The retail industry is concerned the Trump administration will impose punitive tariffs on Vietnam as one of its last actions before its influence expires on Jan. 20.
Blake Harden, vice president of international trade at the Retail Industry Leaders Association (RILA), was set to testifying Monday and Tuesday before the Office of the U.S. Trade Representative (USTR) as part of the agency’s investigations into Vietnam’s acts, policies and practices related to the illegal import and use of timber, and currency valuation, and whether they violate Section 301 of the Trade Act of 1974.
The Trump administration and USTR have used Section 301 violations as the premise for imposing tariffs against China for a wide range of products and has threatened to do the same against Vietnam, currently the No. 2 supplier of apparel to the U.S.
Harden’s testimony outlines the concerns that RILA and member retailers such as Walmart and Target harbor about the potential for tariffs being imposed on products from Vietnam.
“American businesses and families have been assessed more than $72 billion in additional tariffs on products since the China 301 tariffs were put into place,” Harden said in prepared testimony. “These tariffs have resulted in less money in the pockets of American families, a slowdown in U.S. manufacturing, and decreased competitiveness for American businesses vis-à-vis their European and Asian counterparts. The evidence is clear–tariffs on imports have failed to increase domestic sourcing.”
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Harden said in addition, tariffs on goods from Vietnam will harm the ability of U.S. retailers to compete globally. He said as the outgoing administration considers whether to impose tariffs, “our competitors in countries such as the European Union and Canada have lowered their tariffs and removed trade barriers with Vietnam through free trade agreements and trade preference programs.”
“It is imperative that USTR conduct this investigation in a fair, thorough, and transparent manner that carefully considers the novel issue before it and all potential implications of any actions taken, including the collateral damage that could be caused to U.S. retailers and American families if tariffs are imposed,” Harden said. “This process must not be rushed. To do so risks the credibility of the investigation and its findings and more broadly USTR’s Section 301 authority.”
RILA members include more than 200 retailers, product manufacturers and service suppliers that combine to account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.
Meanwhile, National Retail Federation senior vice president of government relations David French also urged the USTR not to place tariffs on Vietnamese imports at the illegal timber and currency practices hearings this week.
“Vietnam has become an increasingly important political ally and economic partner to the United States to counter the influence of China in the region,” French said. “It is important that this relationship not only continue but expand as the global economy continues to recover from the coronavirus pandemic.”
French cited a report commissioned by NRF and prepared by the Trade Partnership Worldwide on the potential impact of tariffs on Vietnam. It estimated tariffs on imports of apparel, footwear and other goods from Vietnam would result in American consumers paying $4 billion to $9 billion more in higher prices.
“As companies continue to face economic hardship caused by the coronavirus pandemic, new tariffs on imports from Vietnam will further harm U.S. companies and will result in higher costs for consumers,” French continued.
Furthermore, he noted that many companies shifted their supply chains from China to Vietnam due to the China 301 tariffs. Placing tariffs on imports from Vietnam, he said, would punish these companies and may result in sourcing shifting back to China.
Earlier this month, RILA joined with a coalition that included the American Apparel & Footwear Association (AAFA) and National Retail Federation to extend the comment period following the U.S. Department of Treasury’s Dec. 16 report on Vietnam’s timber imports and currency valuation. It said the country allegedly took actions in the first half of the year to devalue its currency against the dollar.
Those actions gave Vietnam an “unfair competitive advantage” in international markets by making its product cheaper abroad by devaluing its currency, the dong.
In October, the Trump administration began a probe of Vietnam’s trade practices, levying tariffs against Vietnamese tires last month after the Commerce and Treasury Departments concluded that currency manipulation took place.
At the time, the AAFA urged the administration to “refrain from sowing further supply chain disruption” during the Covid-19 pandemic.
Following the currency manipulation designation, AAFA Trade Policy Committee members said they were “concerned that the [USTR] will use this report and act quickly to impose preliminary tariffs as high as 25 percent on imports from Vietnam.”