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Lifting China Tariffs Won’t Tame Inflation, Textile Groups Argue

The Biden administration should maintain Section 301 penalty tariffs on finished textiles and apparel or risk reversing once-in-a-lifetime nearshoring trends and undermining critical investments and jobs in the U.S. and Western Hemisphere, three key American textile manufacturing groups said Thursday.

In a formal submission to the U.S. Trade Representative’s (USTR) office, which is conducting a four-year statutory review of the tariffs, the associations expressed strong support for the continuation of penalty tariffs on imports from China and warned of the consequences associated with removing them.

“A key aspect of [the Biden administration’s trade] policy is the need to maintain Section 301 tariffs, absent substantive improvements in China’s pervasive, predatory trade practices,” the groups said.

Lifting the tariffs “would also do nothing to achieve the administration’s goal of easing inflationary pressures, as apparel prices out of China continue to hit rock bottom even with the Section 301 tariffs,” they said.

The submission was filed by the National Council of Textile Organizations, and the Narrow Fabrics Institute and Industrial Fabrics Institute, both divisions of the Advanced Textiles Association. The associations represent the entirety of the U.S. textile production chain.

“For decades, China’s illegal actions have undermined virtually every domestic manufacturing sector and contributed to the direct loss of millions of U.S. jobs,” the groups said. ‘These devastating state-sponsored practices include intellectual property (IP) theft, as well as pervasive state-ownership of manufacturing, industrial subsidies, and abhorrent labor and human rights abuses in the Xinjiang region. Cancelling these tariffs would create further unhealthy dependence on Chinese supply chains and embolden future systematic trade abuses as bad actors know that the U.S. will not hold them accountable.”

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The tariffs were imposed on China beginning in 2018 in response to China’s continuing IP and related trade violations. USTR has said that China has since failed to comply with an agreement it reached with the United States in 2020.

In early May, USTR announced it would begin a statutory four-year review of the China 301 tariffs. USTR said leading up to the four-year anniversaries of the tariff actions in the Section 301 investigation of “China’s Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation,” it was giving notice to representatives of domestic industries that benefit from the tariff actions and had previously submitted comments in support of them.

The Biden administration has publicly signaled a desire to lift the tariffs, a bipartisan group of senators said last month in a letter to Biden urging him not to lift the Section 301 tariffs that target China and its “illegal and unfair trade practices. They said the White House has also noted that China has failed to comply with provisions in the Phase One Agreement, which the Trump administration reached with China in January 2020.

Industry groups such as the American Apparel & Footwear Association (AAFA) have taken a contrary stance on the issue, citing higher prices on apparel imports caused by the tariffs. Steve Lamar, AAFA president and CEO, said recently that the administration still doesn’t “connect the corrosive effect of tariffs, persistent tariffs, on inflation, and that’s the point that we keep trying to make to them, so they see that tariff reduction can lead to lower pricing.”

He and others have also pointed out that the Chinese government doesn’t pay the tariffs, but U.S. importers do.

National Retail Federation president and CEO Matthew Shay said last week after the May Consumer Price Index was released that “this report showing that rampant inflation continues is one more reason for the administration to move quickly to repeal tariffs.”

“Independent researchers and government agencies agree that ending tariffs is the fastest way to relieve the pressure of higher prices that American businesses, workers and consumers are facing every day,” Shay said. “We need the administration and Congress to move forward on steps to lower prices that can be taken immediately. Repealing tariffs is one of those steps and one of the most effective and meaningful.”