Paul Farago, president of footwear brands Jack Erwin and Ace Marks, has been navigating the shifting tariff backdrop firsthand for years.

More importantly, he’s already seeing a structural change in footwear production, moving from central concentration to a new normal with distributed manufacturing networks and regional specialization.

“I don’t believe there’s a single “new China” emerging. Rather, we’re moving toward a more regionalized production model where brands maintain manufacturing relationships across multiple countries to balance costs, capabilities, and risk. This diversification strategy is more resilient but requires more sophisticated supply chain management,” he said.

For more on the challenges and opportunities in global markets from Brazil and Mexico to Italy and Portugal, read on.

Footwear News: The tariff plan for China imports to the U.S. could continue at the temporary 30 percent rate instead of the planned 55 percent for another 90 days. Will companies that have moved production out of China rethink that strategy?

Paul Farago: The reduction from 55 percent to 30 percent on China tariffs is somewhat of a relief, but I don’t expect to see wholesale reversals of production decisions already made. Companies that have successfully diversified their manufacturing — particularly those with established relationships in Italy, Portugal, Mexico and Brazil — have discovered benefits beyond just tariff avoidance: reduced lead times, smaller minimum orders and greater supply chain resilience.

However, this tariff adjustment will likely slow the pace of new production shifts. For firms still evaluating moves away from China, a 30 percent tariff significantly changes the economic calculus, especially for mass market products where China’s volume capacity and component ecosystem remain unmatched. The lesson learned from this experience is not to have all of your eggs in one basket, and I don’t think it will soon be forgotten. 

For countries like Vietnam, this could actually represent positive news. As flight from China loses its urgency, there’s less pressure to create new manufacturing capacity in alternative locations. This could lead to more stable, sustainable growth in Vietnam’s footwear sector rather than the boom-bust cycles we’ve seen in other countries when brands rush in during crises only to exit when conditions normalize.

FN: What lessons were learned during COVID-19 that can be applied during this period?

PF: COVID revealed that efficiency and resilience are often competing priorities in supply chains. The footwear brands that weathered the pandemic best weren’t necessarily those with the lowest production costs, but those with diversified manufacturing relationships.

The most significant lesson wasn’t just about geographical diversification — it was about relationship depth. Brands with transactional supplier relationships faced the worst disruptions, while those who had invested in partnership-based manufacturing relationships received preferential treatment when capacity was constrained.

The footwear industry now recognizes that concentrating production entirely in one region creates substantial vulnerability. However, the solution isn’t simply relocating — it’s developing flexible networks across multiple countries while acknowledging that each offers different capabilities and capacity constraints.

FN: Given the specialized machinery involved, footwear manufacturing isn’t an easy category where one can pick up stakes and shift production elsewhere. Do you foresee China still maintaining its position as a footwear manufacturing hub?

PF: China will remain indispensable for mass market footwear production due to its unmatched capacity and comprehensive component ecosystem. Even manufacturers in Italy, Portugal, Mexico, and Brazil depend on China for many components, creating an interconnected global production network rather than truly independent alternatives.

What we’re witnessing isn’t China’s replacement but a more nuanced evolution where different categories find their optimal production locations. Mass market brands will continue leveraging China’s scale advantages, while creating secondary capacity in places like Vietnam and Indonesia. Mid-tier and premium brands have more geographic flexibility, and can explore alternatives with attractive quality-to-cost ratios.

The specialized machinery and infrastructure required for footwear manufacturing creates significant barriers to rapid relocation. This reality explains why, despite years of tariff pressures, we haven’t seen wholesale exodus from China — the capacity simply doesn’t exist elsewhere to absorb that volume.

FN: Amid all of the upheaval, is there more opportunity for European footwear producers?

PF: China’s dominance in mass-market footwear remains undeniable, but European manufacturing represents a fundamentally different approach rather than just a higher price point. In Italy, Portugal, and Spain, we’re seeing specialized expertise by product category — Italy excels in dress shoes and luxury sneakers, Portugal in casual and performance leather goods, and Spain in particular types of construction methods.

Portugal, for instance, has brilliantly positioned itself as a middle ground — offering much of the craftsmanship associated with Italian production but at more accessible price points. This has made Portugal particularly attractive as tariffs have increased on Chinese goods.

The real advantage these European countries offer isn’t just quality — it’s flexibility. When we produce a run at our Italian factories, the minimum order quantities (MOQs) are much lower allowing us to test a larger variety of product with less risk. Many suppliers also have skilled technicians on site that can do a lot of the heavy lifting when it comes to product development, and they do it fast. This responsiveness has become increasingly valuable as consumer preferences change more rapidly.

As for prices, at the product level, you’d be hard pressed to find China prices in a European country with comparable quality to China. However, when you factor in logistics costs, quality control requirements, MOQs, other operational factors, and of course the current tariff situation, what was once a huge pricing delta is now a much thinner spread that has to be seriously considered.

FN: You’ve said that Brazil and Mexico have been manufacturing hubs for footwear for decades. What is the factory infrastructure? What is the main hurdle?

PF: Brazil has maintained a robust domestic footwear industry due to its size and relative isolation, focused primarily on serving its internal market with some export capacity. Mexico’s proximity to the US has positioned it well for certain categories, but has also historically focused on domestic production. Both countries have very ardently protected their domestic manufacturers through the decades, which is one of the reasons that they have a footwear manufacturing infrastructure today — unlike the U.S. which used to be a footwear manufacturing hub until the Seventies.

The infrastructure in both countries varies significantly by region. Brazil has well-developed industrial clusters, particularly around Novo Hamburgo, with sophisticated technical capabilities. Mexico’s footwear industry is concentrated in León and surrounding areas.

The primary hurdles aren’t necessarily technical capacity — both countries have skilled labor pools and understand footwear construction — although younger generations are not exactly flocking to work at footwear factories. The challenges are more systemic: inconsistent material supply chains, logistics infrastructure that wasn’t designed for export-oriented manufacturing, and business environments that can be challenging for international brands to navigate. And they often prioritize domestic production over export as they see it as more stable, which often leads to delays and results in the deterioration of trust between foreign brands and local manufacturers.

FN: For shoe imports to the U.S., how realistic is the possibility for near-shoring — given the investments needed and the time required — to build out a new manufacturing infrastructure just for footwear?

PF: Near-shoring for footwear faces significant challenges but is increasingly viable for specific product categories. The economics simply don’t work for mass-market athletic footwear, which requires massive scale and specialized technical capabilities currently concentrated in Asia.

However, for certain types of leather footwear, particularly in the premium and luxury segments, near-shoring to Brazil, Mexico, Colombia and a few other countries in the Americas can be economically viable today. We’ve successfully produced dress shoes and leather casual styles in Brazil with quality comparable to our European manufacturing at competitive costs.

FN: How do you think Trump’s current trade policy might impact the thinking around footwear production in the years to come?

PF: Frustratingly, one trade policy that has not seen much change over the decades with regards to footwear is the unreasonably high duty rates that existed even before the current trade challenges.

Footwear production and the related logistics is so complex and often reliant on the good graces of multiple domestic and foreign governments that it feels like we are always dealing with some sort of a crisis either caused by nature, man, or government. Just in the last decade we’ve had to deal with currency volatility, COVID, pirates, port congestion, canal closures, haphazard testing regulations, and now tariffs just to name a few. It’s a constant battle.