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AGENDA SETTING: We caught up with USFMA Policy Director Karlee Popken about what we need to be on the lookout for in the fast-moving agenda in the new Congress and administration that could directly impact our industry – on taxes, tariffs, and more.
Tax season: The Republican-controlled Congress is poised to expedite comprehensive legislation that could include provisions on immigration and border security, energy, defense, and tax policy.
A primary focus will be extending tax cuts that were enacted during President Donald Trump’s first term, which are set to expire at the end of 2025. This includes individual tax rates, the expanded child tax credit, and the Section 199A Small Business Deduction.
R&D tax credit: Congress is also likely to push for the reinstatement of the annual Research and Development Tax Credit. USFMA has been active in advocating for restoring the tax credit, which is critical to many innovative businesses in the footwear supply chain.
During his campaign, Trump also laid out several other tax policy proposals that we will be closely tracking, including a reduction in the corporate tax rate on domestic production.
Trade battles: Trump has also moved ahead with his trade agenda and campaign promises to impose tariffs on foreign goods, beginning with China.
On his first day in office, he issued a presidential memorandum titled “America First Trade Policy.” This memorandum directed the Office of the United States Trade Representative (USTR) to assess unfair and unbalanced trade practices, as well as economic and trade relations with China and other economic security matters, by April 30.
He followed up with an executive order imposing a 10 percent tariff on Chinese goods and a 25 percent levy on imports from Mexico and Canada. The China tariffs went into effect on February 4, while Trump paused tariffs on Canada and Mexico pending negotiations. China has already taken retaliatory measures against certain U.S. imports.
The executive order also included a provision ending the de minimis loophole for imports from China, Canada, and Mexico that allows goods valued at $800 or less to enter the United States duty-dree and subject to minimal customs procedures.
Currently, the provision applies solely to China, where government data indicates that low-value shipments to the United States have doubled from 2014 to 2023, reaching a total of $4.7 billion.
USFMA will continue to advocate for a permanent legislative solution to closing the de minimis loophole for non-market economies and restricting the use of de minimis for import-sensitive industries like footwear.
Not so fast: The president is using his authorities in the International Emergency Economic Powers Act and the National Emergencies Act, citing the national security risks from the influx of migrants and fentanyl.
These authorities impose limitations, including the number of countries that can be targeted and their duration. To bypass such constraints, the administration may seek new authorities from Congress, which could potentially involve using the revenue to offset tax cuts.
Bring it on? Some tariffs could be good news for a resurgent American footwear industry. Even their prospect is pushing more U.S. brands to expand their domestic supply chains, as Footwear News reported in January.
“The brands just are relieved and feel like it’s great timing with tariffs and other challenges they’re having to deal with,” said Pepper Harward, Chief Executive Officer of USFMA member Okabashi Brands. “I think we’re just starting to see a new wave because of that.”
‘Made in America’: Another USFMA member, American Sole, told the publication it is also seeing a growing desire of footwear brands to support “Made in America” branding on their shoes.
“They want something with the American flag to say, ‘You know what? I have an American made product,'” said Jack Kishk, President of American Sole. HILOS, hich makes 3D-printed footwear, is also witnessing the trend. “…When it comes to the threat of tariffs,” said CEO and founder Elias Stahl, “we’ve really seen an acceleration in brands wanting to diversify their supply chain.”
Next steps: USFMA leaders and the board are evaluating the effects of the proposed tax reforms and tariffs in finalizing the association’s policy agenda for 2025. They are also identifying priorities for engaging with the new administration and congressional leadership. We are committed to making sure the Trump administration and Congress understand the impact of these changes on the domestic footwear industry.
“The United States Footwear Manufacturers Association supports efforts by the administration and Congress aimed at increasing investments in U.S. manufacturing and enhancing the resiliency and growth of U.S. supply chains,” Executive Director Bill McCann said in a public statement. “We recognize the challenges faced by U.S. manufacturers today who depend on imported components and sales of U.S.-made products in critical export markets and will continue to advocate for policies that strengthen the U.S. footwear industry.”
Go deeper: Karlee testified last year on behalf of USFMA to the USTR as part of a review of how to promote domestic supply chain resilience.
The USTR issued its final report in January, Adapting Trade Policy for Supply Chain Resilience: Responding to Today’s Global Economic Challenges, which includes six policy papers on trade and investment policy initiatives that promote supply chain resilience.
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