Daily Newsletter

13 October 2023

Daily Newsletter

13 October 2023

US tariffs on Chinese imports could cost US consumers $31bn

A new National Retail Federation (NRF) report estimates the cost of adding tariffs to imported household goods, including apparel and footwear.

Rachel Lawler October 13 2023

The NRF's report considers how ending the country’s permanent normal trade relations (PNTR) trade status would impact common household products, including apparel and footwear as policymakers express a growing interest in changing current practice between the US and China.

PNTR rules mean that China currently has the same tariff rates as other US trading partners. This has been the case since 2000, when China joined the World Trade Organization.

Removing this status would mean significantly higher tariffs on imports from China, including both finished goods and inputs to production.

NRF estimates that this would cost US consumers $240 per household in higher prices – or a total of $31bn for US consumers overall.

The cost of apparel could increase by nearly 2% and footwear by nearly 5%. Other sectors hit with increased prices include toys, household appliances and furniture.

Low-income households would be hit the hardest by these rising costs, according to NRF's report, as they tend to spend a greater percentage of their income on these items than others. The NRF says these price increases could also hurt efforts to curb inflation overall.

NRF’s vice president of supply chain and customs policy Jonathan Gold says: “Even though significant efforts have been made in recent years to diversify sourcing, China continues to play an important role in the supply chain of many retailers and other global industries, from sourcing raw materials to manufacturing and production.”

“It would be impossible for American families to escape the higher costs from dramatic tariff increases on necessities such as apparel, footwear, furniture, appliances and toys.”

In September 2022, the United States Trade Representative (USTR) announced the next steps of its four-year review on the Section 301 tariffs against China, following requests for continuation from the US’ domestic industries and the apparel sector's response was mixed.

In July 2023, Shein called on the US apparel industry to propose a new framework for Section 321 of the Tariff Act of 1930, also known as the de minimis exemption for what it says is “for the benefit of all US retail consumers”.

Clothing and footwear ranked among the top 3 sectors by global ecommerce transactions in 2022

Per GlobalData estimates, food and drink, clothing and footwear, and accommodation were the top three sectors by global ecommerce transactions in 2022. Clothing and footwear accounted for 11% of ecommerce transactions in 2022. While consumers may wish to try on clothing and footwear items to ensure a good fit, enhanced technology that offers sizing recommendations and hassle-free returns services has made them more comfortable shopping for these goods online, accounting for the sector’s high share of transactions.

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