For more than 80 years, Hestra has been crafting leather gloves and mittens to keep skiers' hands warm and responsive out on the hill. If you've ever gulped at the price tag and ponied up anyway, you know you pay for what you get. But in coming months, consumers might see a 25 percent increase in retail cost—not because the brand is upgrading their product, but because gloves made in China and sold in the United States could be subject to an increased tariff proposed by the Trump administration on a long list of consumer goods. Those products include ski gloves and mittens, safety helmets, sports bags, and knit hats—critical items in any skier's gear closet.
The goal of this 25 percent tariff hike is not necessarily aimed at forcing manufacturing state-side. Rather, it's part of a gamble by the Trump administration to pressure the Chinese government into discontinuing certain policies and practices seen as restricting U.S. commerce. After two rounds of punitive tariffs, levied earlier this year by the United States Trade Representative (USTR) Robert Lighthizer, Beijing has made some concessions, such as lowering investment restrictions, but it has also imposed its own retaliatory tariffs. And Chinese officials have been clear they intend to punch back in kind, should this third round of tariffs get the green light. This round of levies targets products with a combined annual trade value of $200 billion, a substantial portion of Chinese imports to the states.
"With even a slight increase in prices, the economic viability of our industry is in jeopardy and the impacts will be felt across our local communities and tourist-dependent resort towns, as well as by individual consumers in the United States.” –Nick Sargent, SIA President
The list of products subject to this proposed tariff is 110 pages long. Skis and hardgoods will not be affected by this round of tariffs, simply since they’re not listed. This is not to say they aren’t affected by other tariffs, or will never be. Lighthizer contends that analysts selected each item after determining that a supplemental duty imposition wouldn't have detrimental effects on small- or medium-sized businesses and consumers. But they must have overlooked the $73 billion winter sports industry, which generated $779 million in consumer sales of gloves, helmets, sports bags, and hats between August and March 2018, according to the Snowsports Industries America (SIA). SIA has advocated for the removal of these winter sports goods from the tariff list, testifying to the threat it poses to brands, recreationalists, and mountain towns.
"Our economic vitality depends on tight margins throughout our supply chain and selling our products at a fair price each season," Nick Sargent, SIA President told a USTR committee in Washington, D.C., during an August 27 hearing on the proposed tariffs. "With even a slight increase in prices, the economic viability of our industry is in jeopardy and the impacts will be felt across our local communities and tourist-dependent resort towns, as well as by individual consumers in the United States. A 25 percent, or even 10 percent, increase in price on those products would certainly challenge even the most determined participant."
Hestra has its roots in hand-hewn leather goods, but in the modern era, the company owns and relies on four overseas factories—its two biggest are in China—to keep up with production. If these new tariffs are approved, Hestra USA President Dino Dardano says the brand's long-term approach will be to shift the bulk of production for the American market into its factories in Hungary and Vietnam, but a move of that magnitude will take a minimum of three years.
"Realistically, a five percent increase over five years would have given us an opportunity to address this [exiting China] with some intelligence and methodology," Dardano told POWDER. "But now we have a gun to our heads, and we're really scrambling."
If the tariffs are approved this fall, the short-term challenges are even more daunting. Dardano says that sales to outdoors shops for the 2018-2019 season were inked last February, based on current prices. With these sales already set, the company would have to absorb the 25 percent duty increase in order to bring those products into the U.S., something Dardano says is neither feasible nor reasonable because it exceeds Hestra's profit line. "That would put us out of business," he says. Hestra's plan is to air freight everything out of its China factories before the tariff is passed, basically rushing to beat the buzzer.
"It's going to dramatically affect U.S. consumers. It's not only gloves; it's helmets and backpacks—the cost of participation is going to escalate. We're already challenged in getting more people to experience skiing and get on snow. It's a very expensive investment to begin with." –Dino Dardano, Hestra USA
Ultimately, Dardano says Hestra's hands are tied, and that the cost of this tariff would have to be passed down to customers. One of their most popular gloves, the Heli, which currently retails for $145, would be bumped up to $181.
"It's going to dramatically affect U.S. consumers," Dardano says. "It's not only gloves; it's helmets and backpacks—the cost of participation is going to escalate. We're already challenged in getting more people to experience skiing and get on snow. It's a very expensive investment to begin with."
In addition to the looming business challenges, it seems like Dardano is deeply frustrated with the lack of transparency in the process.
"Why ski gloves? Why knit hats? It's beyond me," he says. "This is my personal opinion, but Trump is trying to get China to the table to address much bigger issues. Now we're a chip in that big game… [the tariffs] are a negotiation tool. We got sucked in."
Dardano, Sargent, and others in the industry hope that the United States Trade Representative will take note of their testimonies and move to exempt winter sports goods from the proposed tariff. If the Trump administration ignores these cries, heritage outdoors brands like Hestra may become casualties in the president's trade war.