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New US-China Tariff Hikes Take Effect, WTO Suit Follows

As trade talks resume, so do the tariffs.

On Thursday, both the U.S. and China imposed $16 billion worth of new tariffs on the other’s goods, rounding out the first $50 billion in tariffs President Trump promised to impose and China promised to reciprocate.

That means U.S. importers bringing in any of the targeted goods—like injection molding machines for footwear manufacturing or textile extruding machines—from China are already paying the additional 25 percent duties at the border.

It also means U.S. companies exporting fibers, yarn or shredded fabrics to China will be subject to the same 25 percent additional duty.

China’s Ministry of Commerce said in a statement Thursday, “The United States has been willing to go its own way…China firmly opposes and has to continue to make the necessary counterattacks.”

Taking things one step further than the tariffs retaliation, China’s Commerce spokesperson said the country will file a lawsuit with the World Trade Organization against the U.S. taxation measure.

The moves bring the total in tariffs between the U.S. and China to $50 billion, though Trump has already outlined a list of goods slated for a next tranche of 10 percent tariffs on $200 billion worth of goods, alluded to raising the rate on that $200 billion to 25 percent, and threatened to take the total tariffs up to $500 billion.

Tariffs, according to Trump, are working.

Earlier this month, the president tweeted: “Tariffs are working far better than anyone ever anticipated. China market has dropped 27% in last 4 months, and they are talking to us. Our market is stronger than ever, and will go up dramatically when these horrible trade deals are successfully renegotiated. America First…”

Economists surveyed for the National Association for Business Economics’ (NABE) Economic Policy Survey, however, don’t seem to think tariffs are working quite as well as Trump believes them to be.

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“Over 90 percent of the NABE Policy Survey panel considers current tariffs and threats of tariffs as having unfavorable consequential impacts on the U.S. economy,” NABE vice president and chief economist Kevin Swift, said.

Tariffs for textiles?

The apparel and textiles industry has so far managed to go largely un-attacked in the ongoing tariff battles, but testimony this week during the United States Trade Representative’s hearings on the proposed $200 billion in additional tariffs show the notion can’t be ruled out yet.

The National Council of Textile Organizations (NCTO), in fact, is calling for it.

In a statement Monday ahead of her testimony, NCTO senior vice president Sara Beatty stressed the importance of having apparel end products included on the tariff target list.

Noting that finished apparel, home furnishings and other made-up textile goods make up 93.5% of U.S. imports from China, and fiber yarn and fabric imports from China represent just 6.5%, Beatty said, “Given that apparel and other sewn products made in China almost always contain Chinese inputs, a significantly greater value of fiber, yarns, and fabrics made in China enter the U.S. market in the form of Chinese-made downstream finished products than at the input stage.”

Those numbers considered, according to NCTO, China has been benefitting while the U.S. textile industry struggles.

“Most of China’s 10 million direct textile and apparel jobs are concentrated at the final steps of the supply chain, the highly labor-intensive cutting and sewing operations,” Beatty said. “As such, imposing tariffs on end items would maximize U.S. leverage in bringing China to make meaningful reforms.”

Not all in the apparel and textiles sector share the same perspective, however.

Ahead of her own testimony Thursday, United States Fashion Industry Association president Julia K. Hughes said complex supply chains will preclude U.S. brands and retailers from being able to respond to the tariffs without facing setbacks.

“Talking with sourcing executives, they say that it takes anywhere from two to five years to identify and approve a new vendor. That is because we are a long way from the days when apparel could be made any place there were workers and a sewing machine,” Hughes said. “That means that companies are faced with no real alternatives to sourcing in China. But an increase in costs of 10 percent or 25 percent will have a negative impact on sales and no jobs here in the U.S., plus, of course, potentially derailing the economy from what we hope will be a positive holiday selling season.”