The trade association representing US retailers claims American consumers would pay $4.4bn more each year for apparel and $2.5bn more for footwear if the US goes ahead with an additional 25% tariffs on US$300bn worth of Chinese goods.
The National Retail Federation (NRF) raised its concerns as the USTR holds a near two-week-long hearing on the proposed tariff hike. US apparel and textile industry trade bodies are submitting testimony to the administration, with The National Council of Textile Organisations (NCTO), several of its member companies, and the American Apparel and Footwear Association (AAFA) presenting their evidence at the first day of the hearing last week.
“We support efforts to achieve better trade deals, but American consumers shouldn’t be caught in the crosshairs,” said David French, NRF senior vice president of government relations, during testimony prepared for a USTR hearing on Friday (21 June). “It’s time to reevaluate a strategy based solely on tariffs and work with our allies to put international pressure on China.”
French added that for most of the consumer products on the list, there are very few alternative sources of supply.
“It would be impossible for all market participants in our industry to simultaneously move sourcing to other countries. The capacity does not exist. In the short term, retailers would be forced to continue to use Chinese suppliers and pass on higher costs to their customers – just in time for the holiday shopping season.”
French also cited a new report commissioned by the NRF and prepared by Trade Partnership Worldwide that examines key product categories and the negative impact on American consumers. It projects American consumers would pay $4.4bn more each year for apparel and $2.5bn more for footwear if the administration proceeds with the additional tariffs.
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By GlobalData“In summary, we find that the proposed tariffs, especially at 25%, would be too large for US retailers to absorb and, once passed on, would result in prices higher than many consumers would be willing to pay,” the report states.
The proposed retaliation list would add a range of apparel items to those facing higher duties, on top of the high duties American consumers already pay for these goods. It includes over 500 Harmonized Tariff System (HTS) items of clothing, from tops and bottoms to underwear and outerwear, from swimwear to ski suits and from ties and gloves to socks and hosiery.
“Our analysis of the likely impacts of the imposition of 25% duties on the apparel items in List 4 found that prices for apparel rise across the board. Prices of apparel from China would increase by 22%, and by 2% for products from US suppliers. Overall, US prices for apparel generally (from all sources combined) would rise by 5%. As a result, US consumers are forced to reduce overall purchases by 11%.”
The report notes the biggest winners from tariffs on Chinese apparel are producers in other countries. Manufacturers in Vietnam would see annual export revenues grow by about $660m. Producers in Indonesia, Mexico, India, Honduras, Bangladesh, and El Salvador, meanwhile, each would see annual export revenues grow by about $150m-$300m per year.
It also suggests US apparel manufacturers would see revenues grow by about $620m – but that after accounting for domestic manufacturing gains and new tariff revenue, the result is a net $2.2bn loss for the US economy.
As part of monthly consumer surveys conducted by Prosper Insights & Analytics, NRF has been tracking the public’s growing concern over the trade war. Its June survey found 81% of consumers are “concerned the ongoing trade war will cause prices to increase,” a 12% increase since November 2018.
