TRADE WAR TAKING TOLL ON OUTDOOR COMPANIES
Tariffs have cost industry nearly $2 billion, trade group says.
The Outdoor Industry Association, trying to defend against the blows its members are taking from higher tariffs on Chinese imports, is taking off the gloves.
The group is lobbying members of Congress to lift all U.S. tariffs on Chinese goods until a trade agreement can be worked out. So far, it isn’t getting much traction.
“We aren’t getting a lot of answers on what steps Congress will take to put additional pressure on this administration,” Patricia Rojas-Ungar, vice president of government affairs at the Boulder-based trade association, said during a conference call Thursday.
Outdoor recreation represents a $412 billion-per-year industry, according to the U.S. Bureau of Economic Analysis. It also happens to be highly reliant on materials and products made in China.
Makers of outdoor clothing and equipment have paid $1.8 billion more in tariffs since the trade war started, not counting the latest round of increases, said Amy Roberts, executive director of the OIA.
September’s tariff hikes will increase costs substantially. They have now pushed the levies on some products, primarily footwear, above 50 percent.
“We are starting to see a direct threat to our outdoor businesses and the overall outdoor recreation economy,” Roberts said.
And it could impact the economy in Colorado, which has made a concerted effort to attract makers of outdoor clothing and gear. Denver hosts the nation’s biggest winter and summer recreational product trade shows, and last year landed the headquarters of VF Corp., parent to well-known brands The North Face, JanSport, Eagle Creek, Smartwool and Altra.
All the uncertainty, not to mention the dollars that tariffs are soaking up, is putting a crimp on the company’s hiring plans in Denver, Joel Cohen, manager of government affairs at VF Corp., said on the call.
VF Corp. has been trying to fill several hundred jobs in Denver because of employees not relocating from other locations.
Cohen didn’t provide a tally on how many jobs might be at risk. But he did say labor represents just over a quarter of the embedded costs in a product.
As tariffs rise, the hit has to be passed on to customers or extracted from savings elsewhere.
Even companies that have fought the good fight to keep manufacturing in the U.S. are getting hit hard by tariffs because they import raw materials from China.
Nester Hosiery produces 90% of its products domestically, but relies heavily on merino wool imported from other countries, said Katie Kumerow, sustainability manager at the sock manufacturer based in Mount Airy, N.C.
Wool from China is under a 25% tariff. Had the company purchased finished socks directly from China, it would be paying only a 10% tariff, she said.