firms got a holiday gift from the Trump administration in the form of a one-year hold on any additional China tariffs on imports to the U.S.
An executive order on the White House site disclosed further details on the modification of reciprocal tariff rates in the new trade arrangement between the U.S. and China. Much of the talk when the arrangement was first disclosed on Oct. 30 was centered on a one-year time period in connection with rare earth minerals. The presidential action in the new order clarified that the U.S. will suspend “heightened reciprocal tariffs” on imports from China through 12:01 a.m ET on Nov. 10, 2026.
The caveat in the executive order is that the U.S. will monitor conditions to ensure that China adheres to the trade terms, and if not, Trump “may modify this order as necessary.”
Before the new trade arrangement, the tariff threat on China imports was 100 percent starting on Nov. 1. The new trade deal has tariffs on China shoe imports in the range of 20 percent to 27 percent, depending on classification and not including existing duties. The new rate range is better than what it was as it is both lower than the temporary reciprocal rate of 30 percent and even lower than the original threat of a 55 percent duty rate.
For the footwear industry, the new trade deal does present some form of a guarantee for most of 2026.
“We welcome the pause on further tariff escalation, and are optimistic it will bring some much-needed clarity for companies planning for 2026 and beyond,” said Steve Lamar, president and CEO of the American Apparel & Footwear Association (AAFA). “Still, true long-term stability demands durable trade agreements and renewed commitments with all of our key sourcing partners, especially while the fashion industry continues to bear disproportionately high MFN (Most Favored Nation) and Section 301 tariffs.”
“In spite of the fact that tariffs on footwear from China remain elevated — even with the reduction in the fentanyl tariff — the White House has provided some much-needed sourcing certainty with China for the foreseeable future. I’ve spoken to dozens of shoe companies since last week, and all have expressed relief that we might actually experience some policy stability out of Washington for at least the next year,” Matt Priest, president and CEO of the Footwear Distributors and Retailers of America (FDRA), said.
Priest noted that for footwear, the U.S. has now established equal tariff rates across “most of the countries we source from in Asia. All things considered, our members will be able to determine their best sourcing strategies based more on normal market realities and less on shifting or inconsistent tariff policy.”
Tariff uncertainties in 2025 presented one big operating headache for shoe companies. And the complexities of footwear production and working with upstream suppliers meant that for some firms it was just easier to stay put.
“The reduction in China tariffs to 20 percent is certainly better than 30 percent, but still too high. We pay the tariffs at the time our shoes are imported and the now 20 percent tariffs put considerable pressure on our cash flow,” said Rick Muskat, president and chief operating officer of Deer Stags. “In addition, we have not been able to establish sufficient price increases with our retail partners to offset the hit to our margins. So, while better…still terrible.”
Muskat said that currently, with the tariff regime in place, “we see no reason to move production from China, which isn’t easy to do.”
For some who moved out of China, moving back could be an option in some instances, said one footwear expert, citing extra costs and timing due to logistics and requirements to avoid transhipping penalties for production outside of China.
Steve Madden Ltd. is one example of a firm that moved a large portion of production out of China in anticipation of higher rates. But CEO Edward Rosenfeld told Wall Street analysts in August that the company returned some work for fall back to China after considering the ability to ensure on-time delivery, product quality and/or unreasonable pricing in an alternative country.
And in Wednesday’s conference call to investors after posting third quarter results, Rosenfeld expressed caution in connection to where the firm chooses to source, even though the reduction in the tariff rate on China is a welcome development. While the math might indicate a move back to China is a good idea, he was advocating for the need to remain flexible.
“I think that we’re going to be careful about that. We want to remain diversified. We don’t want to get back into a position where we have 70-plus percent of our sourcing coming from one country,” Rosenfeld told investors. “And so we’re going to continue to try to be diversified, but it obviously does give us greater flexibility to go back to China, where we need to get the right deliveries and quality, pricing, speed, et cetera.”
Other companies are continuing with their existing supply chain strategies, or looking at further diversification.
“Our category definitely over indexed when it comes to reliance on China. However, we do source across and produce in several other countries now, primarily across southeast Asia, but we’re continuing to explore and unlock other areas,” said Jack Gindi, CEO of Ground Up International, a kids’ footwear firm that creates shoes under license for many entertainment and consumer brands. “Today, I would say we have a much stronger and diversified supply chain than 18 months ago. While tariffs have had impacts, they pushed us to think more strategically about country of origin diversity, sourcing and design execution to leverage best cost/quality.” He said the one-year hold on China tariffs will give his firm additional time to diversify further.
Crocs Inc. sources 13 percent of its mix from China. The bulk, at 47 percent, is from Vietnam. CEO Andrew Rees said in August that the company can “over the medium term mitigate” the impact from tariffs from cost savings in the supply chain, negotiations with factories and some price adjustments. When the firm posted third quarter earnings results on Oct. 30, Rees emphasized that the company has made significant investments in its supply chain over the last several years, which has resulted in efficiencies and better integration of the Crocs and Hey Dude supply chains.
“The impact on the fashion industry is one of relief — tempered with immediate short and long term strategy/sourcing decisions. China as a fashion resource [for the moment is] still quite viable for Spring 2026 through early Fall 2026 deliveries. In the short term, the uptick for China will most likely be enhanced,” said Rick Helfenbein, former chairman, president and CEO of the AAFA and now independent consultant.
Opting for flexibility in one’s sourcing and supply chain strategies may be the best move if there is ability to do that since no one really knows what tomorrow may bring in terms of trade policy. And there could be another glitch on the near-term horizon.
Coming up will be the Supreme Court decision on whether Trump’s tariffs will remain in place. Former Commerce Secretary Wilbur Ross believes the Supreme Court won’t “knock out the whole thing.” In an interview with Ross, he explained that undoing the tariff would create a “huge confusion in a whole lot of directions.” One involves calculating what costs have been passed along and to whom. The other is having the Supreme Court undoing the bilateral agreements that the U.S. has made with other countries.
According to Helfenbein, if refunds are granted, “There could be a mad scramble to sort out the refunds — with potential disagreements as to who gets what — while, at the same time, new sourcing decisions may immediately have to be made to counter any new tariffs that could be administered under different strategies.” (Tariffs now are administered under the International Emergency Economic Powers Act, or IEEPA)
