Last week’s news that Congress passed, and the president signed into law, a $2.2 trillion stimulus and relief package was welcome news. As the country battles health and economic crises created by the COVID-19 pandemic, it is critical that we sustain massive efforts to protect our population and help our businesses, and the workers they employ, to weather these unprecedented challenges.
Indeed, many textile, apparel, footwear, and fashion companies have embraced what we are calling a “Rosie The Riveter” moment for a new generation of Americans.
Companies from across the country have quickly repurposed their U.S. and foreign factories, their supply chains, and their warehouses to make and deliver crucial masks, gowns, gloves, and other items of personal protective equipment (PPE). Some companies are making the products themselves, both at home and abroad. Others are using their sourcing, customs, and shipping expertise to quickly deliver PPE to hospitals that don’t have the wherewithal or knowledge to do this themselves. Still others have donated warehouse space to local hospitals to manage their suddenly expanded logistical requirements or needs for extra space to house patients.
A dynamic U.S. global value chain that normally employs 4 million Americans is quickly becoming a U.S. global safety chain that is helping America fight back against this pandemic.
But with much of the economy shuttered, we must make sure we don’t leave any tools in the toolbox so these companies, that are now on the front lines of both crises, can survive.
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Here are two common-sense trade actions the Trump Administration can take today.
First, it should suspend the collection of all tariffs over the next 90 days and be prepared to extend it for an additional 90 days if three months is not enough. The Administration has already delayed the income tax deadline until July 15 and many other dates and deadlines have been delayed as well. Suspending collection of new tariffs, including any tariffs paid in the past few weeks, would allow companies to have access to this cash—hundreds of millions of dollars each week—at a crucial time when they are trying to keep employees on payrolls.
With help from the stimulus package still a week away at best, it cannot be overstated how important this cash flow relief would be right now. Moreover, suspending the collection of these tariffs, even though they will ultimately be paid, would temporarily relieve tariffs we are still charging on many of these PPEs.
Second, the Administration should refund all of the Section 301 tariffs it has collected in the past two years. Since July, American companies have paid more than $48 billion in tariffs on goods they imported from China.
As policy makers are scrambling to inject dollars back into the hands of U.S. companies in the fastest way possible, we should not overlook the fact that the Administration has a mechanism already in place that can allow these funds to be disbursed almost immediately.
The Administration has rightly rededicated this process to the swift refund of Section 301 tariffs still being charged on medical materials, inputs, and equipment. This is an important step to help fight the health crisis, but the Administration should also implement—automatically—the next logical step of refunding all the tariffs to help fight the economic crisis too. With a Phase One deal done with China, and no talks realistically planned for the foreseeable future, this will have no impact on the negotiating table.
But it’s not just up to the Administration, which only enjoys tariff authority already delegated by Congress. Article I, Section 8 of the Constitution expressly gives Congress ultimate authority over tariff policy. With work now beginning on the next stimulus package—and with members of Congress from both chambers and both parties eyeing tariff cuts as a way to help our distressed economy—Congress should seriously look at whether more tariff reductions can be undertaken.
As Americans, we all have a responsibility to “flatten the curve” over the next four weeks. We must also ensure the implementation of smart policies—including those that eliminate tariff costs—to help us “flatten the economic dip” as well. Let’s make sure our elected leaders in Washington understand the imperatives of swift action now.
Stephen E. Lamar is president and CEO of the American Apparel & Footwear Association, the national trade association representing more than 1,000 brands in the apparel and footwear industry. Steve leads a dedicated team of professionals who represent AAFA members before the government, through the media, and in industry settings on key brand protection, supply chain and manufacturing, and trade issues. Steve also advises AAFA member companies on legislation and regulatory policies. Prior to becoming president and CEO, Steve served as executive vice president for the association.