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Outdoor Brands ‘Buried’ by ‘Avalanche’ of September Tariffs, OIA Says

The outdoor industry has been hit by an “avalanche” of crippling tariffs, totaling more than $1 billion for the first time ever during the month of September.

New data from the Outdoor Industry Association (OIA) shows that American outdoor brands and retailers have paid an astounding $2.6 billion more in tariffs this year than in 2018.

On Sept. 1, the Trump administration implemented a 15 percent punitive Section 301 tariff on a number of outdoor goods, including hiking boots, ski jackets and tents—more than tripling the value of impacted products month over month. Impacted goods totaled $1.3 billion in August, but that number ballooned to $4.1 billion in September.

The Washington, D.C.-based trade organization’s data reveals astronomical tariff hikes on specific categories year over year. Tariffs on outdoor apparel jumped more than $100 million alone in September 2019 compared with the prior year, and outdoor equipment suffered a nearly identical blow. Outdoor footwear has weathered nearly $60 million in additional tariffs compared with last year.

The most recent round of tariffs has kneecapped an industry that already faces some of the highest tax rates on imports from China. Before September, for example, a pair of hiking boots faced a tariff rate of 37.5 percent. That rate has risen to 52.5 percent.

Now, the outdoor industry is bracing for yet another round of potentially devastating tariff increases, set to go into effect on Dec. 15. The new 15 percent increase would impact an expanded range of products, like sleeping bags, more outdoor footwear and apparel.

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“America’s outdoor businesses are being buried by additional tariffs,” Patricia Rojas-Ungar, OIA’s vice president of government affairs, said on a call with media on Tuesday.

As these punitive tariffs continue to grow, some brands are being forced to consider price increases on products, she added. Because consumers are price sensitive, she said, “our fear is that price increases will turn consumers away from our gear and the benefits of spending time outdoors.”

Sara Bowersox, global trade compliance manager for OIA member Keen Footwear, told reporters that the biggest impact of the September tariff increases has been on the company’s domestic production. The footwear brand’s hometown factory in Portland, Ore., has faced significant challenges due to the increased duties on imported items used to make its shoes.

“List 4A drove a significant duty cost spike for that site’s American-built program,” Bowersox explained, adding that the tariffs on components used in the brand’s Portland factory jumped from rates below 6 percent to nearly 20 percent, factoring in the additional 15 percent duty.

“This exercise proved that U.S. production is not the ultimate solution,” she said. “U.S. production uses input from other parts of the world, and is therefore not insulated from trade war fallout.”

Vista Outdoors vice president of public affairs Fred Ferguson said the company, which owns 40 brands and employs around 3,700 employees across the U.S., has faced massive headwinds due to the latest round of tariffs.

Safety helmets have been disproportionately impacted, he said, having been excluded from List 3 but curiously included on List 4. “Helmets have been whipsawed by the China 301 tariffs. They have been listed, de-listed, and listed again,” Ferguson said.

“Vista, our coalition of supporters on Capitol Hill, and other trade groups believe that safety helmets should not be a part of the list,” he added, explaining that products that promote health and safety were supposed to be considered for exemption.

Ferguson went on to tell reporters that the impacts of tariffs—both implemented and proposed—are currently impacting the company’s financial performance, stripping between $15 million to $20 million from the bottom line during the current financial year.

“The overall lack of certainty complicates all aspects of business operations,” he said. “These supply chains have been established over long periods of time, and while we are developing mitigation strategies above and beyond political advocacy, simply relocating operations to meet the political challenges of today is not feasible or realistic in the short term,” he added.

OIA is continuing to call on the president to finalize a phase one deal, OIA’s Rojas-Ungar said on the call. That deal would include “a complete rollback on all existing punitive tariffs on outdoor gear and products, and prevent new ones from coming into effect,” she said.

“Without this certainty, outdoor industry companies will continue to spend precious resources on managing the tariffs instead of their operations,” she added.