Event from China in the early 2000s nearly killed SG Companies, a family-owned footwear company that was founded almost 125 years ago. Now Donald Trump’s swop war could finish it off.
The 15 December deadline when the US is due to impose another exact of tariffs is just days away. For the New Jersey company, it could close a new 15% tax on the shoes it designs, makes in China, and sells to retailers in the mood for Walmart.
Chief executive Matt Feiner is still hoping for a last-minute delay. Without one, he said, the company, which employs about 100 in the flesh in the US, may not survive.
“There’s really no way that we could digest all of those rates,” he said. “It is very scary.”
Since the trade war started, the US and China partake of imposed tariffs on more than $450bn worth of each other’s exports. But quondam US actions have hit mostly business products.
This round – on an guesstimated $156bn worth in annual Chinese imports – will fall on a not on target range of consumer goods, heightening the stakes. The list of affected artifacts includes smart phones, make-up brushes, children’s books, and attiring.
- A quick guide to the US-China trade war
- Potential US-China trade buy could remove tariffs
With more than 70% of shoes furnished in the US made in China, footwear is among the industries most exposed to the pace off.
American buyers could pay as much as $4bn more for their shoes each year if the rates move forward, according to the Footwear Distributors and Retailers of America, an toil association.
Nike, Clark’s and Steve Madden are among more than 200 footwear firms that make spoken out against the plans.
“Tariffs are taxes,” association president Matt Clergywoman has warned. “This move will noticeably raise the cost of shoes at retail and leave have a chilling effect on hiring in the footwear industry,”
The White Ancestry has said its tariffs – initially announced at 10% but later raised to 15% – are pointed at forcing China to change “unfair” trade practices, including subsidies and avowed theft of tech secrets. Officials say any impact on the US will be minimal.
No matter what, Mr Trump has postponed the tariffs once already, amid concerns the bill of fares might hurt consumer spending – the main driver of the US economy – during the Christmas flavour.
In recent days, administration officials have suggested that a comparable delay could happen, assuming the two sides make sufficient move toward a deal.
In the meantime, economists say the uncertainty has hurt business investment and belief.
“I wish I could tell you I was spending more time creating break-through spin-off ideas… and figuring out the way to bring them to life,” Mr Feiner held. “Unfortunately, we… have been spending much more of our once upon a time working through this issue.”
SG Companies was founded in 1896 as a slipper fabricator. For decades, it resisted the closures affecting footwear manufacturers – despite imposts enacted in the 1930s to protect domestic production.
Finally, in 2002, SG fasten its own Hackensack factory, laying off more than 500 workers.
The coterie reinvented itself as an import and licensing business, and now sells about 20 million yokes of flip flops, sandals and other products each year.
But the excises threaten to raise import costs by more than the firm’s usual profit, said Mr Feiner, who declined to share more specific get the hangs.
For now, the firm’s business partners – both retailers and contract manufacturers in China – compel ought to agreed to share the burden of the tariffs. But Mr Feiner expects that malleability to end after the spring shipments.
He said he has looked at shifting its production to Vietnam or Cambodia, but the prices didn’t make sense for the lower-priced shoes that are his company’s specialty.
And with all and sundry in the industry considering similar moves, there simply isn’t the capacity slim of China to handle it, he added.
“These tariffs really threaten the viability of the institution on a go-forward basis,” he said. “For a company like ours, it feels peer a very precarious place to be in.”