Trade War Affects on Footwear Distributors | Financial Buzz

Trade War Affects on Footwear Distributors

President Donald Trump has been engaging in a political trade war with the Chinese government. This includes a tariff for all shoes made within China of up to 25% which would affect millions of consumers, employees as well as taxpayers.

Footwear giants such Nike Inc. (NYSE: NKE) and Adidas (OTC: ADDYY) have been greatly affected by the new policy and have asked the president to reconsider his tariffs noting that the decision would be catastrophic for their consumers as well as the U.S. economy as a whole.

The Footwear Distribution and Retailers of America has sent an open letter to the U.S. Department of Commerce with the signatures of 173 companies stating that “the 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 U.S. footwear industry currently has to pay a USD 3 Billion duty bill each year and it can increase drastically due to the new policy. It is one of the most affected industries in the U.S. because of the fact that most of its production takes place in China.

For example, roughly 65% of Skechers Inc. (NYSE: SKX) footwear, 26% of Nike footwear and 20% of Adidas footwear are made in China. Although there were talks of many companies expanding production to Vietnam due to the Trans-Pacific Partnership where there would be duty-free exporting benefits, President Donald Trump has rejected the deal soon after stepping into office.

The fact that most footwear companies produce their products in China, this newly implemented tariff have sparked many industry giants to take action against the President’s decision for this trade war. If the tariffs are going to remain intact, then the affected footwear companies might be better off moving production to other Asian countries such as Vietnam. For the response to this open letter, stay updated for more trading news.