The outdoor industry is fighting $200 billion in tariffs

The trade war with China could raise the cost of bikes, backpacks, knives, and other outdoor products, and also disrupt established American business models. Over the next two weeks, a parade of brands and organizations in the outdoor industry will tell the United States Trade Representative (USTR) that more than $200 billion in tariffs on imports from China will hurt consumers, employees, and ultimately, American business.

The U.S. has already imposed $34 billion in goods from China, with an additional $16 billion taking effect on Thursday, as punishment for unfair trade practices discovered in an investigation. Each time, China has responded by imposing its own tariffs on U.S. exports.

“The Administration’s motivations are understandable, but, respectfully, we must wonder if this process is beginning to spin out of control,” said Darren Dunn, chief operation officer of SOG Specialty Knives & Tools, in testimony he presented on Monday.

Another list of materials and products released in July—including backpacks and sports bags, bikes, leather gloves, wool and other fabrics, kayaks, knives, camp chairs, and hats—could face additional 10 to 25 percent tariffs. Apparel and footwear were previously spared.

This round of tariffs is the first that could directly hit the outdoor industry.

What it means

Some outdoor industry officials have said that the tariffs would likely raise prices for companies and consumers, result in job losses, sever long-lasting relationships with Chinese manufacturers, and impact how Americans experience the outdoors.

More than 350 people representing all industries are scheduled to testify this week and next Monday. Of those, Outdoor Industry Association’s Rich Harper spoke Monday. He testified that the outdoor industry generates more than $887 billion in consumer spending and 7.6 million jobs, and creates some of the most innovative, technical products designed for getting outside.

An additional 10 percent tariff will absolutely raise costs. And raising the tariff to 25 percent could put some small, medium-sized companies out of business.

Harper, international trade manager, said, “Many of the contracts outdoor companies have signed with their vendors cannot be changed. They will be forced to either absorb the costs of the higher tariff or pass it along to the consumer. Regardless, the effect will be to hamper the innovation the industry is known for and outdoor consumers demand. It will mean less money for the design, development and testing of new technologies and products.”

Dunn, of SOG, said the company’s duty costs could increase nearly $1 million—a large amount of money for them. He said knives are primarily imported and then sold in specialty stores and mass chains, such as Walmart and Home Depot. The target customers are tradesmen, contractors, farmers, construction workers, police officers, and other first responders.

“This proposed tariff will detrimentally affect these user groups,” he said. “It is a tax on the ordinary citizen.”

Dunn said he supports the president wanting to fix longstanding issues surrounding Chinese industrial policy, but he hopes the negotiations between the two governments will lead to a solution.

"Regarding the proposed tariffs on SOG’s products, we hope the Administration listens to our concerns favorably," he said. "They have said they want to avoid hurting American consumers and American small-to-medium sized businesses. SOG and its fellow American companies and our customers fit this profile exactly. As such, we are glad we had a chance to explain the situation and hope that increased tariffs on these products can be avoided."”

While outdoor companies are looking to diversify sourcing options outside of China, new manufacturers are hard to come by and said to cost more for lesser quality. And in many cases, such as travel goods and technical materials, China dominates the market.

"There is not sufficient capacity at this moment outside of China to accommodate our industry’s needs," said Tom Cove, president and CEO of the Sports & Fitness Industry Association. "Shifting manufacturing to other countries is simply not feasible in real time or at this scale.”

Snowsports Industries America, Camp Chef under Vista Outdoor, Downlite, and numerous bike brands are among hundreds scheduled to testify before the USTR in the following days.

"The products of interest to SIA are not the type of products that are the targets of the Chinese acts, policies, and practices of concern to the United States and imposition of additional duties on these products therefore would not aid the goal of China eliminating such acts, policies, and practices," wrote SIA President Nick Sargent in a letter to the USTR.

Burton, Black Diamond, KÜHL, NEMO, Vista Outdoor, and Salewa are some of the outdoor brands that have filed written comment in opposition to the tariffs, Harper said.

OIA is urging brands to submit comments here before the Sept. 5 deadline. As of Tuesday morning, there were 1,626 comments submitted to the USTR.

Will the outdoor industry be spared?

Credit:

Amelia Arvesen

www.snewsnet.com