Industry Voices Grow Louder In Opposition To Trade War
President Trump’s claim that increased tariffs on foreign goods have resulted in an improved business climate for U.S. companies has been widely rejected by representatives of the outdoor, sporting goods and active lifestyle industries who are growing louder in their opposition to the administration’s escalating trade war.
Look for those industries’ collective voices to reach a fever pitch with Monday afternoon’s announcement of $200 billion in new tariffs on Chinese imports. Trump said earlier Monday that the administration “would be announcing something” regarding China after market close, and the decision was formally announced around 4:30 p.m. Mountain time.
Trump also said the U.S. will consider an additional $267 billion in tariffs of Chinese imports after the $200 billion move, meaning almost every product imported into the U.S. from China would be subject to a tariff.
“The tariffs will take effect on September 24, 2018, and be set at a level of 10 percent until the end of the year,” the White House said in a press release Monday afternoon. “Further, if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional tariffs.”
“As president, it is my duty to protect the interests of working men and women, farmers, ranchers, businesses and our country itself,” the release continued. “My administration will not remain idle when those interests are under attack.”
Trade associations and businesses alike continue to vocalize their displeasure about the tariffs, which they say will instead hurt American companies, and the topic has been top of mind across the outdoor, sporting goods and active lifestyle trades for the past few months.
Here’s a snapshot of what industry associations have said in recent days about the tariffs:
Outdoor Industry Association
Rich Harper of the Outdoor Industry Association last Thursday presented a webinar on the topic titled “How Additional Tariffs On Imports From China Could Impact Your Business.”
In the presentation, Harper outlined the current U.S-China trade war, including what started it (a trade deficit with China and concerns over Chinese intellectual property practices), the current tariff list (multiple products totaling $50 billion), what’s next ($200 billion in even more products) and the impact on outdoor companies in particular.
“Clearly you’re facing higher costs—either costs that you would have to absorb or ultimately pass on to the consumer,” Harper said. “We’ve heard from a number of outdoor companies that are facing choices between quality and cost; they want to ship their supply chains out of China to avoid the higher tariff, but they may face a situation where they’ll settle for a lesser-quality product. This is not a choice outdoor companies want to face.”
Click here to watch a replay of the webcast.
Snowsports Industries America
Nick Sargent, president of Snowsports Industries America, testified before Congress a few weeks ago about the impact of tariffs on the ski and snowboard industries. In his message to the Office of the United States Trade Representative in Washington, DC, Sargent expressed concern over proposed tariffs on sports bags, knit hats, safety helmets and ski gloves.
Sargent pointed out that the snow sports industry generates $73 billion in consumer spending annually and that last winter season—from August 2017 through March 2018— the specific goods in question generated more than $779 million dollars in retail sales.
“We are an industry selling widely recognized outdoor brands through specialty and community-based retail shops that are the backbone of our industry,” Sargent said in his comments. “Our economic vitality depends on tight margins throughout our supply chain and selling our products at a fair price to consumers each season.
“Snowsports Industries America and our members strongly oppose the tariffs on ski gloves, hats, head gear, safety head gear (helmets) and sports bags and we urge you to remove these products from the USTR list,” Sargent concluded. “Doing so will protect U.S. businesses and jobs.”
Click here to read the full transcript of Sargent’s testimony.
Sports & Fitness Industry Association
In the recently released 2018 SFIA State of the Industry Report, SFIA President and CEO Tom Cove included in his executive summary the association’s views on the increasingly hostile trade situation.
“As much of the sports and fitness industry operates on a global scale, changes to tariff rates can cause tremendous disruption and uncertainty,” he wrote. “The threat of a sustained ‘trade war’ between the United States and China is of particular concern. At present, China remains a vital and not easily replaceable link in our industry’s supply chain. Shifting manufacturing to other countries is simply not feasible in real time, or at scale. There is also the possibility that American brands might suffer limited access to the vast and increasing Chinese consumer marketplace through retaliatory tariffs and non-tariff barriers. SFIA is committed to fighting these tariffs on behalf of its members.”
This topic will be front and center at next week’s Sports & Fitness Industry Association Industry Leaders Summit in Denver, CO. David Cohen, operating committee ,ember, Sandler, Travis & Rosenberg PA, will be presenting the final day’s keynote on “The Taxing World Of Tariffs—How Trade Policy Is How Trade Policy Is Affecting the Sporting Goods Industry.”
According to the description of Cohen’s keynote, “International sourcing is a part of most sports, and fitness product enterprises and trade compliance is a critical part of how companies do business. How you approach these issues directly impacts your firm’s financial performance. In these uncertain times for international trade, how do you plan for the future? Disruptive U.S. trade policies make it hard to accurately gauge their impact and deploy effective countermeasures. It is important to understand the prospects for additional tariffs, options to limit your exposure and the political landscape the industry is facing. Cohen will discuss the current climate, potential for new tariffs and provide information on industry options to avoid them.”
**SGB will be at the event and will report on Cohen’s speech. Look for a recap in SGB Executive at the end of September.**
During last month’s Paddlesports Retailer conference in Oklahoma City, numerous paddlesports companies expressed concerns over the trade war—including U.S. tariffs on products made in China, Chinese tariffs on products made in the U.S. and retaliatory Canadian and European Union tariffs on products made in the U.S.
The retaliatory 25 percent tariff on boats shipped to Europe and the 10 percent tariff for boats shipped to Canada, for example, has been a sore subject for kayak makers like Greenville, SC-based Confluence Outdoor.
“That’s impacting a significant portion of our global business,” said Todd King, the company’s vice president of marketing. “We’re working on creative ways to offset, but 25 percent is a lot. As we go into 2019 we’re looking at how we moderate that.”
Some of the suppliers that American kayak makers work with in Asia are building plants outside of China to avoid future tariff issues for U.S.-bound goods. Peter Hall, founder and CEO of Steamboat Springs, CO-based SUP brand Hala Gear, said one of the factories the company works with in China has opened a plant in Vietnam to avoid potential trade war issues.
He also noted that some paddlesports brands have spoken of highlighting how tariffs are really a tax for consumers. They mentioned listing their MSRP prices as they would be without the tariffs and then listing a line item of the applicable tariff and labeling it a “Trump tax.”
For all the geopolitical issues surrounding the industry, most vendors said they look forward to the day when they think less about the trade war and more about their core business mission: “We just want to sell kayaks,” said Evan Lyendecker, marketing director for Confluence Outdoor. “We just want to get people on the water.”
Photo: Associated Press