If Americans were clamoring for higher sneaker prices, lower quality, and fewer styles to choose from, then President Trump’s tariffs would be just the ticket. That’s not what they want, of course. Voters gave Trump a second term in the White House last year in large part because they want lower prices, paychecks that stretch further, and more prosperity.
Trump hasn’t delivered that so far. The aggressive tariffs dominating his economic agenda are already raising prices, punishing stocks, and leading economists to forecast lower growth and rising unemployment. Trump says, no matter. His tariffs are necessary to bring manufacturing back to the United States and create more assembly line jobs. He describes a stock wipeout and possible recession as “medicine” that will eventually make the patient — the US economy — healthier.
Yet there are many instances in which Trump’s tariffs will raise prices while bringing virtually no jobs back to America, imposing a net loss on the US economy and American consumers. To understand why, start with the shoe rack in your closet and the sneaker collection that probably includes specialized shoes for various sports, trendy athleisure kicks, and maybe a few pairs of dress or designer sneakers that now qualify as business attire.
Americans spend about $31 billion on Nike, Adidas, Converse, and many other sneaker brands each year, more than any other footwear category. Almost all sneakers in the US market come from Asia, with Vietnam the top source, followed by China, Indonesia, and Cambodia. Producers in those nations have built huge, sophisticated supply chains allowing them to minimize costs and maximize scale, which is why consumers throughout the world can get affordable products while the companies selling the shoes make decent profits.
A customer looking at Nike shoes at a store in Hong Kong. Most of the world's sneakers are made in Vietnam, China, Indonesia and Cambodia, which are now subject to stiff Trump tariffs. (Photo by May James/SOPA Images/LightRocket via Getty Images) ·SOPA Images via Getty Images
After Trump announced his "Liberation Day" tariffs on April 2, Apollo Global Management (Yahoo Finance's parent company) estimated that imported sneakers would face a new consumption tax of at least 42%. That could change now that Trump has temporarily called off his reciprocal tariffs, which would apply to Vietnam, Indonesia, and Cambodia. At the same time, Trump has raised the tariff on Chinese imports to a whopping 145%, as his broad-based trade war increasingly becomes a showdown between China and the United States.
Whatever the tariffs, the Asian cost advantage will still be so significant that moving production to somewhere else — especially the United States — would make little economic sense. “There are only four countries in the world where you can produce sneakers at high volume,” Craig Radcliffe, Apollo’s managing director in public policy, said during a recent conference call with clients. “I don’t know what a footwear company does. You really don’t have any good options. It’s not credible to think we’re going to bring that supply chain back to the United States. Maybe we just need to buy less of those things.”
Trump seems to want all manner of manufacturing to return to the United States, as if it is ideal to build everything we consume. It isn’t. One way economists differentiate industries is by “value added,” or the enhancements that make something worth more than the raw materials that go into it. High-value-added industries include digital technology, business services, advanced manufacturing, green energy, autonomous vehicles, and other things requiring high levels of innovation and expertise. Those industries produce the strongest growth, the highest incomes for workers, and the biggest advantage against competing economies.
Smart industrial policy would focus on cultivating high value-added industries. Trump isn’t doing that. Sneakers and most clothing categories are low-value-added industries, which means there’s less financial upside for businesses and workers in the actual manufacturing of the product. Low-value-added industries are a good fit for developing economies such as Vietnam, where there are millions of workers willing to toil for relatively low pay. But in advanced economies such as the United States, business investment perpetually migrates out of “sunset” industries with low returns into “sunrise” industries likely to be dominant in the future.
“There’s no compelling argument for Americans to move back down the value-added supply chain,” said Joe Brusuelas, chief economist at consulting firm RSM. “Even if a company wanted to take that sort of risk, where are they going to get employees?” He pointed out that immigrants often man low-skill assembly lines, and Trump wants less immigration, not more. The unemployment rate, meanwhile, is a low 4.2%, suggesting there are few or no surplus American workers interested in low-paying jobs making sneakers.
