The American footwear industry is on edge as the Footwear Distributors and Retailers of America (FDRA) calls on the incoming Trump administration to adopt a careful approach to tariffs. This comes amid the administration’s broader strategy to reduce the U.S. trade deficit and encourage domestic manufacturing by imposing higher tariffs on imported goods, particularly from major trading partners like China.
With uncertainty swirling around potential tariff hikes, industry leaders are voicing concerns about inflation and economic pressure on consumers.
Conflicting reports have surfaced about the Trump administration’s potential plans for tariff increases. During the campaign, proposals included an immediate hike on imports from China, Canada and Mexico. While these plans remain unclear, the FDRA is taking the threat seriously.
“We take these threats seriously. Our hope is that the President and his team will carefully consider the inflationary effects of tariffs on products like footwear, which are not strategic industries and lack strong domestic manufacturing,”
Matt Priest, CEO, FDRA
The U.S. heavily depends on imported footwear, with over 99% of shoes about 2.5 billion pairs annually coming from overseas.
In contrast, only 25 million pairs are produced domestically, mainly for military use. The top suppliers are China, Vietnam, and Indonesia.
Even as production shifts from China to Vietnam and Indonesia, the supply chain remains deeply connected to China, making it complex and inflation-prone.
Footwear expert Mike Jeppersen, lead director at Manitobah Footwear, pointed out that once duty rates are implemented, they rarely go away.
The U.S. footwear industry already pays around $4 billion annually in import duties. Increasing these rates would likely cause countries affected by U.S. tariffs to retaliate, leading to higher costs for American exports.
Currently, the industry pays about a 20% duty rate on average. For example, a sneaker costing $20 to produce in China incurs a $5 import duty, totaling a $25 landing cost in the U.S.
This shoe sells to retailers for $50, and after markup, reaches $100 at retail. If the duty increases to 30%, the cost jumps, pushing the retail price to around $110.
“If tariffs rise to 60%, it could add another $60 to the retail price of a single pair of shoes.”
Mike Jeppersen, lead director at Manitobah Footwear
The idea of shifting production back to the U.S. is impractical, as evidenced by recent attempts from companies like New Balance and Wolverine Worldwide, which faced significant challenges scaling domestic operations due to high labor costs and supply chain limitations.
According to Jeppersen, American factories cannot compete due to high labor costs. Workers in China and Vietnam earn around $2.50 per hour, while U.S. workers earn about $25 per hour. Factoring in healthcare and other benefits, a shoe costing $20 to make overseas would cost over $100 if produced domestically.
