Reeling apparel retailers may be able to put the brakes on duty payments for the next 90 days.
President Trump is reportedly prepared to announce a 90-day deferral on tariffs for certain imports, Bloomberg reported Tuesday, citing sources close to the matter. An official announcement, which is expected to be made in the form of an executive order, could come as soon as this week. Some apparel is expected to benefit from the tariff break.
The United States Trade Representative (USTR) could not be immediately reached for comment.
The move, which comes amid a mounting COVID-19 pandemic crisis, would defer payments for most-favored nation duties and isn’t expected to apply to Chinese goods tariffed higher in the trade war, according to Bloomberg. Most-favored nation, or MFN, tariffs are the highest rates countries agree to impose on other members of the World Trade Organization (WTO), for product groups like textiles, clothing and footwear.
Details beyond that are not yet clear, and because Trump has consistently flouted pleas for tariff breaks on China duties in particular, the scope of the deferrals may be narrower than what some might hope.
Nearly 400 CEOs from major global companies sent a letter to President Trump Tuesday imploring him to delay duty collection in light of the havoc coronavirus has already wreaked on businesses both stateside and worldwide. The request was for a 90- to 180-day deferral.
“Delaying duties helps us preserve cash flow–critically important during a prolonged period of little to no revenue–allowing us to keep our businesses in operation so we can preserve U.S. jobs,” the letter, undersigned by CEOs from Adidas, Levi Strauss & Co., Under Armour, Kontoor Brands, Macy’s and Moda Operandi, read. “At the same time, delaying duties does not undermine the effect of tariffs on trade flows because the money is still due.”
The deferral the CEOs are seeking would help the companies preserve their cash flow at a time when funds have largely dried up with stores shuttered and sales stunted. Many retailers have already laid off workers or furloughed them, and executives are starting to take pay cuts.
The 90-day pause on import duties still awaits Trump’s approval, according to reports, but his sign off on some sort of deferral is expected.