Actor Timothee Chalamet wears Convsere sneakers at the 2021 Met Gala in New York. Trump's tariffs will likely raise the price of such sneakers by 25% to 45%. (Photo by ANGELA WEISS/AFP via Getty Images) ·ANGELA WEISS via Getty Images
During his first term, Trump imposed limited tariffs on many goods from China, including sneakers and other types of shoes. A 2023 analysis of those tariffs by Trade Partnership Worldwide found that even with the China tariffs, which are still in place, the cost of producing in the United States would have been 3 to 4 times higher. So Americans paid the tariffs, and production stayed in China. “The burden of the tariffs on footwear imported from China has fallen primarily on U.S. companies and American families in the form of higher costs and higher prices,” the study found. “U.S. manufacturers and their workers did not benefit from any significant (if even measurable) reshoring of footwear sourcing.”
Trump’s 2025 tariffs are far beefier, as if he thinks production will return to the United States if the cost of foreign production simply goes high enough. In the sneaker business, that simply ignores economic reality.
Shoemakers such as Adidas (ADS.DE) and Under Armour (UA) have experimented with “innovation labs” in the United States that could have become broader production centers, but it didn’t pan out. “From a production perspective, people are unwilling to do these kinds of jobs,” said Matt Priest, CEO of the Footwear Distributors and Retailers of America. “Or we do it with robotics. The whole thing is ass-backwards.”
What will happen instead of an American sneaker renaissance is most sneaker production will stay in Asia, while tariffs raise costs for consumers and lower profits for producers. If the China tariffs remain far higher in China than in other Asian nations, production could shift out of China. But producers also know that Trump is mercurial and could change his mind at any time, so moving production could backfire.
Before Trump paused his reciprocal tariffs, the new tax was 46% on imports from Vietnam, 32% on Indonesian goods and 49% on Cambodian goods. Imports from those three countries now face a new 10% tariff. Nobody knows what the final tariffs will be, which means businesses can only guess.
Contrary to what Trump often says, American importers pay those customs duties to the US Treasury and usually try to pass on as much as they can to their own customers. A rule of thumb is that retail customers end up paying about half of any added tariffs through price increases, with the rest borne by producers along the supply chain.
Workers make sneakers in a sportswear factory in Jinjiang in southeast China's Fujian province Thursday, Oct. 14, 2021. (Feature China/Future Publishing via Getty Images) ·Feature China via Getty Images
“Prices will go up for sure,” said Priest. The biggest price shocks for consumers could come when the back-to-school shopping season begins over the summer and retailers have exhausted pre-tariff inventory. To cut costs, sneaker makers will probably move to cheaper components. Priest said retailers are already cutting orders in anticipation of falling demand, as shoppers face higher prices for thousands of items affected by Trump’s tariffs. That could mean less selection and possibly shortages.
Some importers, meanwhile, will face financial stress because they have to pay much higher customs duties to the US Treasury upfront but can’t recoup those costs until they sell their wholesale products to the next purchaser, which might balk at the higher prices. Those firms — American businesses — may face cash-flow problems if they can’t arrange bridge financing. And the few footwear makers that do produce in the United States, such as New Balance, now have to pay higher costs to produce domestically because of tariffs on assembly line equipment.
When Trump imposed tariffs during his first term, there was an exemption process that allowed companies to plead with the government for tariff relief if the new taxes were too damaging to their business. The government approved about one-third of those requests.
But Trump now seems determined to shut that relief valve. “We’ve been told there won’t be any exclusion process for any product,” Nate Herman, senior vice president for policy at the American Apparel and Footwear Association, told Yahoo Finance. “These additional costs are going to be passed on.” Before Trump paused the reciprocal tariffs, his group estimated price hikes for sneakers at the retail level would range from 25% to 45%, with little to no sneaker manufacturing moving back to the United States.
What could stop Trump’s war on imported sneakers and thousands of other products? Some business groups are bringing legal challenges, claiming that Trump lacks the authority to impose such sweeping tariffs. But that will come down to a Supreme Court generally favorable to Trump’s autocratic governing style. Some congressional Republicans are grumbling, but there’s essentially no chance of legislation that would remove Trump’s tariff authority with enough votes to override a presidential veto.
The fate of Trump’s trade war may ultimately depend on how voters react. “There is going to be pushback and it’s going to be significant,” Herman said. “I just don’t think it will happen anytime soon. A lot of the damage will have to happen first.” Sneakerheads, you're on notice.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
