sneakers to sandals. Trump will discuss the tariffs with Chinese President Xi Jinping next month.

Related video: Top retailers urge Trump to remove shoes from tariff list (provided by CNBC)

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‘Both Sides’

Trump has repeatedly stated that China would pay the tariffs — something his critics say is misleading or wrong. Earlier this month, Kudlow said that “both sides” will pay.

“As an industry that faces a $3 billion duty bill every year, we can assure you that any increase in the cost of importing shoes has a direct impact on the American footwear consumer,” according to the letter.

That sentiment has been echoed around the industry. “We don’t make enough to absorb that,” said Michael Jeppesen, president of global operations for Wolverine World Wide Inc., which also signed the letter. “The only way it can is to be passed onto the consumer.”

The shoe industry’s trade association, the Footwear Distributors & Retailers of America, estimates that the tariffs would cost U.S. customers an additional $7 billion per year. The companies said in their letter that those costs would disproportionately affect working class individuals.

Touchy Topic

Tariffs are an especially touchy subject within the footwear world because shoe companies already pay some of the highest duties in the U.S., thanks to longstanding tariffs that in some cases surpass 30%. The industry shifted a lot of production to Vietnam in anticipation of the Trans-Pacific Partnership — which would have allowed duty-fee exporting to the U.S. — but Trump exited those negotiations.

Still, the companies in the letter vary in their reliance on China. Nike, for example, made 26% of its apparel and 26% of its footwear in China in fiscal 2018. Skechers U.S.A. Inc. makes around 65% of its goods in China, but not all of those products are imported to the U.S.

Under Armour Inc., which also signed the letter, currently gets about 18% of its products from China — down from 46% in 2013. The company’s goal is to lower that number to just 7% by 2023.

–With assistance from Matt Townsend.


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