Leather Goods: The Hidden Costs of Trade Wars

The leather industry is facing significant challenges due to rising tariffs, inflation, and supply chain issues.

Tariffs and Rising Costs

• Companies Affected: Twisted X, Tapestry (Coach, Kate Spade), Steve Madden
• Tariff War Room: Twisted X set up a special team to manage the impact.
• Price Increases: Expected to stay high due to multiple factors.

Supply Chain Disruptions

• Raw Hides: Start as raw hides from U.S. ranches, sent overseas for tanning.
• New Suppliers: Companies struggled to find new suppliers due to bottlenecks and sudden tariffs.
• Trade Deficit: U.S. imported $1.37 billion in leather goods but only exported $92.7 million in 2023.

Impact on Prices

• Price Increases: Twisted X raised prices by 1% to 3% this year.
• Future Predictions: Analysts expect a 22% rise in leather goods prices over the next year or two.

Domestic Industry Decline

• Workforce Reduction: From over 300,000 in the 1950s to around 50,000 today.
• Cattle Hides Shortage: Drought and rising feed costs have reduced the U.S. cattle herd to its smallest size since the 1950s.

Synthetic Leather Alternatives

• Increased Costs: Due to tariffs on petrochemical inputs from Asia.