Fashion Companies Hope for Deal as Looming Tariff on Chinese Goods is Suspended

As discussed in our earlier alert, the proposed Section 301 tariffs would impose an additional 25 percent duty on an extensive list of Chinese-origin products, totaling approximately $50 billion worth of imports, as a response to the USTR’s affirmative findings in the Section 301 investigation on unfair Chinese technology and intellectual property policies and practices.

The details of the agreement are undecided and officials warn that the tariffs can always be imposed if negotiations are unsuccessful. With the notice and comment period on the proposed list closed on May 22, this announcement leaves importers cautiously optimistic that the disruptive tariffs will be permanently suspended.

Fashion companies, whose products are already subjected to some of the highest tariffs, especially would be able to take a big sigh of relief if a deal is struck and the 25 percent additional duty is avoided. Although currently the proposed list of merchandise under consideration for the imposition of the 25 percent additional duty does not include textile or apparel, it was widely rumored that there was a “second” product list of $1 billion of imported products from China upon which the Administration was considering to impose the 25 percent additional duties, and that this list did contain both textile and apparel products, as well as footwear.

Moreover, just last week, the US textile industry forcefully urged the Trump Administration to add textile and apparel end products to the list at the public hearings held in Washington, DC. In particular, Auggie Tantillo, President and CEO of the National Council of Textile Organizations, testified that China’s predatory trade actions, including intellectual property theft, has contributed to the loss of millions of US manufacturing jobs, including hundreds of thousands in textiles. He added that “China’s domination of global textile markets has clearly been aided by its rampant theft of US textile intellectual property. From the violation of patents on high-performance fibers, yarns, and fabrics to the infringement of copyrighted designs on textile home furnishings, China has gained pricing advantages through blatantly illegal activities.”

Tantillo’s appeal to expand the current list to include textile and apparel goods came one day after fashion industry representatives, including Julia Hughes, President of the United States Fashion Industry, and Rick Helfenbein, President and CEO of the American Apparel & Footwear Association, testified to the detrimental effect additional tariffs on textile and apparel would have on Americans, and implored the Administration not to subject these products to the additional 25 percent tariff. Hughes emphasized the negative impact that the tariffs would have on American jobs, noting that “retail operations alone support 42 million jobs – or 1 in 4 jobs in the United States.” Helfenbein testified that “tariffs are a tax – plain and simple – and levying tariffs on US imports will directly raise our costs here at home.” He also noted that the significant rise in retail prices as a result of the tariffs would “fall disproportionally hard on low-income Americans.”