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Could The End Of U.S. Sneaker Tariffs Kill The New Balance Brand?

Submitted by on March 4, 2013 – 10:37 amNo Comment
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By now, you’re probably aware of the fact that those Nike sneakers that you have on your feet were not produced in a factory in the U.S. Instead, they were produced at a plant far, far away in Asia, most likely in China where Nike produces a large majority of their sneakers. And, the same can be said for most other sneaker companies, including Reebok and adidas. Like most other industries, they’ve set up shop in other countries where they’re able to produce sneakers using cheap labor in order to sell them back in the U.S. for a higher profit. However, when they do, they have to pay a sneaker tariff on every single pair that gets brought into America—that tariff usually ranges from $3 to $5—and then pass that cost along to consumers. But, because of rising labor costs in other countries, companies like Nike are now pushing for the end of those tariffs so that they can keep their costs down and not have to increase the price of sneakers.

That sounds all well and good. But, what about a company like New Balance that produces their sneakers right here in the U.S.? They’ve gone out of their way and paid additional costs in order to keep their sneaker factories right here in America. So, putting an end to the sneaker tariffs that other companies pay could be really bad for business for them. It could impact their bottom line and, ultimately, force them to lay off employees or, even worse, follow the other sneaker companies overseas. As you’ll see in this report by the Wall Street Journal, it’s a big concern for New Balance right now and something they’re monitoring closely:

We think that the U.S. government should think long and hard about eliminating the sneaker tariffs that companies like Nike are required to pay now. While we certainly don’t want to pay anymore than we already do for sneakers, we also don’t think it’s fair for companies who have taken their factories to other countries to get a break simply because those countries are now forcing the companies to pay more in labor costs. So, rather than cutting tariffs, why not offer incentives for some of those companies to bring their factories back to America? We could sure use it. And, while that option would also impact New Balance, it would at least be beneficial to the national economy and show that the U.S. is serious about bringing factory work back to this country.

What do you think? Do you want to see the sneakers tariffs eliminated so that companies like Nike can save money, or do you think the existing tariffs should remain in place?

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