Photo by www.jonflemingphotography.com
The trade war has been bad enough in fueling price increases over the past year or so. Now layer on the Iran war—led by its spike in oil prices—and the industry is facing potential cost increases like never before.
That’s because, for starters, the industry uses a lot of oil, according to Matt Priest (pictured), president and CEO of the Footwear Distributors and Retailers of America. Examples include EVA midsoles, insole cushioning foams, TPU, PVC, polycarbonate plastics, synthetic textiles polyester and nylon fabrics, and spandex, to cite a few. He estimates 30 to 40 percent of components are oil based. And while that doesn’t mean the costs for those materials will rise immediately, the handwriting is on the wall if the price for oil remains elevated or, worse, rises.
“We could see anywhere from a three to seven percent increase just on the components,” Priest says, adding that tariffs are assessed on declared value of the shoe when it lands. “So, if components prices go up, the price of shoes go up, and then you’ll have a higher duty value. The tariffs are compounded.”
In the meantime, fuel surcharges are already being applied, particularly on shipping containers. “There are reports of $275 to $375 fuel surcharges, and we’re hearing air freight is significantly elevated—jet fuel prices have gone up 75 percent month over month,” Priest reports. “So, for example, if you’re air freighting a hot item ahead of the spring shopping season, you’re seeing elevated prices.” This applies especially to smaller companies that often utilize last-minute rates and aren’t locked into contracts. “We’re hearing anywhere from a $400 to a $1,000 surcharge on those rates, which were flat last year,” he says.
Then there are potential cost increases due to those in the supply chain seeking to make up for tariff-related price increases they’ve absorbed over the past year. “Up until now, our brand and retail members have been putting pressure on suppliers to keep prices down so consumers won’t be hit as dramatically,” Priest says. “Now suppliers see this opportunity to call back some of what they’ve given up. They’re going to be having these conversations sooner rather than later to put pressure on their customers.”
Priest’s insights on the current state of the industry stem largely from FDRA’s quarterly SHU Executive Outlook Survey. It taps into how executives are feeling about the economy and the market, and what their plans are over the next few months. Surprisingly, Priest says the overall mood is optimistic despite the tremendous headwinds. “Sales are moving along, shoes are flowing, the consumer is resilient,” he reports. “We still find a consumer that continues to weather the storm, at least up into the first quarter of 2026.”
As for how the rest of 2026 might shake out, Priest says survey responses ranged from optimistic to pessimistic to pragmatic. But all essentially agreed that 2026 will be a tough year. “Some members are fortunate to have markets outside the U.S., which are growing faster than the U.S.,” he notes. “This should lead to growth overall, but U.S. numbers will probably be flat to down.”
When members were asked what keeps them up at night, the top responses continued to be taxes, tariffs, duties, and regulations. This soared right after Liberation Day last April and stayed top of mind into the fourth quarter of 2025. It subsided a bit when tariff rates with China eased. But it shot up again following the Supreme Court’s late February ruling that the Trump Administration’s tariff hikes were unconstitutional, after which Trump introduced more tariffs and threatened even more. “It’s easy to understand why our members are concerned about the government action or inaction as it relates to lowering tariffs,” Priest says.
Looking for a silver lining in this survey? Priest recalls President Trump’s statement last May that he’s not focused on making shoes in the U.S. He hopes POTUS is a man of his word. “Our industry generally pays $3 billion a year in tariffs, and we paid $6.2 billion last year,” Priest says. “A positive outcome for us would be a surgical focus on industries that are high value and do not include additional tariffs on shoes.”
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