The Trump administration has engaged in what Rick Helfenbein, president of the American Apparel and Footwear Association, is calling a “very dangerous game.” The trade war between the U.S. and China has grown, with the U.S. imposing tariffs on $250 billion worth of Chinese goods due to the country’s “unfair trade practices.” The administration has warned the new ten percent tariff could be raised to 25 percent at the beginning of 2019.
The tariffs are imposed as punishment for “China’s theft of American intellectual property and forced transfer of American technology,” stated the United States Trade Representative office (USTR) in a press release.
The most recent tariffs in this trade war cover 5,745 items including textiles, handbags, leather, and fur in addition to electronics, cigarettes, and beauty products. Apparel and footwear are not yet on the list, but it continues to grow.
297 tariff lines were removed from the list following August hearings. Among the removed products were rayon fibre and some dyes and chemicals, thanks to a lobby by the National Council of Textile Organizations.
“The U.S. textile industry requested the exclusion of these products because they are not available domestically, and China is the only significant source of supply,” said Auggie Tantillo, the chief executive of the NCTO. Tantillo went on to state that the Trump administration’s strategy of imposing tariffs is not the most effective method of penalising China for intellectual property rights abuses.
“Added tariffs on finished Chinese textile home furnishings and apparel is the most effective sanction the United States could impose on China,” explained Tantillo. “Products from the NAFTA (North American Free Trade Agreement) and CAFTA (Central American Free Trade Agreement) regions, using U.S.-made textile inputs, immediately become more competitive, thereby incentivizing the re-shoring of textile manufacturing jobs.”
Helfenbein said he and his organisation were also disappointed by the administration’s decision. “We are extremely disappointed that President Trump has, once again, decided to impose a huge new tax on American consumers and manufacturers,” said Helfenbein. “During the public review process, AAFA and many of its members detailed the extreme damage this new tax will do to our industry, our nearly four million U.S. workers and to every American family. It seems most of those pleas were ignored. Instead, today’s announcement shows a deep disregard for American businesses, American workers and American families, who will be negatively impacted by this decision.”
The National Taxpayers Union Foundation suggested the full impact of a 25 percent tariff in 2019 would impact American consumers more seriously than the taxes levied under the Affordable Care Act.
In September, JCPenney counsel David Spooner warned the USTR that retailers would not be able to absorb the cost of a ten percent tariff – let alone a 25 percent one. Walmart also spoke out. “Either consumers will pay more, suppliers will receive less, retail margins will be lower, or consumers will buy fewer products or forego purchases altogether,” stated the company in a similar letter to U.S. Trade Representative Robert Lighthizer.
In response to criticism of the tariffs, Trump stated the increased costs wouldn’t impact consumers. “A lot of money is coming into our coffers. And it’s had no impact on our – absolutely, by the way – no impact on our economy which I said it wouldn’t."