Shoe Giant Announces It Has Paid Approximately 2-3 Billion in "Illegal" Tariffs Without Considering Recovery Possibilities

Global footwear companies will face a tariff adjustment to 15%, effective as early as this week.

On March 4, U.S. Treasury Secretary Scott Bessent revealed this news in a media interview.

He also stated that U.S. tariff rates could revert to their previous levels within five months, no later than August.

He pointed out that the Trump administration is considering other legislation to implement new tax rates, replacing the tax rate ruled invalid by the US Supreme Court last month.

The shoe factory owner knew in advance

The tariff will increase to 15%

This price increase was not unexpected. At last week’s Coterie by Informa trade show in New York, footwear suppliers had already anticipated another price hike—it was merely a matter of time.

Steve Madden, the brand's founder and chief designer, was at the booth speaking with buyers and at one point confidently stated that he knew the tariff rate would rise to 15%.

Last week, Steven Madden Ltd. reported its fourth-quarter earnings, but the company declined to provide earnings guidance due to uncertainties surrounding recent developments in U.S. tariff policies.

On February 20, the U.S. Supreme Court ruled that President Trump's comprehensive tariff policy was illegal because he did not have the authority to implement these tariffs under the International Emergency Economic Powers Act (IEEPA).

Trump responded quickly, signing an executive order on the same day, invoking Section 122 of the 1974 Trade Act, to impose a new 10% tariff on global goods.

However, the next day he changed his tune, stating that the temporary global tariff rate would be increased to 15%.

The footwear giant has paid approximately €300 million to €400 million.

"So-called illegal" tariffs

Recently, during Adidas's fourth-quarter earnings call, CEO Bjørn Gulden stated that the company has paid approximately €300 million to €400 million (roughly RMB 2.4–3.2 billion) in so-called illegal tariffs.

He stated that the company had not considered whether this sum could be recovered and pointed out, “We all know it will be a long road to recover this money.”

He also stated that while lower tax rates (10% or 15%) compared to higher rates (19% or 20%) could provide the company with some upside potential, these factors were not reflected in the company's earnings guidance.

Although there are some mitigation measures, not all tariffs can be mitigated.

"Due to the existence of discounts, you can't offset losses through rising market prices right now. Even if you increase the price tag on the shoebox, it won't help if discounting intensifies," Guldin explained, noting that in the U.S. market, "promotions by other brands lower the actual selling price."

Last week, Wolverine Worldwide Inc. released its fourth-quarter earnings report.

CFO and Treasurer Taryn L. Miller stated on the company's conference call that the company expects "an unmitigated full-year impact from higher tariffs of approximately $60 million, which is a $50 million increase from 2025. Any tariff relief would impact the second half of the year."