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    HomeFashionShoe Firms Producing in Mexico Get 90-Day Tariff Extension

    Shoe Firms Producing in Mexico Get 90-Day Tariff Extension

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    As the clock ticks down to the 12:01 Aug. 1 deadline, shoe firms that produce in Mexico get a last-minute reprieve — but only for another 90 days.

    U.S. President Donald Trump had threatened to blanket all Mexican imports with a 30 percent tariff rate if a deal wasn’t reached by Friday.

    Trump has been pushing America’s southern neighbor to address issues over drug trafficking, cross-border crime and illegal immigration. He decided to grant a 90-day pause following what the president described as a “very successful” telephone call with Mexican President Claudia Sheinbaum, per a Truth Social post. The post added that the trade negotiations with Mexico are different than those with other countries because of the complexities connected to the U.S.-Mexico border. It also noted that Mexico agreed to terminate its “Non Tariff Trade Barriers,” but provided no further details.

    That new temporary 25 percent tariff extension ends on Oct. 31. That’s long enough to get fall and winter shoes and boots into place for the holiday selling period.

    brands that will get some benefit include Steven Madden Inc. and Crocs, both of which said in earnings calls that they moved some production out of China to other countries, including Mexico.

    Footwear companies were already moving production outside of China during Trump’s first term in office when he raised tariffs on China imports in 2019. That opened the door to new production hubs, namely Vietnam and Cambodia. India and Thailand also have a growing shoe manufacturing base, as well as Brazil and Mexico.

    But companies such as Kane Footwear, which produces in Brazil, will see a 50 percent spike in the duty levy. Trump signed the order on Wednesday. Other made-in-Brazil brands include São Paulo-based Havaianas owner Alpargatas S.A., the Arezzo & Co. and Grupo Soma conglomerate that owns brands that include Alexandre Birman, Schutz, Arezzo, and Farm Rio, as well as sandal giant Grendene Global Brands, which owns Melissa, Rider and Grendha, among others. The Walking Co., which includes its Abeo brand, counts Brazil as a manufacturing hub, as does women’s footwear firm Larroudé, which opened a pair of Brazilian factories in the last two years. Brazil is now the fifth largest producer of footwear in the world and the largest in the West. The sector produces more than 800 million pairs annually, and exports about 15 percent.

    Madden also shifted some production to Brazil. That means any benefit from the 90-day pause on Mexican imports will be overshadowed by a 50 percent tariff hike on Brazilian imports. Both Mexico and Brazil were considered safe because neither country received reciprocal tariffs on April 2, which gave the impression that they represented less production risk even if the shift to manufacturing south of the U.S. border meant deliveries had to be pushed out by 30 to 45 days. Trump disclosed his global reciprocal tariff plan on April 2.

    The changing landscape also shows how difficult it is for shoe firms to weigh the pros and cons of production locales. BTIG’s Janine Stichter said footwear companies, like Madden, were “prudent” to move out of China when faced with a 145 percent tariff threat. But Madden’s CEO Edward Rosenfeld said on Wednesday that the temporary reduction in China tariffs to 30 percent through Aug. 12 saw the company move some production back to the Asian country. It did so in cases where it would be difficult to ensure on-time delivery, product quality and/or reasonable pricing in an alternative country. The company posted a net loss for the second quarter, which Rosenfeld attributed in part to canceled wholesale orders and shipment delays, as well as pushed deliveries to later periods.

    Separately, Trump also hit India with a 25 percent tariff on imports. Meanwhile, with no firm details in place and just disclosures regarding parameters for continued trade negotiations, footwear firms will need to stay nimble to quickly adjust their sourcing strategies amid tariff headwinds. Executives from Adidas and Madden on their second quarter earnings conference calls on Thursday noted that uncertainties remain, with near-term pressures continuing into the third quarter.



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