The Kicks You Wear, Vol. 415 — Talking tariffs with Matt Priest
Today we talk to Matt Priest, the president and CEO of the Footwear Distributors and Retailers of America, about the impact of Trump's tariffs on the industry.
Good morning, folks! Welcome back to the Kicks You Wear. Thanks for rocking with me today. Appreciate you giving me a bit of your time.
Almost faltered this week, gang. My “I ain’t buying nothing” April challenge almost ended this week. More on that later. We’ve got a lot to get into today.
Alright. Let’s get it.
The massive tariffs proposed by Donald Trump last week officially went into effect at midnight on Wednesday morning. By Wednesday afternoon, Trump backed off.
The president announced a tariff “pause.” He pulled back — not fully, but quite a bit. There’s a blanket 10 percent tariff across the board for the United States’ trade partners. … Except for China, which has a 145 percent tariff from the U.S. and is retaliating with an 84 percent tariff on U.S. goods coming into the country.
This tariff war has crashed the stock market twice over now after a brief bounce back following Wednesday’s announcement. The market is dipping again despite the paus announcement.
Why? Because everything is unstable. No one really knows what’s going on or which direction the wind will blow next with this administration.
To grasp all this chaos, I reached out to Matt Priest, the president of the Footwear Retailers and Distributors of America.
Below is our conversation. I hope you find it helpful.
Marketplace whiplash
Sykes: The president’s change here is a huge shift from this time last week. Will it be business as usual for the footwear industry or is this still panic-inducing?
Matt Preist: That depends on who you ask. If you look at the volume of shoes sold in the U.S., 56 percent come from China, so it’s still our top supplier. When I joined [FDRA] 16 years ago, it was at 88 percent. We’ve come down from that high in 2009.
With that being said, if you’re 100 percent using China, you’re probably serving a working-class member of our economy and our society. You’re selling into mass retail. So you’re still highly concerned. Profitability is going to be gobbled up with the added cost the American government is charging you to bring in product.
If you’re an athletic brand in particular — the brands that we know and love — then there’s a bit of a sigh of relief. A pair of sneakers out of Vietnam, prior to this, was 20 percent [tariff rate]. After last night, it became 66 percent. Now, it’s 30 percent. So it’s still up from where you were, but down from what the threat was.
Sykes: Is that a positive?
Priest: The more positive angle to the pause is it does give the Trump administration time to try and negotiate all these deals. There’s not enough people and personnel to work through 75 trade agreements under pressure like that.
The 90-day window opens up a little bit of space and allows his team to engage. I think Vietnam is well-placed to be part of those discussions. I think that’s why there’s a positive aspect about this. But, by no means are we out of the woods yet.
Sykes: Is the volatility here in decision-making something the industry should be concerned about? The new window does give the administration time to negotiate. But then, wouldn’t the question be, “Why wasn’t this the strategy in the first place?”
Priest: Business really loves good news. Business doesn’t like bad news. Business hates instability. You can plan for the first two — you can’t plan for the third. I think that’s the environment we’ve found ourselves in.
We’re talking about billions of dollars in added cost moving in one direction to the next. I had my team pull the numbers. The tariffs the U.S. government placed on footwear in 2024 was $3.4 billion. If the action that went into effect last night were to continue all year long, it’d be a $10.2 billion cost to our importers, which would inevitably flow to the consumer.
You’ve got to be able to plan for those types of whirlwind moves. You had a week to prepare to add billions of dollars in costs to your cost structure. That is mind-numbingly frustrating for just about every company I talk to. You feel relief for this 90-day pause and all eyes will be on USTR and the White House for the coming three months. But, at the same time, beyond that, what’s going to happen?
This is Lucy, Charlie Brown and the football. The industry is Charlie Brown. Do I run down the field and try to kick this ball one more time?
“We’ve done this five or six times in our nation’s 250-year history.
It never works. Ever.”
Sykes: The goal the administration says it envisions is to bring back manufacturing to the U.S. across industries. From a footwear perspective, how realistic is that?
Priest: I’m always put in this position where I’m asked to choose between domestic production or imports, but it’s way more complicated than that. For us, it’s not a zero-sum game.
We bring in 2 billion to 2.5 billion pairs of shoes every year for 340 million people. That’s about 7.5 pairs of shoes for people every year. The thought process is do we have the capacity from the American workforce to make that many shoes and meet that demand? The answer is no. So, where do we go from there?
