Forget tariffs — this U.S. shoe company vows not to hike its prices

Trump: U.S. volition not little tariffs connected China

Trump says U.S. volition not little tariffs connected China to kick-start commercialized talks 03:27

Steep caller U.S. tariffs connected imports are rattling businesses ample and small, with galore companies readying to sorb the higher costs by hiking prices for customers. Not footwear institution Keen.

Although the midsize company, based successful Portland, Oregon, operates successful an manufacture that is highly exposed to tariffs, Keen tells customers that it volition support prices dependable this twelvemonth nary substance however tariffs impact its costs. That's nary idle pledge calculated to sphere marketplace stock — Keen has been steadily retooling the concern for years to support itself from abrupt shifts successful planetary commercialized and the vagaries of geopolitics. 

"We person been preparing for this for implicit a decade. Early on, we saw the risks of being overdependent connected immoderate 1 country, truthful we made the determination to diversify our proviso concatenation good beyond China," Chief Operating Officer Hari Perumal told CBS MoneyWatch. 

The 22-year-old company, with 650 U.S. employees and owned by plan and marque absorption institution Fuerst Group, has worked to trim its dependance connected Chinese manufacturing portion expanding its U.S. beingness and diversifying its proviso chains.

President Trump's tariffs are upending retailer proviso chains, forcing them to devise workarounds. That tin mean moving manufacturing to different overseas state with little tariffs oregon investing successful U.S.-based production. For tiny businesses, tariff-driven uncertainty can mean shutting operations down altogether erstwhile the financials nary longer adhd up.

Shoe and covering prices could soar

Footwear companies are peculiarly susceptible to the upheaval caused by President Trump's commercialized warfare fixed their reliance connected China, wherever 36%, oregon $9.8 billion's worth, of imported footwear sold successful the U.S. is made, according to a TD Cowen investigation of planetary commercialized data. 

For that reason, tariffs are expected to deed footwear and apparel companies hard, and that interaction volition beryllium felt by American consumers arsenic well, according to Jason Judd, a planetary supply-chain adept and enforcement manager of Cornell University's Global Labor Institute.

In 2023, U.S. households spent an mean of astir $1,700 per twelvemonth connected footwear and apparel, Judd said. He expects that fig to surge 70% successful the abbreviated term, to $2,800 per family, due to the fact that of tariff-related terms hikes. In the coming years, meanwhile, consumers are inactive apt to beryllium paying much for footwear and covering due to the fact that of higher planetary tariffs.

"That symptom volition lessen arsenic presumption and sourcing patterns change, but the longer-term costs per household volition inactive beryllium astir a $425 summation per year."

The abrupt alteration successful tariff policies is already rippling crossed the industry. German sportswear elephantine Adidas last month warned U.S. customers that "cost increases owed to higher tariffs volition yet origin terms increases." And retailers crossed assorted industries, from apparel to food, person started passing immoderate of the outgo from higher import taxes to consumers successful the signifier of "tariff surcharges."

"We saw the penning connected the wall"

Today, Keen operates plants successful Shepherdsville, Kentucky; the Dominican Republic; and Thailand, wherever it handles a 3rd of the company's planetary production. It besides contracts with manufacturing partners successful Cambodia, India and Vietnam, each of which are taxable to impending caller U.S. levies. Cambodia faces a country-specific tariff complaint of 49%, portion Vietnam and India look levies of 47% and 27%, respectively. 

"We bash person 10% vulnerability successful those countries, but the 10% tariff we're dealing with is importantly little than what different companies are facing connected products that would travel retired of China," Perumal told CBS MoneyWatch.

Back successful 2015, executives astatine Keen were already taking enactment of rising labour costs successful China. Today, the company's wide proviso concatenation helps it dispersed costs crossed the company, its manufacturing partners and their suppliers, helium said.

"We are making a conscious determination not to summation prices, but that's shared by our partners," helium said. "They stock immoderate of the costs with us, past they spell to the institution they bargain materials from, and those tier-one suppliers stock immoderate of the costs arsenic well."