Illustration of shoes. (CNN Indonesia / Adhi Wicaksono)

US and China Trading War, Adidas and Nike are Worried

USA - Shoes have become one of the list of products proposed to be subject to import tariffs by the US, because of that, famous shoes brands such as Nike, Adidas, Under Armor, and other brands are worried about the rampant trade war between the United States (US) and China. For those concerns, they sent a letter to the US President Donald Trump, United States Trade Representative Robert Lighthizer, Finance Minister Steven Mnuchin, Trade Secretary Wilbur Ross and Director of the National Economic Council Larry Kudlow.

The letter contained how the trading war between US and China will also threaten the economic viability of many of their companies and industries. It is because any increase in the imported footwear rate products from China would have a direct and long-term impact on the lives of US people.

In addition to the rate increase, Trump also plans to impose import rate of 25 percent on imported goods worth 325 billion USD from China. Some of the items included in the list of products affected by the tariff are sneakers, toys and other consumer products.

If fixed rates are applied, American footwear distributors and retailers estimate that they will be charged an additional 7 billion USD per year for shoe customers in the US, because China is the main link in the supply chain for US shoe companies.

However, it is reported that about 26% of Nike (NKE) footwear and 26% of Nike clothing are produced in China in fiscal 2018. In the letter that Chinese companies wrote for the US government, it was mentioned that footwear is a very important industry, with years of planning needed to make resource decisions, and companies can’t simply move the factories to adjust to these changes. The progress of shoe companies in the world will experience slow and incline production in the future if this trading war still happening.