President Trump’s action hurting America more than China

“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.”

(Bloomberg) — Nike, Adidas 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”.

In all, 173 companies signed an open letter to the President, dated Monday (May 20) 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 United States and China has escalated as Trump raised the tariffs on US$200bil (RM837bil) worth of Chinese goods from 10 per cent to 25 per cent.

Trump is expected to discuss the tariffs with Chinese President Xi Jinping next month.

The US President 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 US$3bil (RM13bil) 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, 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 US customers an additional US$7bil (RM29bil) per year. The companies said in their letter that those costs would disproportionately affect working class individuals.

Tariffs are an especially touchy subject within the footwear world because shoe companies are already some of the highest payers of duties in the US, thanks to longstanding tariffs that in some cases surpass 30 per cent.

The industry moved a lot of production to Vietnam in anticipation of the Trans-Pacific Partnership – which would have allowed duty-fee exporting to the US – but Mr Trump exited those negotiations.

Still, the companies in the letter vary in their reliance on China.

Nike, for example, made 26 per cent of its apparel and 26 per cent of its footwear in China in fiscal 2018. Skechers USA makes around 65 per cent of its goods in China, but not all of those products are imported to the United States. Under Armour, which also signed the letter, currently gets about 18 per cent of its products from China – down from 46 per cent in 2013. The company’s goal is to lower that number to just 7 per cent by 2023.