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China, US Agree to Phased Tariff Rollback—Apparel Could Go Unscathed

The rollback of tariffs on Chinese imports could be more than just rumblings.

China and the U.S. have agreed to pull back on a portion of each other’s tariffs in phases as they work toward an interim agreement, a spokesperson from China’s Ministry of Commerce said Thursday.

“In the past two weeks, top negotiators have had serious and constructive discussions on resolving issues of core concern. Both sides agreed to remove the additional tariffs imposed in phases as progress is made on the agreement,” the South China Morning Post reported Ministry spokesperson Gao Feng as saying. “If China and the U.S. reach a phase one deal, both sides should roll back existing additional tariffs in the same proportion simultaneously.”

How much of the existing tariffs will be scrapped in phase one of the deal will depend on what emerges in the agreement, Gao explained.

There were conflicting reports as to whether U.S. officials have agreed to the tariff rollback plan.

At the United States Fashion Industry Association’s (USFIA) Apparel Importers Trade and Transportation Conference in New York City Thursday, David Spooner, partner at Barnes & Thornburg, said there’s truth to the rollback news.

“I think it’s clear that the administration does not want to, or is very reluctant, to impose tariffs on list 4B. It’s no coincidence, of course, that the administration put off tariffs on [apparel and textiles] and consumer electronic products until the very end. And it’s no coincidence that at least for a large portion of those goods, the administration has continued to defer goods,” Spooner said.

“Someone who’s in a position to know conveyed late last week that list 4B would be postponed again come December,” he added. “And indeed from the [China Ministry of Commerce] news this morning, it looks like that may be happening.”

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If the 15 percent tariffs on list 4B goods that were set to take effect on Dec. 15 are delayed or ultimately disappear altogether, it means the apparel and textile sector will evade tariffs on goods including: some woven and knit fabrics, suits, T-shirts, sweaters, performance outerwear, overcoats, undergarments, nightwear, ties, shawls, men’s or boy’s shirts, and women’s or girl’s skirts, to name just some.

It would be a big win for an industry ill-equipped to take on additional margin-pressuring headwinds. And though a signing location for the phase one trade deal has yet to be set, the agreement is expected to be forthcoming.

“I think we will have at least a phase one deal in the short term,” Spooner said. “I think the president wants to show…that the pressure on China has yielded results and that phase one deal may simply be an announcement that 4B tariffs will not go into effect and that China will make agriculture purchases along with some fairly light language about currency manipulation. I think both China and the White House want to be able to show progress.”