The COVID-19 pandemic has the U.S. economy on shaky ground, and voices across the fashion spectrum are seizing their opportunity to refocus attention on their long-standing bottom-line pain point: tariffs.
On Friday, a coalition of industry organizations sent a letter to National Economic Council director Larry Kudlow calling on the Trump administration to provide tariff relief as part of its economic response to the coronavirus.
The American Apparel & Footwear Association, Council of Fashion Designers of America, National Retail Federation, Retail Industry Leaders Association, Footwear Distributors & Retailers of America and U.S. Fashion Industry Association requested immediate elimination of tariffs imposed on U.S. imports of consumer and commercial products from China. These include travel goods, clothing, footwear, accessories and textiles, products hit hard by the U.S.-China tariff war.
“We can think of no other policy tool at the administration’s disposal that would have such a fast and beneficial impact as the immediate and retroactive removal of these tariffs,” the coalition wrote to Kudlow. “Such a move would instantly put billions of dollars back into the U.S. economy. This action also would provide certainty to American companies and encourage new hiring and new investment–moves that are now on hold given the unprecedented uncertainty facing the U.S. economy.”
The organizations noted that American consumers would also see benefits given that these tariffs act as a tax that often shows up as higher prices on retail goods. Retail apparel prices rose 0.4 percent in February following a 0.7 percent increase the prior month, according to U.S. Bureau of Labor Statistics’ Consumer Price Index.
The coalition also stated that lifting these tariffs requires no congressional action, as they were imposed unilaterally by President Trump as a way to punish China for intellectual property (IP) rights and other trade violations.
The National Council of Textile Organizations (NCTO) voiced its opposition to the call for tariff relief. While the group that represents the U.S. textiles sector from fiber through finished sewn products welcomed the administration’s proposals on an economic stimulus package to gird the economy against the impact of the COVID-19 pandemic, NCTO urged the White House not to remove China 301 tariffs on finished products as part of any relief package.
“We support the administration’s efforts to bolster the economy as a response to the coronavirus outbreak, while opposing add-ons to any stimulus package designed to exploit the crisis,” NCTO president and CEO Kim Glas said.
“Any push by importers and retailers to take advantage of the situation and press for removing China 301 tariffs on finished consumer goods…should be rejected immediately,” she added. “Tariff breaks on finished products will only pad the pockets of retailers that have long benefitted from China’s trade abuses and ultimately will not be passed on to the consumer.”
Glas said granting importers a tariff break would essentially let China off the hook for systemic IP violations “that have displaced U.S. workers and undermined U.S. leverage in negotiating a phase two agreement.”
As part of a Phase One deal with China, the administration reduced duties on finished apparel and textile products implemented on Sept. 1 from 15 percent to 7.5 percent.
“NCTO has strongly supported applying tariffs on finished products as a key negotiating leverage, but opposes keeping tariffs in place on certain inputs that are not made in the U.S. such as select dyes, chemicals and textile machinery,” Glas said. “NCTO has long argued tariffs on these inputs hurt domestic competitiveness for U.S. textile manufacturers.”