The saga of one footwear company shows how hard it is to move manufacturing when ‘every brand is scrambling’

The brand is relying on a “hybrid approach,” its CEO, Bret Rasmussen, told Modern Retail — one that involves bringing “as many goods as possible” into U.S. warehouses, raising prices and revisiting its sourcing abroad.

The footwear industry has proven to be particularly susceptible to tariffs, as some 99% of footwear sold in the U.S. today is imported, according to the Footwear Distributors and Retailers of America. And Kuru Footwear is no exception. However, moving manufacturing out of the countries that are most heavily impacted by tariffs — in this case, China — is easier said than done.

Kuru Footwear is looking into working with factories in Cambodia and Indonesia, two countries subject to a 10% tariff for the time being. However, the company is finding that many Southeast Asian factories are getting inundated with requests from brands and are hesitant to bring U.S. partners on board.

“What we’re hearing from them is, ‘Well, do you just want to work with us until the tariffs come back down and then go back to China? Or, are you committed?'” Rasmussen said. “We’re uncertain [in the U.S.], but they are uncertain, too.”

For years, factories in Southeast Asia have worked to position themselves as alternatives to China, when it comes to making items like bags, apparel and footwear. Many saw demand spike during Covid, when the pandemic roiled supply chains and led many companies to look outside of China. Manufacturing hubs in Southeast Asia are now seeing another surge in demand from companies that want to avoid paying duties of 145% to bring in goods and materials from China.

But factories in countries like Thailand, Cambodia, Indonesia and Malaysia are “understandably cautious” about bringing on new partners, “especially after seeing brands shift abruptly in response to political pressure or tariffs,” said Katie Moro, global director of managed services at feed management platform Productsup.

“They want stability and long-term commitment, not just short-term opportunism,” she told Modern Retail. “It’s a valid concern. Brands that come in with transparency, multi-year agreements and realistic growth forecasts will be in a better position to secure quality manufacturing partnerships.”

Oisin Hanrahan, co-founder and CEO of Keychain, a CPG manufacturing software platform, told Modern Retail that matchmaking brands and factories can be tricky “in the best of times, and when the whole industry is scrambling, it gets even harder.” Even if Kuru Footwear manages to sign deals with factories in Southeast Asia, countries there are gearing up to deal with tariff increases. Southeast Asia faces some of the highest rates of the U.S.’s “reciprocal tariffs,” which as of now, are set to go forward in July.

For the time being, Kuru Footwear is continuing to ship product from China and Vietnam, Rasmussen said. “When it comes to higher-end performance footwear like Kuru, China and Vietnam are the two best sourcing solutions,” Rasmussen said. “There are really no countries outside of these two … that have the supply chains and manufacturing base for this type of footwear.”

Rasmussen continued that Kuru Footwear is in “a holding pattern” as it waits for more certainty on tariffs. “It’s really hard to make any big, long-term investments that have a long-term payback when we don’t know what’s to come tomorrow, next week or next month,” he said.

The brand has been able to partially absorb the cost of tariffs by enacting price increases. It upped the prices of its boots by $10-$15 and the majority of its sandals by $5. Its lower-priced products, such as its Moment Recovery Slide and Flex Via Sneaker, increased by 5% or less.

Kuru Footwear has also had luck, in the short term, with sending as many products as possible to its U.S. warehouse. Back in early February, when tariffs on Chinese goods totaled 10%, Kuru Footwear rushed to bring truckloads of shoes into the U.S. from its warehouse in Canada. Kuru Footwear was also able to move more product from China directly to the U.S. before tariffs on Chinese goods jumped up to 145%.

“We’re trying to balance it, in the sense of: Get the goods in at a lower duty, and then hopefully there’s some kind of an agreement that happens so we minimize how many goods come in at the current rate [of 145%],” Rasmussen said.

Stockpiling shoes in the U.S. has proven a game-changer for Kuru Footwear, Rasmussen said, explaining that the company has been able to fulfill orders amid the tariffs chaos. One notable exception was early February when Trump temporarily eliminated the de minimis provision. Kuru Footwear took Chinese-made shoes off its site for a few days because “we didn’t have a system in place to clear that many goods at that price for customers,” Rasmussen said. The Chinese-made shoes are now back on Kuru Footwear’s site.

On Friday, the de minimis loophole disappears again, but Kuru Footwear is now in a better position to deal with this after bringing more products to the U.S., Rasmussen said. It now has three months of inventory in its U.S. warehouse. It also has two months of inventory in its Canadian warehouse, but “we would prefer not to bring [those] in because of duties,” Rasmussen said.

“Fortunately, we moved enough China-made inventory to the U.S. that we should be able to continue business as usual once de minimis goes away, and it will have minimal impact on our catalog offering on the site,” Rasmussen said.