Leading American footwear companies, Nike NKE, Adidas ADDYY, Skechers USA SKX, and others have approached President Donald Trump, seeking an exemption from tariffs, citing the risk of a potential industry collapse.
What Happened: The Footwear Distributors and Retailers of America trade association dispatched a letter dated April 29 to the White House, pleading for relief from Trump’s reciprocal tariffs. The letter, endorsed by 76 footwear companies, expressed that the tariffs present an “existential threat” to the industry, as per a CNBC report on Friday.
The letter emphasized that businesses manufacturing affordable footwear for lower and middle-income families are incapable of absorbing high tariff rates or transferring these costs. Without swift support, many companies could be forced to shut down.
Trump’s tariffs, announced on April 2, imposed duties on several key countries for footwear sourcing, such as China, Vietnam, and Cambodia. The tariffs are scheduled to restart in early July.
The footwear association cautioned that the tariffs would not fulfill Trump’s promise of returning manufacturing to the U.S., as they eliminate the stability businesses need for investment in sourcing changes.
"This is an emergency that requires immediate action and attention,” stated the Association. “The American footwear industry does not have months to adjust business models and supply chains while absorbing this unprecedented and unforeseen tariff regime,” it added.
Why It Matters: Earlier in April, Nike’s shares plummeted by about 25% as the escalating trade war between the United States and China threatened the company’s supply chain. Nike imports a majority of its products from China, Vietnam, and Indonesia.
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In April, Economist Peter Schiff cautioned that Nike Inc. is unlikely to move its production to the U.S. despite new tariffs, forecasting increased prices and a decline in domestic sales for the footwear company.
Schiff wrote on X, "Nike won't build factories in the U.S. to make sneakers. That would add more cost than the 40% tariffs…The result will be fewer sneakers sold in the U.S. at much higher prices."
Additionally, Skechers reported a revenue miss in the first quarter, further indicating the strain on the footwear industry. The tariffs, if not lifted, could exacerbate these challenges for the industry. Even Adidas cautioned that tariffs would result in increased costs for American consumers.
Nike stock has climbed 5.36% over the past month, while that of Adidas surged 14.81% during the same period.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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