Leather goods companies have not been spared the fallout from U.S. President Donald Trump's administration's tariff imposition.
According to CNBC on the 25th (local time), most U.S. companies that sell leather shoes and bags have run out of inventory they stockpiled before the tariff was imposed. The products currently on store shelves are made with leather that costs more than last year, and overseas processing expense and shipping costs are also higher, it said.
The Yale Budget Institute projected that leather goods prices will remain at least about 22% higher for the next one to two years due to the impact of the tariff.
Leather has been cited as one of the causes of the U.S. trade deficit. As of 2023, the United States imported $1.37 billion worth of leather apparel, while exports were only $92.7 million. That is a 15 to 1 ratio of imports to exports. In particular, one-third of leather goods entering the United States are from China.
The problem is that even after the tariff was imposed, it is not easy to change the leather goods supply chain. According to the U.S. Leather and Hide Association, in the 1950s more than 300,000 people worked at about 1,000 tanneries in the United States, but now only about 50,000 work at a few hundred locations. This means it is difficult to increase U.S. leather production in a short period.
The number of cattle to supply leather has also decreased. The scale of cattle raising in the United States is said to be at its lowest level since the 1950s. The burden of expense such as feed costs has grown. As an alternative, there is synthetic leather using petrochemical raw materials, but it is also mainly imported from Asia and is subject to the tariff.
Leather goods retailers told CNBC they are considering further raising prices for the new year or reducing dividends and other payouts.