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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Footwear firms Nike, Adidas, and Puma tell Trump: US tariff hike on shoes “catastrophic”

In a public letter which included more than 170 shoe companies and retailers, the firms warned US president Donald Trump on the effects his proposed China tariffs could have to the footwear industry in America.

Global footwear firms including Nike, Adidas, Puma, and Dr Martens, have come together in a public letter to the president of the United States (US), Mr Donald Trump to implore against his recent decision to impose tariffs on footwear, which is included in the new round of US$300 billion of tariffs in Chinese goods, calling the move if it takes into effect, “catastrophic”.

The public letter, which included more than 170 shoe companies and retailers, warned Mr Trump on the effects of his proposed China tariffs on the footwear industry in America.

‘On behalf of our hundreds of millions of footwear consumers and hundreds of thousands of employees, we ask that you (Donald Trump) immediately stop this action to increase their tax burden. 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,’ penned the open letter from the Footwear Distributors and Retailers of America (FDRA) signed by over 170 footwear firms.

Nike shares fell 0.33% or US$0.28, at US$83.36 in after-market trading.

China tariff costs would trickle down to consumers

The FDRA estimates that the additional 25% of tariffs could cost Americans an extra US$7 billion a year on shoes.

For example, a pair of running shoes which usually cost around US$150 currently could rise to US$200 after the tariff hike while basketball sneakers which are priced around US$130 could cost US$180.

‘As an industry that faces a US$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. It is an unavoidable fact that as prices go up at the border due to transportation costs, labour rate increases, or additional duties, the consumer pays more for the product,’

‘This significant tax increase, in the form of tariffs, would impact every type of shoe and every single segment of our society,’ the firms said in the letter.

Footwear industry capital-intensive, difficult to shift source from China, says US shoe firms

Although the firms acknowledged that moving their source location to countries other than China could solve some issues in the wake of the tariff war between China and the US, the firms stressed that due to the industry’s capital-intensive nature, ‘years of planning’ are required to make the sourcing decisions.

‘Companies cannot simply move factories to adjust to these [recent] changes,’ the firms said.

Any action taken to increase duties on Chinese footwear will have an immediate and long-lasting effect on American individuals and families, the companies added. ‘It will also threaten the very economic viability of many companies in our industry.'

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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