There are a number of companies that do make here and they do it well. But the dirty little secret with these tariff actions is that all these tariffs apply to materials, components and machinery needed to produce here in the states. This misguided view from the White House — particularly from some of the president’s advisors — that if you’re not fully integrated and fully making a product with the full spectrum of manufacturing processes here [in the United States], then you’re not making product here.
If that’s the mentality, it’s a very strict rule of thumb to what’s manufacturing and what’s not.
Sykes: Are there frustrations about that part from the companies you all work with? There seems to be a misunderstanding of what it takes to make a product in the U.S.
Priest: There has been a frustration. It’s centered around the administration’s shotgun approach to something you need surgical strategy around.
I suspect, in their heart of hearts, they don’t want to tax inputs that go into production. But they’re attacking everyone in one fell swoop. They were trying to do something very complicated in a very broad way that would have tons and tons and tons of unintended consequences.
That’s what happens when you create centralized control over an economy within one office within our government. It creates these unintended consequences. A lot of these advisors are theorists, but have they been in the trenches of placing an order, meeting payroll, or finding a new source for an input that’s now too expensive because of a tariff? The answer to that is no. That’s where the disconnect is.
Sykes: What’s the most sensible solution here? People generally seem to think the idea of bringing more manufacturing to the U.S. is a good idea. How do you do that in a way that makes sense?
Priest: Well, first, we already make more now domestically than we’ve ever made before. We export those things. We’re one of the world’s largest exporters. People look at shuttered factories in the auto sector and point to trade. A lot of those factories shut down and moved to the south of the U.S. There’s interstate trade that’s happening in our country that’s driven by right-to-work laws. There’s a lot more nuance to this conversation than the politicians will tell you.
For us to encourage the opportunity for domestic production, it’s about incentives that encourage that kind of thing. Investing in research and development. A lot of that is being stripped out now because of DOGE efforts.
I’m thinking about innovation. Thinking about robotics. Lowering tariffs on everything — or inputs, at least — so you can create a lot of flow into this country that will allow production more vigorously.
Ironically, when you throw up barriers, you drive down your GDP, you raise costs, you raise prices for consumers and they stop purchasing, which funds a lot of this. And that’s a challenge to encourage continued growth in any sector of our economy — particularly manufacturing.
We’ve done this five or six times in our nation’s 250-year history. It never works. Ever.
How much does a sneaker cost?
Menswear writer Derek Guy shared a thread on X this week that showed just how much the proposed tariffs can shift prices in a $100 pair of sneakers.
Big shoutout to the homie,
, for pointing this out to me. Shoutout to Nice Kicks for sharing it via Instagram.
It’s a deep dive into the process that’s well worth your time.
I almost bought shoes this week
I was tempted, folks. I’m not ashamed to admit it. I mean, look at these things.
What you’re seeing: This is a surprise Nike Air Max 95 drop with New York’s Museum of Modern Art. It’s an inverse gradiet on the neon Air Max 95. This pair was inspired by a sketch by the original designer, Sergio Lozano, that just never made it into production.
Pairs sold out almost immediately. I tried. I really did. Then I thought better of it and just closed my browser. I’m proud of me. Ashamed I was tempted, but still proud!
I mean, can you blame me? These are awesome, man.
#TheKicksWeWear
LET’S GET IT!!!
First the homie Dalton got us poppin with the Nike Footscape in this woven Cowprint colorway. These are so fun!
The homie Mark kept the vibes going with the Frank Lloyd Wright 998s. These are classics, man.
The homie Matt popped out with the Yuto Horigome SBs. Ain’t gonna hold you. These are better than the OG colorway.
The homie Jess brought out these INCREDIBLE cmft AJ11s. What a pair.
Then the homie CJ brought us home with the Hellcat Hardens AND the 3SSB AE 1s. Adidas going CRAZY with the hoops joints.
I gotta match y’all’s fly, man. I’m gonna get on my job.
That’s a wrap, folks. Thanks so much for reading today. I appreciate you giving me a bit of your time.
I know the newsletter topics haven’t been as fun lately with, well, ya know. But I hope you’re taking a lot from the coverage that I’m bringing to the table here. If you’re not, I get it. And I promise we’ll get back to the fun stuff soon! But we’re going to keep covering this news as it happens. I hope you’ll follow along.
If you have any questions, comments or concerns, feel free to hit me up via email at mikedsykes@gmail.com or shoot me a message here via Substack.
Be safe, be easy, be kind. We out.
-Sykes 💯
Great newsletter today! That tariff conversation was so interesting!
This was a great piece, mate. Keep it up.