The leading American shoe and accessory retailer, Steven Madden, has announced a significant shift in its manufacturing strategy, planning to reduce its production in China by nearly half within the next year. This move comes in response to the looming threat of new tariffs under a potential second term for former President Donald Trump, who has long campaigned for tougher trade policies against China.
The company’s CEO, Edward Rosenfeld, made it clear during a call with Wall Street analysts that the decision was prompted by the election results, with the company bracing for the tariffs that Trump had repeatedly promised during his campaign.
“We have been planning for a potential scenario in which we would have to move goods out of China more quickly,” Rosenfeld stated. “As of yesterday morning, we are putting that plan in motion.”
The Impact Of Trump’s Trade Policies
During his presidency, Trump sparked a global shift in manufacturing by initiating a series of tariffs on Chinese imports, which affected companies worldwide. He has signaled plans for even more drastic measures, including additional tariffs of up to 60% on Chinese goods and a potential 20% tariff on all foreign-made products. These policies have caused businesses to rethink their supply chain strategies, with many, including Steven Madden, seeking alternative manufacturing locations.
For years, Steven Madden has been diversifying its production base, establishing manufacturing plants in countries such as Cambodia, Vietnam, Brazil, and Mexico. This strategy was intended to hedge against the growing uncertainties surrounding Chinese manufacturing and to safeguard against rising tariffs.
Despite these efforts, the transition has proven challenging. As of now, over 70% of Steven Madden’s U.S. imports still come from China, underscoring the difficulties in breaking the long-standing reliance on the Chinese manufacturing ecosystem.
Challenges Of Shifting Production From China
While the move out of China is being carefully planned, the logistics involved in such a shift are complex. Bert Hofman, a former World Bank country director for China, explained that relocating production to other countries is no easy feat.
“It is hard to move out of China. Most suppliers to companies such as Madden are based in China, thus it is easy to source there. Moving to another country for production adds complexity in terms of logistics, customs, and settling into a new country for production,” Hofman said.
The Road Ahead
Steven Madden’s goal is to reduce its exposure to tariffs by shifting its manufacturing operations, with expectations that by this time next year, around 25% of the company’s business will be subject to tariffs on Chinese products. However, the broader shift is still in progress, and the complexities involved in moving manufacturing out of China remain a challenge.
Despite the pressure from tariffs, it is unlikely that these changes will lead to a mass return of production to the United States, as companies will likely seek countries that have established trade connections with China-based suppliers, rather than bringing production back to the U.S.
MUST READ | Israeli Prime Minister Orders Immediate Rescue Mission After Violent Attacks in Amsterdam
