Donald Trump won a second term for president on Wednesday morning. A few hours later, Steve Madden had put a plan in motion to move a large portion of its production out of China — and quickly.
It’s well known that one of Trump’s biggest campaign promises was to slap tariffs on shoes and other Chinese imports — a move that would translate into significant price increases. In a study released this week, the National Retail Federation warned U.S. consumers could pay between $6.4 billion to $10.7 billion more for footwear a year with proposed tariffs.
Ed Rosenfeld, chief executive officer of the New York-based company, told analysts on a conference call Thursday that Madden — which reported solid third-quarter earnings — had been preparing for a “potential scenario in which we would have to move goods out of China more quickly.”
Of course, footwear and retail executives are well aware of the impact tariffs can have on their bottom lines. The issue was a major storyline during Trump’s first term.
Overall, about two-thirds of Madden’s business is derived from imports. And about 70 percent of those imports are sourced from China. That means just about half of Madden’s business is currently subject to tariffs — if Trump ultimately decides to put them in place.
Rosenfeld said the company has been working hard to develop production capabilities in Cambodia, Vietnam, Mexico and Brazil.
The company’s goal: To reduce the percentage of goods produced in China by 40 to 45 percent. “If we’re able to achieve that, a year from today we would be looking at just over a quarter of the business subject to tariffs,” Rosenfeld said.
One thing is clear: The industry wants to avoid the tariffs altogether.
“The supporters of the president-elect are very concerned about their pocketbooks,” FDRA president and chief executive officer Matt Priest said this week. “Encouraging the administration not to add taxes on goods for American people is probably a really good place to start if you want to ensure that the prices stay low.”
— With contributions from Shoshy Ciment
