Skip to main content

Trump Threatens New China Tariffs as Punishment for Pandemic

President Trump may look to pay China back for its part in the COVID-19 pandemic by levying new tariffs on the country.

And that would mean already down-and-out retailers and apparel brands could be dealt an additional blow.

The phase one trade deal that the U.S. and China settled in January was supposed to be expanded into a broader trade deal that could have seen greater tariff relief for apparel and footwear manufacturers, but the president said the agreement is taking a backseat to the coronavirus.

“We signed a trade deal where they’re supposed to buy, and they’ve been buying a lot actually, but that now becomes secondary to what took place with the virus,” Trump said in remarks to reporters Thursday afternoon. “The virus situation is just not acceptable.”

The president’s sentiments surrounding China have shifted in recent weeks, moving from praise for its handling of the outbreak to scorn and threats. In that time, “something happened,” Trump said, expanding only to say that he might be able to share what that “something” was in the “not-too-distant future.”

It’s clear, though, that the president has placed fault with China for the health, humanitarian and economic crisis the U.S is facing.

“It came out of China, and it could have been stopped, and I wish they stopped it,” Trump said of the virus. Retaliation could come in the form of the president’s weapon of choice: tariffs. And with apparel and footwear among the key categories left to hit with additional duties, it may be unrealistic that the sector would be spared if that’s the move Trump chooses to make.

When asked whether not paying U.S. debt obligations to China is punishment for the virus, the president said, “Well, I can do it differently. I can do the same thing, but even for more money just by putting on tariffs.” Canceling debt obligations, he said, could undermine “the sanctity of the dollar,” but he could raise the $1 trillion in a “more forthright manner” by imposing more tariffs on China’s exports to the U.S.

Related Stories

U.S. officials, according to the Washington Post citing senior administration officials with knowledge of the matter, are already mulling retaliatory measures.

“Punishing China is definitely where the president’s head is at right now,” one senior adviser told the Washington Post.

If the U.S. does levy new tariffs on China over COVID-19, Beijing is prepared to retaliate, which could further strain U.S. businesses in a struggle for survival.

Many U.S. brands and retailers are already facing financial crises, and at the end of May the average market capitalization across fashion players had plummeted by nearly 40 percent, according to McKinsey & Company. Revenues for the apparel and footwear sector over the rest of 2020 are expected to contract between 27 percent and 30 percent year over year.

Even on the heels of the administration’s announcement last week of a 90-day deferral on duties for U.S. goods not hit with China punitive tariffs, American Apparel & Footwear Association (AAFA) president and CEO Steve Lamar said, “There is more that can and should be done…We urge that all goods—including textiles, apparel, footwear, and accessories facing Section 301 tariffs–be covered by this deferral action.

Every day we have to pay those duties means another day we can’t pay our workers,” he said.