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Trade war

Buffett-owned footwear maker moves output from China to Vietnam

Brooks Running fears US tariffs on shoes will surge to 45% as trade talks grind on

Jim Weber, CEO of Brooks Running, said May 2 that the shoe company is in the process of moving some of its production out of China.   © Reuters

NEW YORK -- Brooks Sports will move the bulk of its manufacturing operations from China to Vietnam as the trade talks between Washington and Beijing drag on with no certain conclusion, CEO Jim Weber said Friday.

The shoes and sports apparel company, known as Brooks Running, is a unit of Warren Buffett's Berkshire Hathaway.

"Tariffs are muddying the water and we’re trying to navigate through it like everyone else," said Weber. "To prepare our business for the future, we are in the process of moving some of our China manufacturing to an existing factory partner in Vietnam and will look to add a third country in the next year. These decisions have been made in partnership with our vendor partners in Asia."

Brooks Running was especially concerned about tariffs on shoes, following President Donald Trump's remarks last year that he would slap an additional 25% tariff on Chinese goods on top of the 20% tariff that has existed for years.

For a $130 pair of running shoes, a 45% tariff would be "significantly detrimental" to Brooks, according to a company spokesperson. The company made a joint decision with its vendor partners in China at the beginning of this year to move some production out of the country.

China accounts for one-third of Brooks' factories worldwide, while 19% of the company's production is done in Vietnam, Brooks data on contract manufacturers from last year shows. It is unclear exactly how much production Brooks will move to Vietnam.

The U.S. and China are still in trade negotiations, though U.S. Treasury Secretary Steven Mnuchin this week said the conversations were "productive." Beijing and Washington had cited progress on issues, including ways to help end tariffs that have burdened the economies of both countries, disrupted supply chains and financial markets.

Trade talks were scheduled to continue in Washington this week. Though on Sunday, Trump tweeted that he will raise the 10% tariff on $200 billion worth of Chinese goods to 25% on Friday. This has sent shock waves throughout the market globally. It's unclear if China's Vice Premier Liu He will be in Washington from Wednesday as planned. 

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