Don’t Forget the Tariffs
By Amelia Arvesen
Any outdoor brand that raised prices over the past year could have done so because of pandemic stresses, but another root cause could have been the tariffs on goods from China. One of Outdoor Industry Association’s (OIA) priorities this year is to urge the Biden administration to rethink the trade policies used to punish China for unfair business practices, such as stealing the intellectual property of U.S. businesses.
Over the last four years, OIA Government Affairs Director Rich Harper says, the hefty fines have done more to hurt many domestic businesses across numerous industries that rely on parts as well as finished products from the Asian country.
“Uncertainty really puts a damper on innovation,” Harper says.
As a brief recap, the Trump administration imposed four rounds of tariffs. Most outdoor products, already facing high duties, fell under the third and fourth rounds that raised fines to 10 and then 25%. Some brands looked to diversify their supply chain, while others stuck it out by internally absorbing the additional costs and/or passing them down to customers through price increases. The tariffs have cost consumers at least $56 billion since the trade war began, according to a tracker by Americans for Free Trade. And OIA’s latest report, in November 2019, measured the value of outdoor products impacted at $4.1 billion.
BOCO Gear was one of the companies hit by two rounds of tariffs—the first was 10%; the second was 15%, for a total of 25%. CEO Kay Martin says the company held off raising prices until the second wallop. A BOCO hat that used to be $25 is now $30. But it was most important to her to maintain the trusting relationship with the factory they’ve been using for nine years and now only does business with them. She felt that it wasn’t moral to abandon the working relationship just to seek out a cheaper price in another country, which might have a whole host of other issues. “We just didn’t feel like chasing this penny,” Martin says.
Now that customers are more used to the $30 price tag on hats—some competitors reached $35—Martin says she doubts prices will fall back if tariffs adjust. Regardless, she’ll continue to stay involved, and she’s hoping a larger hat manufacturer will add its voice to the lobbying efforts for the greater good of the industry. “We’re trying, as an industry, to bring in more people and be more inclusive, and we’re making it more exclusive with these types of things that hit us,” she says.
Because the tariffs remain, OIA is planning to press the new administration to develop a new exclusion process for companies to make their cases. One of the industry’s talking points has been the fact that many items cannot be made at all elsewhere or in the same quality as they are in China. “They couldn’t just pick up a supply chain and move it within days or weeks,” Harper says.
Harper also has two other pieces of trade legislation on his radar. The Generalized System of Preferences (GSP), which promotes economic development by eliminating duties on thousands of products imported from designated countries and territories, expired at the end of 2020. Renewal is expected, but, nonetheless, it’s a priority of OIA. The GSP was last renewed in March 2018.
The Miscellaneous Tariff Bills also relate the industry because they would provide duty relief to manufacturers in various categories, including active footwear. In some cases, duties are completely suspended, and in other cases, they’re reduced.
The collective impact of these tariffs on the outdoor industry is worth billions, and OIA, member companies, and other outdoor brands are eager to remind the Biden administration of the immense and detrimental impact, especially as they dig out of a mountain of other hardships.
“There are so many other issues that members are facing, obviously responding to the pandemic,” Harper says. “The members paying tariffs certainly haven’t forgotten.”
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