How Far Will Tariff Expansion Go?

As the Trump administration threatened to again raise tariffs on $200 billion worth of Chinese imports as soon as May 10, many were wondering how far it would go and what it would cost the American consumer.

The American Apparel & Footwear Association, a trade organization of U.S. clothing and footwear companies, has been adamantly opposed to the tariffs and has been fighting to see them eliminated. Last September, the Trump administration tacked on an additional 10 percent tariff to 6,000 Chinese import items worth $200 billion.

Now Trump has threatened to raise that 10 percent to 25 percent, although this action has been threatened before and postponed a few times.

Currently the affected imports include textiles, handbags, yarns, embroidery and leather as well as other goods including electronics, seafood, produce, cigarettes, carpeting and beauty products. So far, apparel and footwear items are not on the list.

But Trump is saying he may expand the number of Chinese products subject to tariffs, which could include apparel and footwear.

The AAFA calculates that an added 25 percent tariff will result in a family of four paying an additional $500 a year on these products.

“As has been made clear by the administration’s use of tariffs during the past year, tariffs are an additional tax burden placed on Americans,” said Rick Helfenbein, the AAFA’s president and chief executive. “These taxes are not paid by foreign nations, and they result in higher costs, which are simply passed on to the American consumer.”

The National Retail Federation, the United States Fashion Industry Association and the Council of Fashion Designers of America have also been pushing to have the tariffs eliminated. The National Retail Federation estimates that the added 25 percent tariff will cost the average family of four $767 million and reduce U.S. employment by more than 934,000 jobs.

“A sudden tariff increase with less than a week’s notice would severely disrupt U.S. businesses, especially small companies that have limited resources to mitigate the impact,” said David French, the NRF’s senior vice president for government relations. “We want to see meaningful changes in China’s trade practices, but it makes no sense to punish Americans as a negotiating tactic.”

But the National Council of Textile Organizations, a trade group that represents much of the U.S. textile sector, has been pushing to see tariffs on Chinese products expanded to include home-furnishings textiles, apparel and textile end products.

“Chinese imports of finished goods into the U.S. market have the most significant impact on domestic textile and apparel production, investment and jobs,” said Kim Glas, NCTO’s president and chief executive. “In order to address the crisis, we need to get to the very heart of the problem.”

Glas points out that much of this trade dispute is about intellectual property being stolen by Chinese manufacturers. Apparel is one of the largest sections affected by Chinese factories copying U.S. designs and then passing them off as their own. “In fiscal 2016 and 2017, wearing apparel and accessories accounted for one of the single largest segments in IPR seizures,” she said. “Twenty percent of all seizures was apparel. The total value of the seizures for wearing apparel and accessories was $200 million during the past two fiscal years. This is a large and systemic problem.”

But NCTO also wants to see tariffs reduced or eliminated on textile and apparel inputs that are not produced in the United States and therefore pose no threat to local industries. "Acrylic serves as a good example of products that NCTO recommends be removed from the 301 list to avoid undue harm to U.S. manufacturers," the trade group said at a hearing last year. “Raising the production costs for these inputs will only undercut U.S. competitiveness for manufacturers that utilize them without bolstering U.S. producers, of which none exist.”