That’s at least what experts speaking at an invite-only tariff seminar in New York City Monday believe.
The world has been waiting with bated breath until the G20 summit in Osaka starts Friday to see whether President Trump and Chinese President Xi Jinping will in fact meet and, if so, whether they can reach a truce on their heated trade war.
As of now, it’s still anyone’s guess as to what the outcome will be.
“They’ve got some of our negotiators [in Osaka] trying right now to at least set a framework for talks or discussion,” said Rick Helfenbein, CEO and president of the American Apparel & Footwear Association (AAFA), speaking at the seminar hosted by Sourcing Journal in partnership with MMG Advisors, Alba Wheels Up, CIT, RSM, and Sorini, Samet & Associates, LLC. “Just about anything could come out of it. Right now, the freight train is rolling towards, shall we say, a tariff.”
If the Trump administration does press ahead with a final tranche of tariffs, which would target nearly all remaining imports from China, including apparel and footwear, the impact could be felt fairly quickly.
Hearings on the final tranche 4 tariffs are underway in Washington, D.C. this week, with two days remaining. Once the hearings wrap up, a seven-day review process will begin and, according to Helfenbein, “You could be hit with tariffs as soon as…July 2.”
Instead of one major blow, however, the administration could dish out the new set of tariffs incrementally.
“My gut is telling me something will happen on July 2, but my gut is also telling me that it’s going to look like 10 percent for 60 days, with the threat of going to 25 percent,” said Vincent Iacopella, EVP of growth and strategy at Alba Wheels Up International Inc., a customs brokerage company. “Twenty-five percent is just like the nuclear option. There’s really no way to absorb that. Anybody who has orders for July and August that are already locked into POs with big-box stores, those are not going to be renegotiated, those are going to have to be eaten.”
There’s little way to tell what Trump will decide because, as Andrew Samet, principal at Sorini, Samet & Associates, said, “I don’t even think the president has decided on this.”
Taking a more positive position on when potential new tariffs could begin to plague the industry, Samet said he would be “surprised” if the tranche four duties took effect on July 2.
“July 2 would be the seven-day rebuttal period. I would think there would be some longer period of time before,” he said, agreeing, however, that the tariffs would take effect in stages.
The president may even agree to delay enforcing the tariffs for another 90 days, Helfenbein surmised.
Adding to that, AAFA executive vice president Steve Lamar said, “If the administration does tranche four, the scenario is 10 percent for tranche four for a period of time and then maybe it rises to 25 percent, maybe not…but we could see a scenario where it’s 10 percent for a year.”
In line with the new way of trade in Trump’s administration, what’s up ahead remains unclear.
“We might find out what’s going to happen on July 2 the night of July 1,” Iacopella said.