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Trump’s trade war plays vital role in declining China’s footwear imports to the US

China was the only country of the top five suppliers of footwear imports to the US – making up 89% of all shipments – to post a decline in value January. Its position as the top in the U.S. market kept falling in April. As a result, the next five top countries gained ground.

US-China trade war footwear imports
Figure 1: When Donald Trump raised tariffs in May, he told companies that they could reduce costs by shifting production back to the US.

In the background, President Donald Trump’s trade war is playing a vital role. Footwear imports from China fell 8.4% for the year-to-date through April, compared to the same period in 2018, to a value of $4.03 billion. This was a faster pace of decline than the 8.2% year-to-date drop-off through March.

This consecutive decline also brought China’s market share down to 49.5% in volume terms in the first four months of the year, as companies diversify their sourcing in lieu of ongoing tariff threats from the Trump administration.

Some of the biggest names in American footwear have penned a letter to President Donald Trump, asking him to remove shoes from a proposed list of tariffs on China imports. The letter, dated May 20, was posted on the website of the Footwear Distributors and Retailers of America (FDRA), and signed by nearly 200 companies, including Nike Inc. NKE, -0.20% Under Armour Inc. UA, +1.53% Foot Locker Inc. FL, +0.16% and Reebok. It says the President’s decision to raise import tariffs will affect the working class.

Table 1: Trade war impact on Chinese made footwear entering the US.

  • 8.4% value fell to $4.03 bn, footwear imports from China
  • 14.8% decrease to 529.13 million pairs of footwear, from the last FY
  • 1.1% dropped to $4.03 billion, the value of overall footwear imports

Trump says that the trade deficit with China hurts the US economy. The US President increased levies on $200bn (£157.3bn) worth of Chinese imports into the US from 10% to 25% after Washington and Beijing failed to reach a deal on trade.

“Adding a 25% tax increase on top of these tariffs would mean some working American families could pay a nearly 100% duty on their shoes,” the companies wrote. “It is time to bring this trade war to an end,” the firms urged.

When Donald Trump raised tariffs in May, he told companies that they could reduce costs by shifting production back to the US.

A redrawing of manufacturing map has also been seen in the last decade. Since 2010, Adidas has cut the share of footwear it makes in China in half. The country that has absorbed most of that business is Vietnam.

A similar situation is playing out at Nike. A decade ago, China was its main footwear producer. Today, Vietnam owns that title.

Adding a 25% tax increase on top of these tariffs would mean some working American families could pay a nearly 100% duty on their shoes.

-says affected US footwear companies

China’s decline was even more pronounced in volume terms, as 529.13 million pairs of footwear entered the U.S. in this year through April, a decrease of 14.8% from the same period a year earlier. This came as overall footwear imports were down in value and volume year-to-year in the four months through April.

The value of overall footwear imports dropped 1.1% to $4.03 billion, while volume fell 8.4% in the period to 792.01 million pairs.

At the same time, footwear imports from Vietnam increased 9.5% to $2.08 billion, giving the country a 25.6% market share, increasing from 25.2% in the year-to-date for the first three months of the year. According to the Footwear Distributors & Retailers of America (FDRA), shipments from Vietnam have risen 35 of the last 36 months.

“Vietnamese volume dominates the changes in total footwear shipments so far this year, almost exclusively at the expense of declining Chinese shipments,” FDRA said.

Table 2: Benefiting top 5 countries making footwear for the US.

  • 9.5% increase to $2.08 bn, footwear imports from Vietnam
  • 6.7% increase to $559.91 mn in value, footwear imports from Indonesia
  • 4.1% rose to $478.93 mn, shipments from Italy
  • 6.2% increase to $143.82 mn, imports from India
  • 2.6% increase to $135.55 mn, goods arriving from Cambodia

The next four top suppliers – Indonesia, Italy, India, and Cambodia – all posted gains in the year through April. Footwear imports from Indonesia were up 6.7% to $559.91 million in value, shipments from Italy rose 4.1% to $478.93 million, imports from India gained 6.2% to $143.82 million and goods arriving from Cambodia were up 2.6% to $135.55 million.

Athletic footwear imports fell 4.6% in April, which FDRA said was “constrained by declining shipments from China, Vietnam, and Indonesia.”

Footwear imports posted a 0.1% gain for the month, which FDRA credited with strong shipments from Indonesia (up 14.7%) offset by a 13.1% drop from China.

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