Steep new U.S. tariffs on imports are rattling businesses large and small, with many companies planning to absorb the higher costs by hiking prices for customers. Not footwear company Keen.
Although the midsize company, based in Portland, Oregon, operates in an industry that is highly exposed to tariffs, Keen tells customers that it will keep prices steady this year no matter how tariffs affect its costs. That's no idle pledge calculated to preserve market share — Keen has been steadily retooling the business for years to protect itself from sudden shifts in global trade and the vagaries of geopolitics.
"We have been preparing for this for over a decade. Early on, we saw the risks of being overdependent on any one country, so we made the decision to diversify our supply chain well beyond China," Chief Operating Officer Hari Perumal told CBS MoneyWatch.
The 22-year-old company, with 650 U.S. employees and owned by design and brand management company Fuerst Group, has worked to reduce its dependance on Chinese manufacturing while expanding its U.S. presence and diversifying its supply chains.
President Trump's tariffs are upending retailer supply chains, forcing them to devise workarounds. That can mean moving manufacturing to another foreign country with lower tariffs or investing in U.S.-based production. For small businesses, tariff-driven uncertainty can mean shutting operations down altogether when the financials no longer add up.
Shoe and clothing prices could soar
Footwear companies are particularly vulnerable to the upheaval caused by President Trump's trade war given their reliance on China, where 36%, or $9.8 billion's worth, of imported footwear sold in the U.S. is made, according to a TD Cowen analysis of international trade data.
For that reason, tariffs are expected to hit footwear and apparel companies hard, and that impact will be felt by American consumers as well, according to Jason Judd, a global supply-chain expert and executive director of Cornell University's Global Labor Institute.
In 2023, U.S. households spent an average of about $1,700 per year on footwear and apparel, Judd said. He expects that figure to surge 70% in the short term, to $2,800 per family, because of tariff-related price hikes. In the coming years, meanwhile, consumers are still likely to be paying more for footwear and clothing because of higher global tariffs.
"That pain will lessen as terms and sourcing patterns change, but the longer-term costs per family will still be around a $425 increase per year."