Shoemakers Face Losses Amid China, U.S. Trade Tension

(Reuters) -
Shoe importers find themselves caught in the crossfire of trade tensions between China and the U.S.

Shoemakers in the United States are facing losses over the tit-for-tat tariffs amid the trade tension between China and the U.S.

Xero Shoes is an American brand of lightweight minimalist footwear designed for walking, running and athletics. According to Steven Sashen, CEO of the company, their shoes and sandals have thin and flexible soles that are contoured to the shape of the human foot.

“It really reflects the essence of what we’re doing, which is something so lightweight, so minimalist, so barely there that you don’t know that it exists,” said Sashen.

Sashen started the company with Lena Phoenix 10 years ago. Their 80%-online business has taken off with 84% growth in the past four years.

Yet as another round of U.S. tariffs took effect from early September, Sashen’s products are now 15% more expensive to import from China, where all of his shoes are made.

Lena Phoenix, co-founder of Xero Shoes, says one possible solution is to uproot their supply chain. Yet such move would take time and isn’t as easy as it sounds.

“We don’t want to leave China. Moving factories is very dangerous for a company of our size,” said Phoenix.

“People just say very casually, Well, why don’t you move to Vietnam, for example? Well, because Vietnam is full. They’re overcapacity already,” said Sashen.

They’ve also thought about raising shoe prices in response to the tariff.

“While we have a … fan base and many people say we’re happy to pay a few dollars more, that’s what people love to say, but when push comes to shove, people are very price conscious,” said Sashen.

“We’re going to hold prices as long as we can,” said Phoenix.

Sashen and Phoenix are not the only ones facing such dilemma. Xero joined forces with about 200 other footwear companies to write to President Trump last month, urging him to cancel the newly planned additional tariffs on goods imported from China.

The letter points out that the tariffs on footwear products imported from China are already at a high level of 11% on average, and will reach 67%  on some shoes after the new tariffs take effect.

According to the letter, the 15% tariff will cost U.S. shoe consumers an additional four billion U.S. dollars every year, which may create further economic uncertainty.

“It’s almost impossible to come up with a coherent strategy because of how in flux all of this is,” said Sashen.

Xero is now trying to come up with a long-range manufacturing plan.

“It forces you to step out of your comfort zone and be innovative and thoughtful about how to go forward long-term,” said Michael Wellman, the vice president of the company’s Asia Pacific Development.