Even if US businesses flee China, prices will still spike: Footwear industry group CEO

A major shoe industry organization is warning American consumers could soon feel the impact of U.S.-China trade tensions, even if businesses relocate manufacturing from China.

“The unfortunate fact is even if you diversify and move to places like Vietnam, prices will go up. There’s demand spike in Vietnam right now. You’re not going to just save 10% because you flee China and go somewhere else. And so at the end of the day, this disruption, this uncertainty, will be paid for by American consumers no matter where the product is sourced from,” Matt Priest, Footwear Distributors and Retailers of America CEO, tells Yahoo Finance’s “The Ticker.

The FDRA says 70% of shoes sold in the U.S. comes from China.

The Trump administration is gearing up to slap an additional 10% tariff on $300 billion worth of Chinese goods starting September 1. The new round targets consumer products like footwear, clothing, and school supplies. And Priest predicts customers who shop at major retailers will feel the pinch, if these duties go through.

“The biggest risks are women’s fashion, accessible fashion at $100 price points, or mass retail production. Places like Walmart (WMT) and Target (TGT) where consumers purchase hundreds of millions of pairs of shoes every year. A lot of that is predominantly China, upwards of 90% or 95% Chinese production. So those are the consumers that will be impacted the most and will feel the brunt of this the most.”

Shoes displayed at a Walmart store in Secaucus, New Jersey, November 11, 2015. REUTERS/Lucas Jackson

The FDRA has hundreds of members, including companies like Nike (NKE), Footlocker (FL), and Crocs (CROX). Priest hopes the friction between the world’s two largest economies will decrease and higher tariffs on shoes don’t take effect. “My hope is that cooler heads prevail — that they find a way to move forward,” he said.

McKenzie Stratigopoulos is a producer at Yahoo Finance. Follow her on Twitter:@McKenzieBeehler

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