US reciprocal tariffs: An opportunity for TN in jolt to US footwear majors

President Donald Trump’s tariff decisions have triggered panic in the US footwear market, where nearly 95 per cent of products are imported, with China and Vietnam alone accounting for around 70 per cent. This could prove to be a major advantage for Tamil Nadu, South Asia’s emerging footwear hub. The state has already seen an influx of suppliers from major non-leather footwear brands like Nike, Adidas, Puma, and Reebok, driven by the China Plus One strategy.

 

According to industry experts, the higher tariffs on China and Vietnam will turn out to be most beneficial for Tamil Nadu. However, one major concern for India will be its import dependence of around 90 per cent for raw materials.

 

On Thursday at 6:15 am (India time), shares of almost all the footwear brands fell in the US market, with Nike down 13 per cent, Skechers 11 per cent, Wolverine Worldwide 6 per cent, and Under Armour around 5 per cent. In Europe, Puma and Adidas were also seeing notable declines of around 10 per cent and 11 per cent, respectively.

 

“Time has come for us to evolve into a global non-leather footwear destination as the world consumes around 85 per cent of such footwear. A lot of investments may come into India, especially in Tamil Nadu,” said N Mohan, director and chief executive officer (footwear business) of Kothari Industrial Corporation. “The raw material ecosystem is still not developed. We need more government support,” Mohan added.

 

Global suppliers like Dean Shoes (Long Yin Investment), Pou Chen Corporation, Hong Fu Industrial Group, Zucca, Sports Gear, Oasis Footwear, Lengthy, ShoeTown (in partnership with Phoenix Kothari), and Apache have lined up investment plans in Tamil Nadu. The clients of Hong Fu include iconic brands Nike, Converse, Vans, Adidas, and Reebok. Hong Fu entered India last year with a ₹1,500 crore footwear manufacturing facility at the SIPCOT Industrial Park in Panapakkam, nearly 85 km from Chennai.

 

Based on the current structure, China is set to face a 54 per cent reciprocal tariff, Cambodia 49 per cent, Vietnam 46 per cent, and Indonesia 46 per cent. Nike makes 40 per cent of its products in Vietnam and 17 per cent in Cambodia.

 

“This will be advantageous as major importing countries have higher tariffs. However, our raw material and component ecosystem is poor. The government should allow component imports to be completely duty-free if we have to capitalize on this advantage. Also, it should remove barriers like the quality control order and introduce a minimum import price or minimum alternate duty,” said V K C Razak, managing director of footwear major VKC Group.

 

Finance Minister Nirmala Sitharaman’s Budget 2025 had promised a “focus product scheme” for the footwear and leather industry, expecting to generate 2.2 million jobs, ₹4 trillion turnover, and targeted exports of more than ₹1.1 trillion. The proposal will help suppliers of non-leather footwear brands like Nike, Adidas, Puma, New Balance, and Reebok.