The US Tariffs are on everyone’s mind right now. Most of us don’t know what to think, and that is okay. We are not economists, nor can we see the future. At the same time, most of us have yet to feel the impending effects. This podcast will discuss how I see the US tariffs not only as a brand owner but also as an individual consumer. This discussion solely focuses on the shoe industry and is not political nor does it desire to be. Let’s get into it.

What Are The US Tariffs?

The US tariffs are further imposed fees on top of the existing import duties for goods that arrive in the US from abroad. The tariffs (fees) vary by country.

A tariff is an imposed tax on top of whatever else is already existing. That is, a 20% tariff on goods being imported into the US from the EU, specifically shoes, implies that on top of paying the 5% import duty, a further 20% fee is added to the cost. If you have an invoice for $10,000, you would owe $500 for the import duties and now a further $2000 for the tariff.

Effect On Businesses?

The effect of the tariffs will differ greatly based on the business. The main issue is whether or not a business is US-based and produces its goods outside of the US. If they produce in Europe, for example, their goods will now become 20% more expensive. However, if they are not based in the US, but rather based in the EU and do not import a ‘stock’ into the US to redistribute to the US customer base, then chances are there is no great effect for them.

De Minimus Exemption

Except for China and Hong Kong, the De Minimus Exemption remains in effect. That means that if you are a consumer purchasing goods online that will be imported into the US, so long as they have a value under $800, you will not be liable for import taxation. Anything over the value of $800 will be taxed at the rate of import plus the tariff associated with the country they are arriving from.

For example, if you purchase one pair of shoes from TLB valued at $400, you will not pay anything more. But if you purchase two pairs with a value of $800, you will pay a 5% import duty ($40) and a 20% tariff ($160). Your $800 order will now become $1000.

Goods from China and Hong Kong will be tariffed at 30% under $800. So, if you purchase a $600 pair of shoes, your new total will be $780.

Effects On Consumers?

In the short term, not much will change, in my opinion. If you are purchasing goods from abroad that fall under $800 value, then nothing has changed for you as of now. But, in the long term, your local brands that import from outside of the US will most likely have to raise their prices. I cannot speak for any other brand, but that price increase will most likely be anywhere from 5% to 20%.

What Comes Next?

I believe that most brands are a bit frozen at the moment, thinking about what to do. I say that as that is where I am with my own brand. Unfortunately, my small business will most likely have to absorb those tariffs for the next few months. But should they continue, a price increase will be inevitable. I presume that most small brands like myself are thinking the exact same thing.

I do not know how large companies will react as they have more power than I do and the ability to maneuver in ways I cannot fathom.

I dare say that if you enjoy the prices now, I would take advantage of them. Come the Autumn/Winter season, I predict a lot of price increases.

Only time will tell.

—Justin FitzPatrick, The Shoe Snob

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