World Footwear


The new chapter of the US-China trade war

May 14, 2019 United States
The new chapter of the US-China trade war
President Trump announced and applied increases on the China tariff rates on List 3 (200 billion US dollars in Chinese-made goods) from 10% to 25%. Remaining goods, including footwear, could be hit with tariffs shortly as a new list was announced
The trade war between the US and China might be on the verge of a new chapter.

The two giants have been in constant negotiations for months, after agreeing to a trade war truce back in December. Recent meetings between both parties seemed to indicate a deal as close to be achieved.

However, over the first weekend of May, President Trump announced, via Twitter, that China's tariff rates on List 3 (one of the lists created in this Trade war process) would increase from 10% to 25% on the 10th of May (200 billion US dollars in Chinese-made goods). This took effect last Friday, as announced.

Mr. Trump also indicated that all remaining goods on China, including footwear, could be hit with 25% tariffs shortly. And last night the Office of the United States Trade Representative (USTR) released the proposed List 4 of Chinese-made goods that may be subject to up to 25% in additional tariffs. The proposed list includes footwear as well as almost every good made in China and totals 300 billion US dollars in trade.

We might be witnessing a new direction for this trade war and the result of this seems unpredictable. One thing seems certain, many will loose with this situation. Following up from the perspective of new tariffs hitting goods coming from China into the US, we have asked footwear associations from both the US and China to comment on this.

"The facts of the matter have not changed — import duties are taxes on Americans and will take away disposable income from US consumers. Higher costs for our consumers will hurt our ability to sell shoes and directly impact jobs in our industry. With this most recent tariff threat, the President seems to be trying to create some urgency in the trade talks and provide last-minute leverage for US negotiators. This is a big week with the potential of a comprehensive trade deal between the US and China. We strongly urge both countries to put an end to this trade war and develop a concrete agreement that restores some certainty to this vitally important trade relationship", commented Matt Priest, Footwear Distributors & Retailers of America (FDRA).

Mr. Priest highlighted some of the costs associated with the implementation of such added tariffs. Mr Li Yuzhong, Chairman of the China Leather Industry Association (CLIA) also pointed the additional costs such measures will bring: "In the footwear sector, the US imported about 2.4b pairs of shoes in 2018, of them 71.4% are imported from China. If the 25% new tariffs on shoes come into effect, both US and China footwear industry will suffer from the trade war. Most of the US consumers will suffer from the additional costs, as the US will not be able to find another footwear supplier that can make up the 70% gap".

While we are on the expectation of the new developments of this chapter in the US-China trade war, we bring you an Evaluation study of the potential impacts such measure might have on the Footwear industry.