The last thing most people consider when voting for president of the United States of America is what impact the future leader will have on the sneaker industry. But those who work in footwear know the impact can be huge. A president’s trade policies can have rippling ramifications on the prices and flow of sneakers produced both domestically and internationally. With Joe Biden becoming president, it’s clear that a lot of things are going to change over the next four years in America, but how will his presidency impact the sneaker industry?
The past four years of Donald Trump as president caused a lot of anxiety in America and some of that played out in the footwear industry, too. To unpack Trump’s presidency in terms of the footwear industry and the impact Biden will potentially have on the sneaker world, we spoke to Matt Priest, the president and CEO of Footwear Distributors & Retailers of America, a lobbying, advocacy, and trade organization for the footwear industry based out of Washington, DC.
Over the past four years, what were the pros and cons of the Trump administration on the footwear industry?
We'll do the bad news first. The bad news was that there was just a lot of uncertainty around the policies they were pursuing and how it would impact our industry in costing. The administration was pursuing several avenues where they ultimately applied duties to product, including sneakers. That was in September of 2019, that added cost to sneakers as they came across the border from China. We went through a multi-year process where the president was tweeting and threatening and tweeting some more. We were trying to figure out how to respond and how it would impact our costing going forward. That was just a huge challenge. There was a whole ton of uncertainty around what would happen. He added potentially an additional billion dollars of duties on the sneaker industry, just by increasing duties from product made in China.
The industry was moving significantly to Vietnam to where the vast majority of athletic shoes and sneakers are made. Towards the end of the presidency, they were starting to think about adding duties on products from Vietnam, including footwear. That was creating a lot of concern and consternation.
Were there any positives?
The good part now, in a kind of conjunction with Congress, the prior acts I just talked about were solely led by the Trump administration. In fact, they were opposed by most Republicans in Congress. The good part was tax reform. Tax reform created some incentives for businesses, lowered the corporate tax rate, which if you're a business and the less money you're giving towards the government, whether it's corporate taxes or it's tariffs, the better off you are, because you're going to employ people and invest in innovation and research and development, design, and distribution.
It also gave more money to consumers. A strong economy led by the tax cuts, I think was really important to help inject capital into the industry and create some opportunities for consumers to earn more money and to buy more product, have more disposable income. That's definitely a positive. There were a number of years where we saw that, and, of course, this was all pre-pandemic.
Trump had stepped away from the Trans-Pacific Partnership as part of the presidency. Is that what you're referring to with all of the added costs or imports?
No, so I'm glad, Matt, I'm glad you brought that up because that was what he did four years ago. He withdrew from the Trans-Pacific Partnership. That was walking away from an opportunity that would have saved us $600 million a year in duties. And we were highly supportive of that, because it was going to be a huge opportunity for our industry. He withdrew from it and that hurt.
Transferring to Joe Biden, is the footwear industry hopeful about him as president? What's the outlook on his presidency as far as shoes go?
I don't want to say there's one unified view to any politician or any administration. You have people on both sides, and we do, too. We're no different, I think in a general sense, if we were to kind of take the pros and the cons of the Trump administration and then analyze what each of those initiatives will look like in a Biden administration, I think we can come up with some optimism. I think there's an expectation that President Biden will not deliver policy by tweet, that it will be more thought out and analyzed within what's called the interagency process, which is a robust process. The president makes a big decision and all the agencies that are impacted by the decision come together and debate it and provide options to the president.
I worked in the commerce department during the Bush administration and was a part of that process. I think we'll return to more of that. There'll be much more thoughtful debate within our government and within the administration about the impact of actions. Then it will be, I think, relayed to us in typical channels, the Federal Register and other ways, and it won't be threats over Twitter, that impact millions of dollars in business for our country. A more predictable policy-making apparatus is what we're expecting with the Biden administration. That doesn't mean that he's going to roll back those additional tariffs on Chinese product right now. In fact, we expect it might be some time, but I think we're not going to be in a position where they're going to add tariffs to footwear, which is a good place to be, relative to the last few years.
Our hope is that he talks about rehabilitating our alliances and strengthening our alliances with our allies and repairing those alliances. One of the best ways to do that is to increase trade, and that might be a trade agreement with the Vietnamese, that might be entering reconstituting or getting back into the Trans-Pacific Partnership. All these things will come in time, but I think there'll be more opportunity for those types of progressive policies than what we've had in the last four years. We've been on the defense the whole time, and it's been exhausting, unpredictable, nonsensical, and I think we're going to avoid some of that, is my hope.
Will there be any negative with Biden?
From the negative side, the question comes down to, will there be corporate tax increases? Will the union part of the Democratic Party put a lot of pressure on a Biden administration to do more of the things Trump was doing? What will the relationship with China be, given there's been bipartisan concern about our relationship with China?
All those things will be on the table. I think it'll be some time before we know the posture the president will take in each of these areas; his focus is going to be on COVID. I think the greatest stimulus to our economy is to get the vaccine out and get people back and open up and all that kind of stuff that will help our consumers. We could probably see another stimulus package that will create more disposable income that will help our consumers, that will sell more shoes and all those will happen before any trade decisions are made. I think there'll be both good things and bad things as with any administration, but my hope is predictability, which business relies on, will return to the fold over the next four years.
Did you see the Dior x Air Jordan 1s at the inauguration?
I didn't see it, but what I think is something that we've been talking about internally yesterday, was the first public fashion moment we've had in a long time where there was a public event where people were attending and they were dressed up, and they were wearing fashionable products. We just haven't had that for the last 11 months. I didn't think about it that way until we started talking about it internally. To see sneakers well-represented on the west front of the Capitol in an environment that, typically, is reserved for dress footwear and dress shoes makes me really happy.
It's just another sign of, one, an administration that is diverse in so many ways, represents a diverse group of consumers and Americans in a variety of different ways. But as a sneakerhead myself, it just goes to show you, man, we are just in an environment where no matter where you are, whether you're in your basement, working from home, or you're at the west front of the Capitol with the inauguration of the president of the United States, that sneakers are welcomed. I'm excited that those shoes were up there. My hope is it'll set a trend in years to come, we'll have more and more sneakers on the Capitol grounds and hopefully this administration can help lead that trend as well.