Wisconsin-based Weyco Group Inc. is proof of why American corporations are suing their own president over lost revenue. The Milwaukee Journal Sentinel reports the shoe company paid more than $16 million in tariff fees to the U.S. government thanks to President Donald Trump, causing a devastating 24 percent drop in the company’s profits from the previous year.
Weyco Group CEO Tom Florsheim said tariffs caused prices to increase between 19 percent to 50 percent, depending on the country buying their product.
“For an extended period during the second quarter we faced tariff rates that rendered trade with China, our largest sourcing country, commercially prohibitive,” Florsheim said on the quarterly call with company investors. “Because the second quarter is a primary manufacturing period for our key fall shipping window, this created a strong likelihood of disrupted deliveries to both our wholesale partners and direct to consumer business.”
Milwaukee Journal Sentinel reports the company passed some of those costs down to consumers by increasing prices 10 percent in July “to keep itself afloat.” However, those increases did not equal what the company was paying in tariffs.
The president’s onerous company tax increase also forced the company to reroute production overseas, shuffling from one production facility to another, said Florsheim.
“We took a very methodical approach to increasing prices because we’re in a tough market as far as consumer sentiment,” Florsheim said. “What we were trying to achieve with that was mitigate part of the tariff impact but also maintain market share as best as we could.”
It is for these reasons that Weyco Group Inc. decided in December to file a lawsuit against the Trump administration to recoup the $16 million it paid in tariffs. That suit was pending upon whether the U.S. Supreme Court struck down Trump’s unilateral tariffs by emergency order.
In February, the court did indeed rule Trump’s use of International Emergency Economic Powers Act to justify tariffs was an overreach on his authority. But it is less clear if illegally-taxed companies like Weyco will automatically receive a refund on what it paid.