New Balance Planned To Open a New Sneaker Factory in America. Trump's Tariffs Might Prevent That From Happening.
Trade is necessary, even for American companies making American products in American factories.
In many ways, New Balance is exactly the type of company that should be winning under President Donald Trump's trade policies.
The Massachusetts-based sneaker company, unlike most of its competitors, makes a lot of shoes in the United States. There are five New Balance factories in America, all in Maine or Massachusetts, and last year they churned out more than 4 million pairs of shoes while employing more than 7,000 American workers, according to the company's website. The president says his tariffs on Chinese goods are intended to force more companies to do manufacturing in the United States, and New Balance seems to be well ahead of that curve.
Indeed, New Balance isn't just a beneficiary of Trump's attempt to reorder global trade, but an active supporter of his efforts. Jim Davis, who owns the company, gave $400,000 to a pro-Trump political action committee in 2016. Like Trump, New Balance executives disdained the Obama-era Trans-Pacific Partnership trade deal. "The Obama administration turned a deaf ear to us and frankly, with President-elect Trump, we feel things are going to move in the right direction," Matt Lebretton, New Balance's vice president for public affairs said in 2016.
(As you may recall, some triggered customers responded to those comments by trying to set fire to their New Balance shoes. Others tried, unsuccessfully, to flush them down the toilet. Meanwhile, neo-Nazis declared New Balance to be "the official shoes of white people." The entire episode says something quite disturbing about how politics have infected every aspect of American life.)
Three years later, it turns out that Trump's "America First" trade policies are likely to prevent New Balance from expanding its highly touted "Made In The USA" operations. The company planned to open a sixth American factory later this year, but proposed new tariffs on China could prevent New Balance from being able to import the necessary shoe-making equipment.
"The proposed…tariffs will risk our company's overall financial heath, which will in turn limit our ability to maintain and reinvest in our American factories," New Balance wrote in a letter to the Office of the U.S. Trade Representative, CNN reported on Monday.
The office is currently collecting public comments ahead of public hearings scheduled for next week on Trump's plan to add more tariffs on Chinese imports. Representatives from more than 300 businesses are expected to testify, mostly in opposition to the tariffs—as was the case last summer during similar hearings on the first rounds of tariffs.
New Balance's newfound opposition to Trump's trade policies is likely to attract more attention than other stories of American companies being harmed by the new import taxes due to the history between the company and the president.
But the underlying issue is the same for New Balance and hundreds of other companies that employ Americans to produce American-made goods. Trade is essential to building a successful American business in an age of global supply chains. Whether a company is making shoes, building cars, or distilling whiskey, erecting barriers to trade is not helping anyone win. The only real question is who will suffer the worse losses.
