AAFA's vice president of trade and customs policy Beth Hughes has told the United States Trade Representative (USTR) the Section 301 China tariffs have proven to be an "ineffective" tool for tackling the US' concerns with China's policies and practices.
She advised the USTR to use other trade tools and measures that do not "harm" US companies and consumers to combat China's so-called unfair practices and policies.
Hughes urged ambassador Katherine Tai to suspend the application of all Section 301 tariffs going forward and create a more robust exclusions process – one that is transparent and open to all products covered by the Section 301 tariffs.
She noted: "All of the expired Section 301 tariff exclusions should be retroactively reinstated. Further, USTR must abandon these ineffective actions and utilise other trade tools and measures to combat China’s unfair practices and policies."
Hughes believes the tariffs have led to more "unpredictability" within the AAFA members' supply chains while simultaneously leading to a rise in prices for apparel, footwear and travel goods for US consumers.
She quoted USTR's 2022 Report to Congress on China's WTO Compliance, which reads: "The reality is that this Agreement did not meaningfully address the more fundamental concerns that the United States has with China’s state-led, non-market policies and practices and their harmful impact on the US economy and US workers and businesses."
Hughes emphasised that during times of high inflation it is the US consumers at the lowest end of the income scale that directly benefit from trade.
She said: "Approximately, 98% of apparel, footwear, and related goods sold in the United States today are imported. Yet the US still maintains high duties on these products – some of the highest we levy on any products - adversely affecting US consumers who ultimately pay those duties in the form of higher prices."
She gave examples to demonstrate that although the average trade weighted tariff rate imposed on all products was approximately 2.36% in 2023 for knit apparel it was 14.9%, woven apparel it was 14.4% and footwear it was 12%.
Hughes added that the amount of tariffs collected on imports of US apparel, footwear, textiles, and travel goods in 2023 exceeded $17bn.
She said: "This burden falls disproportionately on products imported by our industry, even though many of these products are no longer made in commercial quantities in the US. In 2022, our industry represented approximately 6% of all US imports (by value) yet nearly 28% of all duties collected by Customs."
Hughes also pointed out the ongoing challenges in China's IP and e-commerce legal system, noting that criminals can exploit loopholes to conduct online infringement and counterfeit goods sales. Hughes said these challenges make it difficult to effectively tackle such issues.
AAFA's recommendations for Section 301 China tariff exclusions
- All current exclusions should be renewed permanently. At this point, two administrations (one Democrat and one Republican) have on multiple occasions renewed these exclusions and there is ample evidence on the record that the economic realities supporting these exclusions persist and can be expected to persist.
- Retroactively extend existing exclusions for the 10-month period when they were temporarily expired between January 2021 and October 2021. As noted above, there is widespread consensus that these products deserve full exclusions. It made no sense for these exclusions to expire, and it is unfair to the companies, and their workers, who have repeatedly shown that the exclusions have merit, to not be made whole.
- Open up a new exclusions process for any items that continue to face Section 301 tariffs. It is long past time to invite affected parties to petition the government to review fresh exclusions to consider any changed circumstances.
- Complete the four-year review that affects ALL Section 301 tariffs. As noted above, we have long opposed the original imposition of the Section 301 tariffs on textiles, apparel, footwear, travel goods, and related items. The administration is statutorily required to review these tariffs, but regrettably this review has been inexplicably delayed on multiple occasions.
