As the Biden administration weighs whether to keep tariffs in place on a range of imports from China, including apparel and footwear, pressure is mounting in Congress and the textile industry not to let the world’s second largest economy off the hook by letting these punitive duties expire.
The main textile and apparel manufacturing trade groups in the United States and Central America sent a joint letter to Vice President Kamala Harris on Monday, outlining critical issues, such as upholding strong rules of origin in the U.S. free trade agreement with the region and maintaining China 301 tariffs on finished apparel imports, ahead of the Summit of the Americas taking place in Los Angeles next week that Harris is leading.
The National Council of Textile Organizations (NCTO), representing the full spectrum of U.S. textile manufacturing, and the Central America-Dominican Republic Apparel and Textile Council (CECATEC), the main apparel and textile group in the region, thanked Harris for her leadership in helping drive more investment to northern Central America and for the Biden administration’s commitment to strengthening the economic partnership forged between the United States and the region, which supports 1 million collective textile and apparel jobs.
“Perhaps most critical for our collective industries is the administration’s strong support for the ‘yarn forward’ rule of origin in the U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), which promotes trade, investment and economic development in the United States and the region,” NCTO and CECATEC wrote.
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“This ensures the benefits of the agreement go to the partners in the agreement, which helps drive massive investment and certainty,” they said. “The agreement’s strong rules have brought trade and investment to the region and the U.S. and allowed us to compete against highly subsidized industries in Asia often employing illegal trade practices such as the use of forced labor.”
In early May, the U.S. Trade Representative (USTR) announced it would begin a statutory four-year review of the China 301 tariffs. USTR said leading up to the four-year anniversaries of the tariff actions in the Section 301 investigation of “China’s Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation,” it was giving notice to representatives of domestic industries that benefit from the tariff actions and had previously submitted comments in support of them.
In Monday’s letter, the groups continued to urge the administration to “hold highly subsidized economies accountable for predatory trade practices that have blatantly undermined our collective industries and our workers.”
“It is critical for the administration to continue to ensure the 301 tariffs remain on finished apparel products that have helped bring diversification in sourcing from Asia and provided opportunities for both U.S. and Central American workers,” they said. “The tariffs are playing a key role in unlocking investment in the region and the U.S.”
On Friday, Sen. Rob Portman (R-Ohio) led a bipartisan group of senators in sending a letter to Biden urging him not to lift the Section 301 tariffs that target China and its “illegal and unfair trade practices.: Along with Portman, senators who signed onto the letter include Sherrod Brown (D-Ohio), Mitt Romney (R-Utah), Mike Braun (R-In.), Kevin Cramer (R-N.D.), Rick Scott (R-Fla.), Bob Casey (D-Pa.), Jim Inhofe (R-Okla.) and Elizabeth Warren (D-Mass).
The Biden administration has publicly signaled a desire to lift the tariffs, the senators said, adding that the White House has also noted that China has failed to comply with provisions in the Phase One Agreement, which the Trump administration reached with China in January 2020.
“We write to express our continued support for the trade action taken against China pursuant to Section 301 of the Trade Act of 1974,” the senators said. “We share long-standing concerns about the ways in which China’s acts, policies and practices have discriminated against U.S. exports and contributed to the offshoring of U.S. jobs, manufacturing and innovation, all of which has undermined the competitiveness of our country. As you consider the future of the Section 301 action, we urge you to substantially maintain the tariffs in their current form.”
Rolling back the tariffs on China would undermine the U.S. position in negotiations, expose many U.S. companies and workers to a sudden flood of imports, and signal to China that waiting out the United States is preferable to changing its non-market behavior or complying with the Phase One Agreement.
“Rather than lifting the tariffs, the United States should use the enforcement tools guaranteed by that agreement to make clear that we are serious about rectifying its violations,” the senators said. “We need to make clear to China that dialogue leads to commitments and failure to adhere to these commitments are followed by robust enforcement. If we do not exercise the legal rights under the Phase One Agreement, it will only make it more difficult to make progress with China on the subsidies, state-owned enterprises, suppression of labor rights and other unfair behaviors that are the core of the structural obstacles to a level playing field in bilateral trade.”
Industry groups such as the American Apparel & Footwear Association (AAFA) have taken a contrary stance on the issue, citing higher prices on apparel imports caused by the tariffs. Steve Lamar, AAFA president and CEO, said recently that the administration still doesn’t “connect the corrosive effect of tariffs, persistent tariffs, on inflation, and that’s the point that we keep trying to make to them, so they see that tariff reduction can lead to lower pricing.”
He and others have also pointed out that the Chinese government doesn’t pay the tariffs, but U.S. importers do.