As the industry gears up for a holiday season already plagued with logistical hurdles, the Footwear Distributors and Retailers of America (FDRA) is pleading with the Biden administration to lessen the burden on brands by rolling back tariffs on children’s footwear.
This week, the Washington, D.C.-based trade group, which counts more than 750 American footwear brands and retailers as members, delivered an open letter to the White House detailing the fiscal importance of addressing the cost of Section 301 tariffs on footwear amid rising inflation rates and unrelenting supply chain conundrums.
FDRA president and CEO Matt Priest noted that poor and working class families bear the brunt of price increases, as MSRPs on kids’ shoes balloon at a near-unprecedented rate. “The rising costs we see in the shoe supply chain are a contributing factor for shoe retail price increases,” Priest wrote on Tuesday. “Kids’ shoe prices have now reached the highest in over 70 years, causing massive sticker shock for those who can least afford it.”
Duties now make up 30 percent of the cost of certain types of children’s footwear sold at big box retailers across the country, Priest wrote. “This is the major reason why kids’ shoe price inflation is well above other basic goods,” he said. “Kids’ shoes are hit with one of the highest tariff rates of any product sold in America.”
Brands often pay between 20 percent and 37.5 percent in government taxes on children’s footwear due to the punitive duties implemented by President Donald Trump, and rates for FDRA members have been recorded at up to 70 percent. The Biden administration and the office of the United States Trade Representative (USTR) have so far opted to keep these measures in place, though they have tacked other goods and materials onto the growing list of tariff-exempt products since President Biden was sworn in in January.
The highest footwear duty rates have disproportionately impacted lower value footwear, Priest said, leading to what he described as “a regressive hidden tax for working class families.” The Section 301 tariffs led to rates nearly doubling on certain children’s casual shoes and slippers, and taxes more than tripled on certain plastic sandals, wool slippers, and infant crib shoes. “These tariffs affect the cost of each shoe even before retailers have to add labor, transit, marketing and other costs to the final price tag,” he wrote.
While the duties on these goods are exorbitant, Priest opined, pricy gadgets like iPhones are allowed to enter the country duty free. Referencing an Oct. 13 tweet endorsed by Biden chief of staff Ron Klain that said, “Most of the economic problems we’re facing (inflation, supply chains, etc.) are high class problems,” the FDRA exec noted that the excessive duties on kids’ shoes are, in fact, “working-class family” problems.
“While we know you cannot directly reduce our supply chain costs, you can directly help reduce disproportionate retail price spikes with a stroke of your pen,” he concluded, asking that the president eliminate Section 301 duties on kids’ shoes. “Further, we urge you to consider eliminating tariffs on children’s shoes altogether for basic fairness and good economic policy.”
“Now more than ever, consumers are feeling these [economic] pressures, and it’s the time to reduce duties,” Thomas Crockett, FDRA vice president of government affairs, told Sourcing Journal.
When asked about why high duties affect children’s footwear in particular, he said that the taxes date back to the Smoot-Hawley Tariff Act of 1930, an “outdated policy” that places unequal tariffs on different types of shoes based on material inputs. “For example, if you look in the leather section of the tariff code, you’ll find that men shoes are 8.5 percent generally, and women’s are 10 percent—that’s one example where a woman’s leather dress pump is going to have a higher rate than a men’s leather dress shoe, and that scenario doesn’t make sense,” Crockett said.
The longstanding tariffs were originally implemented to protect American shoe manufacturers, Crockett said, but the same policies are now impacting “American individuals and families that are having to buy several pairs of shoes a year as their kids grow.” Even categories of kids’ shoes that weren’t previously subject to high duty rates have seen tariffs double, in some cases, making it tough for retailers to turn a profit without raising prices on traditionally low-cost items that many families default to, year after year.
“We are certainly going to continue to raise this issue with the administration and with Congress,” Crockett asked when asked if he believed if tariff rollbacks could come to fruition. “There’s a lot of focus on this issue within the American public, and it’s a daily story that everyone’s paying attention to, especially with all the supply chain pressures,” he said. “I think there’s some momentum now, and the time is right.”