Leather Goods: The Hidden Costs of Trade Wars

The leather industry is in a tough spot. Tariffs have made everything more expensive. Companies like Twisted X, known for their boots, had to scramble when import costs shot up. They even set up a "tariff war room" to handle the chaos. Prices for leather goods are expected to stay high for a while. This is because of inflation, supply chain issues, and heavy tariffs on countries like China, Vietnam, Italy, and India. Leather goods start as raw hides from U. S. ranches. These hides are sent overseas to be tanned and turned into products. But when tariffs hit, this process became a problem. Companies had to find new suppliers, but that wasn't easy. Some countries had bottlenecks, and others had sudden tariffs. This made everything more expensive at every stage. Big brands like Tapestry, which owns Coach and Kate Spade, are also feeling the pinch. They expect to spend $160 million on tariff-related costs. Even Steve Madden, another major brand, reported challenges due to new tariffs.The U. S. leather trade deficit is huge. In 2023, the U. S. imported $1. 37 billion in leather goods but only exported $92. 7 million. This shows how reliant the U. S. is on foreign leather production. Companies are trying to reduce this reliance, but it's not simple. Price increases are inevitable. Twisted X had to raise prices by 1% to 3% this year. Luxury brands like Chanel have also increased prices. Analysts predict that leather goods prices will rise by about 22% in the next year or two. This is due to higher tariffs, freight costs, and scarce hides. The domestic leather manufacturing industry has declined. In the 1950s, there were over 300, 000 people working in tanneries. Now, there are only around 50, 000. This makes it harder for companies to pivot away from global supply chains. There's also a shortage of cattle hides. Drought and rising feed costs have reduced the U. S. cattle herd to its smallest size since the 1950s. Fewer cattle mean fewer hides, which makes high-quality leather more expensive. Even synthetic leather alternatives are getting more expensive due to tariffs on petrochemical inputs from Asia.