Despite claims of positive progress in trade talks with China, President Trump has opted to add tariffs on the remaining $300 billion worth of imports from China, ratcheting up tensions amid already slow-going negotiations.
Trump tweeted the news Thursday, exactly one month from the Sept. 1 date when the tariffs are slated to take effect.
The apparel and footwear industry—which has said it might be able to stomach a 10 percent tariff, but not the 25 percent Trump originally proposed for the Tranche 4 goods—is still reeling from the news.
Industry groups and retailers alike say the new tariffs will have a chilling effect on the sector, as all imports of apparel and footwear will face the added duties, which come on top of the already-high existing duties companies face when sourcing these goods from China.
With 70 percent of shoes sold in the United States coming from China, Matt Priest, Footwear Distributors and Retailers of America (FDRA) president and CEO, said footwear may be hit the hardest.
“Footwear from China is already hit with upwards of 67 percent duties,” Priest said. “President Trump is, in effect, using American families as a hostage in his trade war negotiations. Tariffs are taxes and this move will noticeably raise the cost of shoes at retail and will have a chilling effect on hiring in the footwear industry.”
And the apparel sector won’t be much better off.
According to Rick Helfenbein, president and CEO of the American Apparel & Footwear Association (AAFA), Trump’s move Thursday was “truly shocking.”
“This decision will increase the tariff bill on all clothes, shoes, and home textiles, like blankets and sheets—products that already account for the vast majority of the duties collected by the U.S. government,” Helfenbein said.
In 2018, 42 percent of apparel and 69 percent of footwear sold in the U.S. was imported from China, according to the AAFA, and in 2017, 51 percent of the duties the U.S. government collected came from apparel, footwear, textiles and travel goods, despite the fact that these products accounted for just 6 percent of all imports.
Disappointment was the sentiment coming from retailers now concerned they’ll have to quickly kick their contingency plans into high gear.
“We are disappointed the administration is doubling-down on a flawed tariff strategy that is already slowing U.S. economic growth, creating uncertainty and discouraging investment,” National Retail Federation senior vice president for government relations David French said Thursday. “The tariffs imposed over the past year haven’t worked, and there’s no evidence another tax increase on American businesses and consumers will yield new results.”
Apparel and footwear retail stocks took a beating after the news Thursday. Caleres stock fell 11.45 percent, Steve Madden stock slid 9.39 percent, G-III Apparel dropped nearly 9 percent, Nordstrom fell 6.83 percent, PVH 6.8 percent, L Brands 6.32 percent, Foot Locker fell 4.19 percent, and Nike saw its stock price down 3.38 percent.
Further up the supply chain, industry coalition Tariffs Hurt the Heartland said the new tariffs could contribute to more farm bankruptcies, too.
“We will not take this news lying down,” FDRA’s Priest said. “This is one of the largest tax increases in American history and it is vitally important that we fight this action on behalf of our consumers and our industry.”