00:00I'm sure you've been talking to all of your members and the like here in the last, what,
00:04weekend. I'm sure you've been busy. What are the conversations like right now?
00:09Yeah, great to be with you. The conversations have been fast and furious because a lot of our
00:14members have checks due to U.S. Customs and Border Protection this coming week. And so
00:19there's a lot of tactical questions and operational questions about should they pay these tariffs or
00:25not? And can we get guidance from Customs and Border Protection, which we expect to come
00:30sometime early this week? So our fingers are crossed. But right now we had 325 companies on
00:36our call Friday as we just outlined and talked through all the different impacts that we'll
00:40see when it comes to sourcing footwear from these countries that you mentioned, Yvonne.
00:46Matt, I know it's early days, but NetNet, is the message you're getting on aggregate,
00:53is this good news or is this bad news?
00:56I think it's good news in a sense that it restores kind of constitutional order around
01:01which of the laws that Congress has passed actually articulate and authorize the President
01:06of the United States to pursue tariffs for a variety of different reasons. And IEPA didn't seem
01:12to have that clarity when it comes to the actual law. But the fact of the matter is since April
01:182nd of
01:19last year, so-called Liberation Day, our members have been scrambling to try to migrate maybe out of
01:25China to other countries like Vietnam and Cambodia and Indonesia. And as the dust has
01:31settled on the reciprocal agreements that have been negotiated, the rates, at least for footwear,
01:36are all the same. There was a 20% tariff in China, same in Vietnam, 19 in Indonesia, 18 in
01:42India.
01:42And so for all the movement around these negotiations, we settled on very similar rates as when we started at
01:50least the playing field's level. So it seems to be a lot of activity to not really having a policy
01:56that
01:56surgically addresses our ability maybe to move out of China. In fact, our volume out of China in 2025 was
02:04the
02:04lowest since the Clinton administration. 49% of the volume sold in U.S. shoe stores came from
02:11China. That's the lowest since 1991 or 92. And so it's this weird environment where we've had to do
02:18all these things and it just kind of settled back to where the status quo was.
02:24Right. And they kept saying that the Section 122 tariffs are really intended to be a temporary fix.
02:30I think Scott Besson said it's more of a bridge than any sort of permanent facility.
02:34You know, what happens after 150 days? How long do you think these conditions can last, Matt?
02:40Yeah, we suspect that they will start to move with some of these other sections, right? Section 301
02:45and 232. The sections that they have been using and a section, you know, we got hit by 301 tariffs
02:50in September of 2019. But the president stated very clearly over the summer last year and publicly that
02:58he's not looking to make shoes in the United States anymore. So you've been discussing maybe this
03:02off-ramp opportunity. I don't think the administration will walk away from tariffs by any stretch of the
03:07imagination. But maybe as they start to move down these other maybe initiatives or these other
03:13investigations or using these other sections of the Trade Act of 1974, that they won't focus on
03:19these low value goods that we're producing all over the world. 99% of shoes sold in the U.S.
03:24are made
03:25overseas. And the president has said very publicly he doesn't think we need to make more shoes in the
03:30United States. And so if that's the case, maybe we have policy moving forward even beyond the Section 122
03:36that doesn't target items like footwear and apparel that Americans are making and are not looking to
03:42make anytime soon. And so that's our hope is that maybe that is the off-ramp. It creates a little
03:46bit more nuance for the administration to navigate through these choppy waters.
03:52And Matt, does that does that ask resonate as you guys lobby as far as that that specific
03:58interest is concerned there in Washington?
04:02You know, we've been at it for a long time, David, and we've been lobbying and we've gotten a lot
04:06of
04:07feedback that, yeah, this isn't a top priority, but the president loves his tariffs. And we've
04:12seen that play out time and time again. Look, I think the president is trying to create leverage.
04:16Most presidents and U.S. trade representatives want leverage when it comes to trade negotiations.
04:21Now, the challenge for developing nations and those that export large volumes of apparel and footwear
04:27is that this is going to be their top export. And so there's going to be going to be leverage
04:32around
04:32those products. And so we're at this place where we hope that the administration is continuing to
04:37maybe strike some of these deals and that they provide even more carve outs for products like
04:43footwear coming out of Vietnam, for example. And we think there's an opportunity there. And then they
04:48can focus in on what they think is important for national security or heavy manufacturing or high value
04:53goods through these other channels as it relates to different different sections of the trade act. But
04:58it remains to be seen just kind of what their next steps are beyond the Section 122.
05:04Yeah. What about in terms of refunds? I think
05:07have a lot of your members, have they been plaintiffs in this case? And what do you think is going
05:13to be
05:13the legal process that's going to entail to actually get some money back?
05:18Yeah, you know, that's a great question, Yvonne. I mean, we've had some of our members that have
05:22been plaintiffs in these cases. A lot of them have not been. Our expectation is that as the
05:28the Circuit Court of Appeals and the CIT start to articulate what the process looks like,
05:33that we'll have the normal avenues available to us to go and get those refunds and file protests and
05:39have even interest paid on those refunds as time allows. And so do we expect it will be an easy
05:45process? No. But our members have been preparing for the last several months, pretty much since the
05:51start of this case as it's made its way through the Supreme Court to get make sure that their documents
05:56in place and they understand how much they paid when it comes to these IEPA tariffs and then what that
06:01number is and then how to engage. And our hope is that with the courts and with Customs and Border
06:06Protection that the administration hopefully will quickly avail, you know, some kind of opportunity to
06:12seek those refunds. Because my encouragement of the president's team is that can you imagine, you know,
06:17the economy is doing pretty well right now. Can you imagine if you unleash that, you know, 200 billion
06:22dollars back into the U.S. economy very quickly and allow that to start to work through the economy,
06:27how even greater our economic growth might be. And so our hope is that they'll do that expeditiously.
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