The impact of the United States’ announcement of tariff review notice on China on garments
It will be the fourth anniversary since the United States officially implemented Section 301 tariff measures against China on July 6, 2018. Now, under the impact of serious inflation and other problems in the United States, it seems that there will be a turn for the better.
The Office of the United States Trade Representative (USTR) issued a notice on May 3, 2022, that it will impose levies on Chinese goods during the Trump administration based on “Section 301” tariffs to be reviewed. The United States will collect industry opinions on US$34 billion of Chinese imported goods (tax list 1) from May 7 to July 5, and target US$16 billion of Chinese imports from June 24 to August 22. Products (Tax List 2) solicit opinions from the industry.
Article 301 tariffs for List 1 and List 2 goods will expire on July 6 and August 23 this year respectively. U.S. domestic industry representatives who have benefited from the increased tariffs can apply for an extension of the increased tariffs. If USTR receives an application to extend tariffs on a certain product, it will continue the imposition of relevant tariffs, review the tariffs, and invite interested parties to submit comments to determine next steps. It is not ruled out that this procedure will result in the cancellation of some of the additional tariffs.
Dr. Sheng Lu, associate professor of the Department of Fashion and Apparel at the University of Delaware, said that most American fashion brands and retailers strongly oppose the imposition of punitive tariffs on Chinese products.
Julia Hughes, president of the United States Fashion Industry Association (USFIA), said in an interview with JustStyle, a British apparel procurement and textile industry news and analysis company, that the USFIA is pleased that the Biden administration is reviewing The impact and necessity of China’s Section 301 tariffs. He said: “We recommend that the government should immediately eliminate Section 301 tariffs on consumer products covered by List 3 and List 4A, such as clothing, accessories, and footwear. Since the tariffs are paid by U.S. companies and consumers, eliminating these tariffs will have an impact on inflation. A direct beneficial impact.”
Lu added that although the tariffs have taken effect and many U.S. brands and retailers have opposed the tariffs, China remains a major source of import for many U.S. fashion companies. Clothing purchasing base, there is no real alternative to purchasing location.
He explained: “Trade statistics show that as of 2021, three years after the tariff war broke out, China still accounts for about 40% of U.S. garment imports, and accounts for 1/3 of the import value. Research also found that U.S. fashion companies rely on China to fulfill orders with minimum order quantities, high flexibility and a wide range of products.”
Lu It added that for fashion companies that still import from China, punitive tariffs increase procurement costs and cut into profit margins.
“U.S. fashion companies have had to add nearly $1 billion in additional import tariffs to annual procurement costs. According to the 2021 USFIA Fashion Industry Benchmarking Study (2021 USFIA Fashion Industry Benchmarking Study), nearly 90% of respondents said that the tariff war directly increased the company’s procurement costs. Another 74% said that the tariff war harmed their company’s financial condition.”
“As companies begin to shift purchase orders from China to other Asian countries such as Vietnam, Bangladesh, and Cambodia to avoid paying punitive tariffs, these countries’ Production costs are rising due to limited production capacity. In other words, due to Section 301 measures against China, sourcing from various places has become more expensive.”
Lu believes that U.S. fashion companies support the U.S. government’s efforts to address China’s “unfair” trade practices, such as subsidies, intellectual property infringement and forced technology transfer.
He explained: “Many American fashion companies are victims of this behavior. However, fashion companies do not believe that punitive tariffs are the right answer to effectively solve these problems. Tools. On the contrary, fashion brands and retailers are worried that the tariff war will create an uncertain and unstable market environment and harm their business operations.”
The American Apparel and Footwear Association (AAFA) and more than 100 industry associations recently sent a joint letter to Katherine Tai, Trade Representative of the Office of the United States Trade Representative (USTR), urging the strict control of Chinese products. Subject to full transparency review of Section 301 tariffs imposed.
Beth Hughes, vice president of trade and customs policy for the American Apparel and Footwear Association (AAFA), told JustStyle that the association is still reviewing China’s 301 tariffs and discussing with members. However, he stressed that “tariff relief remains paramount at a time of the highest inflation in U.S. history, among other challenges facing the industry and hurting consumers.”
At the same time, Kim Glas, president and CEO of the National Council of Textile Organizations (NCTO), said: “We have long advocated the imposition of 301 penalties on textiles and clothing products from China. These tariffs not only increase the Administration’s negotiating leverage to address decades of severe predatory trade practices by the Chinese government that have harmed our domestic manufacturing and our free trade agreement partners, they also send a strong message to China that the United States is committed to Address systemic predatory trade practices that harm domestic industries and their workers.”
“Our industry is experiencing significant investment in U.S. and Western Hemisphere supply chains as procurement executives seek to reduce the risk of these products in China. In fact, we expect to invest approximately $1 billion in the United States and Central America this year alone as punitive tariffs play a key role in procurement diversion.”
“We Advocate for increasing and maintaining tariffs on finished goods to ensure we address these larger systemic issues that have severely harmed our industry.”
NCTO noted that USTR The review process being conducted will allow U.S. domestic manufacturers to weigh whether the removal of tariffs will be harmful and prompt USTR to conduct further review.
“Our position has not wavered. The United States must maintain Section 301 tariffs on finished goods because there has been no substantial improvement in China’s widespread predatory trade practices. Removing these punitive tariffs will solidify China’s destructive dominance of global manufacturing and will do nothing to achieve the government’s goal of easing inflationary pressures, as China’s garment prices continue to fall to rock bottom regardless of Section 301 tariffs.” Glas added.
Lu believes that the prospects for the U.S.-China tariff war are still unclear. It is worth noting that in recent years, the overall U.S.-China bilateral trade relations have seriously deteriorated. He Pointing out that in addition to the tariff war, frictions between the two countries have expanded to highly politically sensitive areas such as forced labor and human rights.
Lu believes that the ongoing new crown epidemic The epidemic is another key factor affecting the fate of the Biden administration’s Section 301 tariffs. He explained that due to the widespread transportation delays and supply chain disruptions caused by the epidemic, U.S. policymakers believe it is necessary to bring manufacturing back to the United States for national security reasons. Rather than relying heavily on imports.
He added that the new crown epidemic means that the U.S. government is facing increasing pressure to ease the worst crisis the United States has faced in decades. Serious inflation.
“Some people believe that eliminating Section 301 tariffs on goods imported from China, especially consumer goods such as ready-made clothing, will help curb inflation. , to increase President Biden’s public support.”
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