What the sneaker industry says about how effective Trump's proposed trade policies will be

Nike SneakerGetty/Pablo CuadraA pair of Nike shoes.

If one seeks a preview of the effects that President-elect Donald Trump’s attitude towards trade may have, one needs only look at the sneaker industry.

The sneaker industry is already impacted by the high tariffs that Trump says would be a signature of his goal to re-shore companies and bring manufacturing back to the US.

Tariffs for athletic sneakers are much higher than for comparable products. The average tariff the US government charges on imported athletic shoes is 20%, a spokesperson for the US Department of Commerce told Quartz.

A leather dress shoe carries a charge of about 8%, while the trade-weighted average for footwear hovers around 10%. The average tariff for all imported products is a relatively low 1.5%.

The high tariffs on shoes are due to hold-over policies that date back to the Great Depression. Successful lobbying by plastic and rubber corporations — starting in the 1960s and leading up to today — worked to keep them in place, according to the Wall Street Journal. These protectionist policies were meant to safeguard the American worker from companies outsourcing jobs across the Pacific Ocean.

By any measure, it hasn’t worked. Nearly all athletic footwear sold in the US — a staggering 98.4%, according to the American Apparel and Footwear Association — are manufactured overseas (mainly in China and Vietnam), despite high import tariffs. Because making footwear is so labour-intensive, it continues to make sense for US companies to import shoes made elsewhere.

Trump has suggested that his trade policies will include much higher tariffs on goods imported from China — all the way up to 45%, much higher than even the rates currently charged. It remains to be seen whether an even higher import cost would cause companies to reconsider their manufacturing and import strategy, or if the additional cost would just be passed on to the consumer like it is currently.

Another possible case is the re-shoring of American manufacturing, which would raise costs due to increased labour scrutiny and higher wages.

A third possible scenario — and what experts believe is the most likely in the long term — is automation. Sneaker manufacturing may be coming back to the US, but many of the low-skilled jobs will disappear as automation takes over for that work. The idea is already being pioneered by Adidas, which will soon be opening its first automated “Speedfactory” in Atlanta, with plans for more.

NOW WATCH: Sneaker fanatics are driving a massive $1 billion resale market

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.