Things might get crazy as far as pricing goes. Photo: Carolyn Christine
President Trump’s trade war has discombobulated importers and exporters worldwide. In a world interconnected by cross-continental supply chains, nearly every industry has felt the impacts to some extent – and the surf industry is no exception.
According to Vipe Desai, the Executive Director of the Surf Industry Members Association (SIMA), Trump’s erratic use of tariffs is already being strongly felt.
“It’s the uncertainty of tariffs – when they’re going to happen, how much they’re going to be, and the (inability) to plan for them when they happen overnight,” said Desai. “That’s when there’s significant disruption to the industry. And we’re just a small part of the larger scope. The outdoor and winter industries will get hammered because of the way these tariffs are being rolled out and not planned very well.”
“When one day there’s a notice that there’s going to be 10 percent tariffs immediately, and the brands already have millions of dollars of goods en route on a ship, that causes a lot of problems and disruptions across the board for brands, retailers, and the consumer in every category,” added Desai.
The Trump Administration has been updating its tariff plan on a near-daily basis. Trump first levied 10 percent tariffs on China, then 25 percent on Mexico and Canada, then an additional 10 percent on China, and then he partially suspended those on Mexico and Canada. Desai says that the majority of surf industry players have supply chains that pass through these countries – mostly from China, but Mexico and Canada are also involved to a lesser extent.
SIMA convenes once per month to discuss the state of the industry among key figures from companies such as Vissla, Finisterre, the World Surf League, Firewire, and Outerknown, among others. Tariffs were a key talking point during the last call on March 4.
As an example of a product category being hit hard, according to the New York Times, 95 percent of shoes sold in the United States are imported, with half of those imports coming from China. Desai points to boardshorts and socks as two other clear examples.
“To give you an idea, the duty and tariffs on boardshorts are hovering around 57 percent,” explained Desai. “The duty and tariffs on socks went from eight percent to 35 percent. (The tariffs) are having immediate ramifications, not hypotheticals. It’s not a couple months down the line, or the end of the year, this is happening in real time.”
The new playing field leaves brands with three options: Absorb the added costs, offset the increased costs by cutting expenses in other areas such as labor, utilities, rent, etc., or pass the costs onto consumers, which Desai says is where most brands are headed.
President Trump asserts the tariffs are a tool to bring manufacturing back to the U.S. However, there is no expert consensus that his goal is realistic and, even if it were, data indicates that it would take time.
“The problem is that the industrial sector has moved overseas because consumers and companies here in America have an addiction to low wages, cheap products, and high profits,” said Desai. “That combination makes it very difficult to manufacture here in the U.S. from a technical perspective.”
“(For example), with some garments, the way they are made requires a certain type of factory,” added Desai. “They need certain types of infrastructure, needles, and workforce, things that other countries have invested billions of dollars in over the course of decades. So it would mean an enormous shift of how we bring manufacturing back here to the U.S. It would disrupt labor, the price of products, and the percentage of profits.”
However, Desai acknowledges that it’s not impossible to bring some of that manufacturing back to the U.S. He points to t-shirt printing and embroidery as manufacturing that is already done to a smaller extent in the U.S., and could be scaled with time.
“Some things could (come back to the U.S.) but I think it’s going to take time,” said Desai. “I think every brand is going to be open to it, saying, ‘Hey, what items can we produce here in the U.S., in an efficient, timely manner, and with quality?’ But there’s a lot of different factors that are out of the hands of the brands in our industry. They sell the wetsuits, they sell the boardshorts. But nobody has their own factory to make all this stuff. They use other factories, and it’s not uncommon for factories to make products for hundreds of other brands.”
Although SIMA includes competing brands, its members share a common goal of supporting the industry. Desai describes the meetings as a mix of a think tank and therapy session, where they collaborate to tackle industry wide challenges. It’s that group approach that Desai stresses will be crucial to weathering the challenges presented by the trade war.
“The last thing we want is to have a discretionary recession in our industry where the price of boardshorts, wetsuits, and other products that people rely upon go up in such incremental increases that it discourages them to surf,” concluded Desai. “That’s going to take brands and retailers working closely together, accepting that there will be price increases and (seeing) how that gets managed collectively.”
