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“A lot of people don’t understand how tariffs work… And to be honest, when we started manufacturing, we didn’t really understand either,” said Brandon Eley, sitting in the conference room of his LaGrange business 2BigFeet. 

2BigFeet sells nearly forty brands and manufactures its own shoes. The business specializes in oversized footwear, sizes 14 and up. Like almost all American footwear companies, it is manufactured overseas. 

Eley, who also owns CORE Marketing Group and served as the chairman of the LaGrange-Troup Chamber of Commerce, sat down with LDN to discuss how the recently announced higher tariffs on Chinese goods and the paused tariffs on other countries are affecting his business.

What is a tariff?

According to the Council on Foreign Relations, a nonpartisan national membership organization, a tariff is “a tax imposed on foreign-made goods, paid by the importing business to its home country’s government.”

Tariffs can be implemented for many reasons, including protecting burgeoning industries in the importing country and addressing unfair or unethical practices of another country. The most recent string of tariffs imposed by President Donald Trump were “driven by the absence of reciprocity in our trade relationship,” stated a White House press release. 

Typically, tariffs are a percentage of the value of the imported products. The rate can vary depending on the type of good or country the good is coming from. During Trump’s first term, tariffs on Chinese exports peaked at roughly 21%, according to the Peterson Institute for International Economics. The current rate sits at over 147%. 

What does a tariff mean for American companies? 

Eley’s company has manufactured in four countries and currently manufactures in China. 

“We have a mixed container that was on a truck headed to the port to be put on the boat,” Eley said. “In the last 48 hours, we have been frantically trying to figure out what we can do because if that container came into the port of Savannah, the Customs and Border Protection would take $50,000 out of my checking account of tax, in addition to what the goods cost me.”

Eley explained that most importers set aside funds to pay for tariffs. 

“We have what’s called a continuous bond, and we pay that every year. And you’re essentially setting up an account to import goods,” he explained. 

He added, “We’re fairly new to manufacturing, but it’s been very consistent in that period of time, but it’s been very consistent since long before we were manufacturing. Tariffs are generally planned over long periods of time, implemented with policies and programs with dates well known in advance.” 

Currently, the container for 2BigFeet is sitting in a warehouse in China. While the brand only imports a few containers throughout the year, the over 40 other brands the company sells have their own containers to pay for. 

“We buy from the brands themselves. So we sell roughly 40 brands of shoes and socks and accessories…So they bring them in from wherever they manufacture them, and when it comes to the port under their name, they pay the tariff and then pass that on to us,” Eley said. “We’ve already had probably 10 of the companies that we sell tell us that they’re raising their prices because of the tariffs.”

The business owner said the ever-changing rates of tariffs and more looming tariffs on the horizon when the 90-day pause on many countries’ imports lifts makes business decisions near impossible. 

“A lot of companies are not going to make the investment and then put it on a boat, not knowing what’s going to happen,” Eley said. “A 10% tariff shouldn’t put anybody out of business. But the difference between 10% tariff and 135% tariff, I don’t know that any company could sustain that, and no consumer would go into a store and pay that kind of difference on a product if there was an alternative available.”

Now, the company is in a holding period, deciding not only what to do with the current container overseas but also whether to even start production of more shoes with the current rates subject to rise. 

“We will probably just stop all new product development. And we’ve got products that have already been developed that we can go into production on, but I can’t invest $50,000 or $100,000 to go into production on something without being confident that it’s not going to cost another $50,000 or $100,000 when it gets here.”

How does a tariff affect the American consumer?

“Essentially, everybody down the chain to the customer pays the tariff,” said Eley. “The only person that doesn’t pay a dime in tariffs ever is the manufacturer, the factory overseas.”

With the tariff rate as high as it is, it could easily double the cost of Eley’s shoes. 2BigFeet is a niche product. Because they are specialty sizes, the molds needed to manufacture parts need to be custom-made. Smaller production quantities, more labor and more material also mean more production costs. Eley gives the example of the water shoe they sell. On Amazon, the shoe in a “normal” size could be $19.99. 

“We’re hoping to retail [our water shoe] for $ 39.95…But if they came in with the current tariff the way that they are, they would be $80.”

Eley said a 10 or even 20% tariff on imports would be manageable, but the company would still have to adjust prices to afford the cost of business. However, he said customers won’t pay a 50 to 135% increase on the product. 

“And I can’t have it just sitting in the warehouse collecting dust…So the current plan is to just not make anything until we’re confident that we can predict and plan our costs better.”

Why can’t you make it in the U.S.?

One of the arguments for the recent high tariffs was to encourage American manufacturing rather than relying on importation. However, Eley said this is not an option for all industries. 

“We would love to make shoes in the United States,” he said. “[But] the supply chain has been gone for decades.” 

Eley said that 90% of leather hides from American cows are exported to be tanned. 

“Then, if it comes back into the US for, say, making a shoe, it gets tariffed,” he explained.

American-made shoes, he said, are not a thing anymore. 

“Over 99% of footwear sold in the United States is imported. Of the less than 1% of shoes assembled here, most are assembled with components and materials that are also imported. 

He said one company is marketed as “Assembled in the U.S. with globally sourced components.” That company’s boots retail on the lower end for over $250. 

“So then imagine making those from US source components and US source materials and the US labor, you’d be looking at three to four times the price of an imported product…So from a cost perspective, even if there was a supply chain here, it’s not really feasible because the customers, they’re not going to pay two, three, four times what is currently available,” Eley said. 

What’s next for the business?

April 15 is supposed to be Michael Ellis Footwear’s 25th anniversary, marked by the day the company launched its website.

 “We were hoping that would be the story we were telling right now,” Eley said. 

2BigFeet, as a company, is now in a precarious position. 

 “We’ve invested everything into starting our own brand as the future of our company…if we’re going to continue, it can’t be just selling other people’s shoes. And now it seems like that might not even be a possibility,” Eley said. 

He continued, “We’ve invested all this time and all this money to get put out of business by this kind of bickering, trade war, back and forth between politicians in different countries? Their trade war has real impacts here with American business owners and American small businesses, that I don’t think a lot of people realize.”