Inside the leather trade war hitting handbags, boots and sofas

Bootmaker Twisted Donald Trump imposed sweep customs duties on imports in April.

The company turned a conference room at its Decatur, Texas, headquarters into a “tariff war room” because of the costs of importing its finished products. work boots rose, shipments were interrupted in transit, and invoices fluctuated so much that staff found themselves recalculating margins hour by hour.

“A lot of other leather companies had to suspend shipments because of the chaos and it felt like prices were going up everywhere before you could account for it,” Prasad Reddy, CEO of Twisted X, told CNBC. “It was a very uncertain time.”

Twisted X wasn’t alone. Leather retailers large and small are facing similar challenges, resulting in higher prices at checkout, which are not expected to drop anytime soon.

Pre-priced inventory is gone, while replacement orders cost significantly more. THE products arrive on the shelves are now made with more expensive hides, subjected to more expensive overseas processing and shipped with higher transportation costs than last year’s goods, industry experts said.

THE Yale Budget Lab Prices of leather goods are forecast to remain elevated by nearly 22% for at least one to two years, driven by inflation, supply chain bottlenecks and high exposure to tariffs, particularly in China, Vietnam, Italy and India.

“The reason leather is being hit so hard is twofold,” said John Ricco of the Budget Lab. “No. 1, some of these higher tariff rates are applied to different countries where we import the most leather. The second reason is that we import a lot of leather and, more broadly, apparel-related products from these trading partners that we manufacture.”

The costs have already emerged for brands like Tapestryowner of a handbag factory Coach and Kate Spade. Executives told investors in August that linked to prices expenses could total $160 millionwarning of “greater than expected earnings headwinds” in the future.

A pair of Twisted American ranch. This hide is shipped overseas, usually to Asia, to be tanned into leather. For Twisted X, about half of its products are tanned in Chinacompared to 90% in 2017, Reddy said.

Once made into leather, the material is usually shipped to another factory, often in Chinain Vietnam, Mexico or India – to be cut, sewn and assembled, before finally returning to the United States as a finished product.

Under normal conditions, this global supply chain has helped keep costs low. But the reliance on foreign production backfired when the new taxes took effect, Reddy said.

“When the tariffs went into effect, everything stopped,” said Kerry Brozyna, president of the Leather and Hide Council of America. “So they [China] couldn’t accept shipments because if they accepted them and priced the tariff, they wouldn’t be able to sell them. »

Currently, the United States leather trade deficit is one of the largest in the manufacturing sector. In 2023, the United States imported $1.37 billion worth of leather clothing and exported only $92.7 million, a deficit of about 15 to 1, according to the report. Census Bureau. China alone supplies about a third of all leather goods imported into the United States.

“Being so reliant on a lot of production methods overseas ended up hurting a lot of people in the industry early on because they didn’t know exactly what was going to happen,” Reddy said. “At Twisted X, we have been working to reduce our dependence on China for some time.”

Like the homework came into force, Twisted X and many other leather companies rushed to leave China and encountered new problems: bottlenecks in Cambodia and Bangladesh, longer delivery times in Vietnam and a sudden 50% rate on many Indian leather exports imposed in August.

By the end of summer, almost all leather companies were paying more at each stage: for hides, tanning, assembly and reimportation, according to Reddy.

“We saw all of our channels for making boots get more and more expensive until we were able to find a good solution,” Reddy said.

Conglomerates like Steve Madden also feel the impacts.

“The third quarter was difficult, largely due to the impact of new tariffs on goods imported into the United States,” Edward Rosenfeld, chairman and CEO of Steve Madden, said at a news conference. call for results in November.

Already, prices for luxury leather are on the rise. that of Chanel The iconic Classic Flap bag is about 5% more expensive than last year, following another round of price hikes this spring, according to luxury retail price data.

But by 2026, the price shock in the leather industry will likely be greater, Ricco said. Analysts expect prices for leather shoes and accessories to rise about 22% over the next two years and about 7% over the long term as higher tariffs, transportation costs and scarce higher-quality hides move through the system.

“2026 will likely be the year the rubber meets the road,” Ricco said. “They [leather companies] “We need to make decisions about whether to pass on cost increases to consumers, whether to cut jobs, and whether to reduce payouts to shareholders.”

In the 1950s, manufacturers employed more than 300,000 people in about 1,000 tanneries across the country, primarily spread across the Midwest and Northeast, according to the American Leather and Skin Council.

The workforce has fallen to around 50,000 people in 2025, and the number of tanneries to a few hundred, according to the council.

Reddy said the so-called golden age of domestic manufacturing was long gone.

The burden of tariffs has had the greatest impact on brands that rely on finished products. goods from Asia – not companies that source leather domestically. Until now, rather than restore American manufacturingAs the Trump administration based the tariffs, many brands responded by reorganizing their overseas suppliers to contain costs, according to industry experts.

U.S. leather companies are also facing a shortage of raw materials because there are simply fewer of them cattle hides to work.

America’s cattle herd is at its peak the smallest point since the 1950s, following prolonged drought, rising feed costs and liquidation of herds. Since skins are a mandatory by-product of dairy products and beef productionfewer livestock means fewer hides – although global demand for premium leather persists for handbags, upholstery and shoes.

“Few cattle means what’s left of the hides makes it more expensive to produce boots with the high-quality leather we use,” Reddy said.

For buyers hoping to get a discount by exchanging for one syntheticthe alternatives have not been spared either.

Many leatherette and polyurethane materials rely on petrochemical inputs from Asia, which also fall under the new tariff rates. Retailers and industry analysts have said synthetic shoes and handbags are seeing cost increases in the range of 5 to 10 percent, according to industry estimates.