US footwear importers look to slash tariffs
Footwear importers last year paid $2.5 billion in duties, which are meant at least in part to protect domestic producers from low-cost imports, but in reality footwear accounts for a tiny percentage of U.S. jobs.
Therefore the Footwear Distributors and Retailers of America, the industry trade association, is urging passage of legislation and a free trade agreement in order to slash import duties by hundreds of millions of dollars in the coming years.
“These are the tools of the trade to reduce tariffs,” FDRA President Matt Priest told the organization’s annual footwear traffic distribution and customs conference this week in Long Beach, California.
The U.S. last year imported 2.3 billion pairs of shoes. That equates to 7.3 pairs of shoes for every American regardless of age, Priest said. Except for some high-end specialty footwear, almost all of the shoes sold in the country are imported.
Historically, import tariffs have been used to level the playing field for industries that compete with low-priced tariffs. However, import duties on footwear tend to be higher than duties charged on imports of other products, even those that are produced domestically.
For example, cell phone imports pay no duties. Duties on tobacco imports are 2.4 percent and duties on auto imports are 2.5 percent. Duties on footwear vary depending upon the type of shoe, but they average 10.1 percent, Priest said.
China last year accounted for 81 percent of footwear imports, although its market share has been eroding a bit each year. Vietnam is in second place, accounting for 10 percent of footwear imports. Indonesia is next with a 4 percent market share, and then it drops off to less than 1 percent duties on footwear from Mexico, Italy, India, Brazil, Dominican Republic, Thailand and Cambodia.
Although the U.S. has free trade agreements with a number of countries, none of them are major footwear producers. “That could change with the Trans-Pacific Partnership,” Priest said. U.S. footwear duties last year from pending TPP member nations totaled $364 million, with $362 million of that amount paid on imports from Vietnam.
Successful negotiation of the TPP free trade agreement, and winning approval for the agreement in Congress, are top goals of President Obama. “He sees it as a legacy issue for his presidency,” Priest said. The goal of the administration is to conclude the TPP negotiations in early 2015, with implementation in 2017.
The Affordable Footwear Act would reduce tariffs by about $617 million. Also, renewing the Generalized System of Preferences and passing miscellaneous tariff bill legislation would also provide a measure of relief on footwear tariffs.
Studies have shown that import prices and footwear purchases are directly related. When prices go up, consumers buy fewer shoes, but when prices drop, footwear sales go up.