TRUMP’S SECOND TERM

Impact on the Footwear Industry

By Alan Miklofsky | November 6, 2024

Trump’s second term is poised to have several impacts on the footwear industry in the U.S., particularly through trade policies, labor regulations, and economic strategies. Here’s a look at the potential effects for footwear businesses:

Trade Tariffs and Cost of Imported Goods

Trump’s proposed tariffs—up to 20% on general imports and a significant 60% on goods from China—could impact footwear costs, as a large percentage of shoes sold in the U.S. are manufactured overseas, particularly in China. These tariffs would likely drive up the cost of imports, potentially affecting wholesale prices and, in turn, retail prices.

For footwear businesses, this might mean higher costs, which could be passed on to consumers. Some brands may opt to explore domestic manufacturing or source from countries with lower tariffs, though this could require time and additional investments.

Supply Chain Adjustments

With a push for American-made goods, footwear companies that rely heavily on international suppliers might face disruptions and higher logistical costs. Businesses may need to adapt by diversifying their supply chains, possibly moving production to countries with lower tariffs or considering domestic manufacturing.

While moving production back to the U.S. could align with “Buy American” sentiments, it could also require substantial investments in new infrastructure, technology, and workforce training—factors that could initially increase operational expenses.

Retail Prices and Consumer Demand

The cost of goods due to tariffs and supply chain adjustments might result in higher retail prices for footwear, which could influence consumer demand. Price-sensitive consumers may seek more affordable alternatives, impacting high-end or specialized footwear segments. Conversely, brands that can maintain or reduce price hikes could gain a competitive edge, especially among budget-conscious shoppers.

Small businesses, particularly independent shoe retailers, might face added pressure to keep prices attractive while managing higher inventory costs. Some retailers may also consider shifting marketing efforts to emphasize American-made products if consumer demand aligns with nationalist sentiments encouraged by Trump’s policies.

Labor and Wage Policies

Trump’s stance on deregulation suggests fewer restrictions on employment practices, which could benefit businesses in managing labor costs, especially as they adjust to potential increases in other areas, like supply chain expenses. His administration’s preference for limited federal oversight may reduce labor compliance burdens, which could free up resources for retailers to focus on profitability and growth.

However, without regulatory pressure on minimum wage increases, competition for skilled retail workers may still challenge footwear businesses, especially as other industries raise wages to attract talent. Companies might find themselves investing in employee training and retention efforts to maintain a reliable workforce.

Potential Impact of Stronger U.S. Dollar and Global Trade Dynamics

With Trump’s emphasis on favorable trade policies and possible economic isolationist moves, the U.S. dollar could strengthen, impacting export potential. For U.S.-based footwear brands looking to expand internationally, a stronger dollar could make American goods more expensive overseas, possibly reducing export appeal.

On the other hand, if domestic demand grows due to tariffs on foreign footwear, American brands might capture a larger market share within the U.S., allowing for potential expansion or new product lines.

Consumer Sentiment and “Patriotic” Buying Trends

A second Trump term may lead to a surge in patriotic sentiments, encouraging consumers to prioritize American-made products. This shift could create an opportunity for footwear brands that manufacture domestically or source U.S.-based materials, allowing them to appeal directly to consumers interested in supporting American businesses.

Retailers might consider promoting their American-made products or emphasizing local manufacturing to tap into this potential market trend. Marketing strategies that align with patriotic themes or “buy local” messaging could resonate well with consumers influenced by Trump’s policies.

E-Commerce and Deregulation

Trump’s preference for deregulation could also impact online retail. With fewer restrictions, digital marketplaces may experience greater flexibility in selling and marketing products across state lines without stringent compliance requirements (i.e. tax collection, shipping standards, product labeling). This could benefit smaller footwear retailers looking to expand their e-commerce presence, especially as online shopping remains a dominant retail channel.

Reduced regulations on shipping, labeling, and advertising might streamline operations for footwear brands and retailers, though they will still need to remain attentive to any state-level requirements that may vary.

Key Considerations for the Footwear Industry

In summary, Trump’s second term could bring both opportunities and challenges for the U.S. footwear industry. Higher tariffs on imports may lead to increased costs, affecting pricing strategies and potentially pushing brands to explore domestic manufacturing or alternative sourcing. Retailers may also face a mix of consumer reactions, as some may seek affordable options while others may prioritize American-made goods.

Footwear companies should consider adapting their supply chains, adjusting labor strategies, and fine-tuning marketing to align with a potential surge in patriotic consumer sentiment. By staying proactive, footwear businesses can navigate these policy-driven shifts and explore growth avenues within the U.S.