U.S. shoemakers face losses amid China, U.S. trade tension
Jeck Deocampo • September 18, 2019 • 415
Shoemakers in the United States are facing losses over the tit-for-tat tariffs amid the trade tension between China and the U.S.
Xero Shoes is an American brand of lightweight minimalist footwear designed for walking, running and athletics. According to Steven Sashen, CEO of the company, their shoes and sandals have thin and flexible soles that are contoured to the shape of the human foot.
“It really reflects the essence of what we’re doing, which is something so lightweight, so minimalist, so barely there that you don’t know that it exists,” said Sashen.
Sashen started the company with his wife Lena Phoenix 10 years ago. Their 80-percent online business has taken off with 84-percent growth in the past four years.
Yet as another round of U.S. tariff took effect from early September, Sashen’s products are now 15 percent more expensive to import from China, where all of his shoes are made.
Lena Phoenix, co-founder of Xero Shoes, says one possible solution is to uproot their supply chain. Yet such move would take time and it isn’t as easy as it sounds.
“We don’t want to leave China. Moving factories is very dangerous for a company of our size,” said Phoenix.
“People just say very casually: well why don’t you move to Vietnam for example? Well, cause Vietnam is full. They’re overcapacity already,” said Sashen.
They’ve also thought about raising shoe prices in response to the tariff.
“While we have a rabid fan base and many people say we’re happy to pay a few dollars more. That’s what people love to say, but when push comes to shove, people are very price-conscious,” said Sashen.
“We’re going to hold prices as long as we can,” said Phoenix.
Sashen and Phoenix are not the only ones facing such dilemma. Xero joined forces with about 200 other footwear companies to write to President Trump last month, urging him to cancel the newly planned additional tariffs on goods imported from China.
The letter points out that the tariffs on footwear products imported from China are already at a high level of 11 percent on average, and will reach 67 percent on some shoes after the new tariffs take effect.
According to the letter, the 15 percent tariff will cost U.S. shoe consumers an additional four billion U.S. dollars every year, which may create further economic uncertainty.
“It’s almost impossible to come up with a coherent strategy because of how in flux all of this is,” said Sashen.
Xero is now trying to come up with a long-range manufacturing plan.
“It forces you to step out of your comfort zone and be innovative and thoughtful about how to go forward long-term,” said Michael Wellman, the vice president of the company’s Asia Pacific Development.
Meanwhile, the shoe-makers are also hoping for near-term relief for the footwear industry, which was relatively highly taxed even before the trade war picked up speed.
“There’s a part of me that’s still in denial, that hopes that it’s going to be resolved next month,” said Phoenix. (REUTERS)
U.S. President Donald Trump has agreed to give China’s ByteDance 45 days to negotiate a sale of popular short-video app TikTok to Microsoft Corp, two people familiar with the matter said on Sunday (August 2).
U.S. officials have said TikTok under its Chinese parent poses a national risk because of the personal data it handles. Trump said on Friday (July 31) he was planning to ban TikTok in the United States after dismissing the idea of a sale to Microsoft.
But following a discussion between Trump and Microsoft CEO Satya Nadella, the Redwood, Washington-based company said in a statement on Sunday that it would continue negotiations to acquire TikTok from ByteDance, and that it aimed to reach a deal by Sept. 15.
It was not immediately clear what changed Trump’s mind. Banning TikTok would alienate many of its young users ahead of the U.S. presidential election in November, and would likely trigger a wave of legal challenges. Several prominent Republican lawmakers put out statements in the last two days urging Trump to back a sale of TikTok to Microsoft.
The negotiations between ByteDance and Microsoft will be overseen by the Committee on Foreign Investment in the United States (CFIUS), a U.S. government panel that has the right to block any agreement, according to the sources, who requested anonymity ahead of a White House announcement. Microsoft cautioned in its statement that there is no certainty a deal will be reached. (Reuters)
U.S. Secretary of State Mike Pompeo said on Thursday (July 30) the “tide is turning” in U.S. dealings with China, saying there is international support for American policies, including the step-up of maritime maneuvers in the South China Sea.
Reflecting rising tensions between Washington and Beijing, Pompeo took a tough line on China in testimony before the Senate Foreign Relations Committee.
“We see the Chinese Communist Party for what it is: the center threat of our times,” Pompeo said.
In recent days, Washington and Beijing have each closed one of the other country’s consulates – the United States closing China’s office in Houston and China retaliating by shuttering the U.S. facility in Chengdu – and Pompeo recently announced an end to Hong Kong’s special trading status.
“We closed the consulate in Houston because it was a den of spies,” Pompeo said.
Pompeo was testifying publicly at Foreign Relations Committee hearing for the first time in 15 months, discussing the State Department’s annual budget request.
President Donald Trump’s administration has tried to slash the State Department budget since it took office, which has been rejected by Congress every year. Democratic lawmakers told the hearing that they would not support steep cuts this year either. (Reuters)
New South Wales (NSW) Police on Monday (July 27) warned students of Chinese backgrounds studying in Sydney to be aware of a ‘virtual kidnapping’ scam that has obtained millions in payments from unsuspecting victims.
Victims are called by the criminals purporting to be from a Chinese authority like the police or tax department, “the caller then convinces the victim that they have been implicated in a crime in China, or that their identity has been stolen, and that they must pay a fee to avoid legal action, arrest or deportation” said NSW Police in a statement.
“Essentially threatening harm against people, family members in China unless they contrive a photograph that makes them look like they have been kidnapped. Then they encourage the person to lock themselves away in a hotel room, turn their phones off, cease all contact,” Director of NSW Police State Crime Command, Darren Bennett told media.
Bennett added that the phone calls are becoming very common and encourage anyone receiving one to not pay any money. (Reuters)
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