Fashion Intel & Analysis

In a CNBC interview this morning, President Trump said the best deal the U.S. could reach with China would involve 25% tariffs on $600 billion of Chinese goods.  The President threatens to impose additional tariffs on the next $300 billion (Tranche 4) if Chinese President Xi Jinping does not meet with him at the G20 summit in Japan later this month. 

During the same interview, the President again claimed that the additional tariffs on China would not have an effect on U.S. consumers, or U.S. companies.  “China will subsidize their product because they want to keep people working. So China is going to pay a lot,” he said. “We have another $300 billion to go with China. I haven’t done that because it’s a very big thing for them, not for us. For us it’s not going to matter because we’ll be able to buy the product in other countries that don’t have the tariffs. So it’s not going to have an effect.”

So, if you’ve been thinking about whether to get engaged in the industry efforts to oppose Tranche 4, we encourage you to say yes. There are lots of options to share your views – both on behalf of your company and on behalf of the industry through USFIA. You can find a recap of recommendations to fight the China tariffs in our recent member update here

As a reminder, Americans for Free Trade will send a letter to the Administration opposing the tariffs. The full letter can be found here. We encourage your company to sign on by June 12th.  To sign on, fill out the Google form here, or email USFIA with your company name, city, state, zip code, and approximate number of company-wide total employment and we will sign on your behalf. 

An article in the Financial Times serves a reminder that all USFIA members should be vigilant when moving production to new sourcing locations.  The FT reports from Vietnam that the local Customs officials are cracking down on companies that have been relabeling Chinese goods as Vietnamese in order to avoid the U.S. tariffs. The article says that there have been dozens of fraudulent cases, and they specifically mention textiles.

On today’s trade update call, Brenda Smith, Executive Assistant Commissioner at U.S. Customs & Border Protection (CBP) Office of Trade, says CBP is working within the Administration to ensure a smooth implementation of the President’s direction to impose a 5% tariff on all goods imported from Mexico beginning Monday, June 10. According to Smith, CBP recognizes the deadline is getting very close and, while it is not a trade remedy, they are looking to take an approach similar to the previous trade remedy work on steel, aluminum, and China 301. CBP will provide as much information as early as possible through the Federal Register, CSMS messaging, and their Twitter account, @cbptradegov. We will share this information as soon as it is available. There are high-level meetings between the U.S. and Mexico continuing today and we are hoping an agreement is reached.  

Executive Assistant Commissioner at U.S. Customs & Border Protection Office of Field Operations, Todd Owen, also provided an operational update on today’s call. As a reminder, 486 officers from airports, seaports, and northern borders and 245 officers from the southwest border remain pulled to assist border patrol with the migration crisis. According to Owen, cargo wait times at the southwest border have begun to stabilize and times are much more manageable and reasonable than times seen in the last few months. However, Owen mentioned CBP is beginning to see an increase in wait times at airports as peak travel season begins. While CBP sees no significant delays along seaport operations, listeners on the call are concerned of the possibility for an increase in wait time at seaports as they enter the peak season for freight shipments and as companies begin to push up cargo shipments to avoid the List 4 China tariffs. In response to the concern, Owen said CBP will take every practical measure to mitigate the impacts. 

Today, USFIA joined over 100 multi-industry associations in a statement opposing tariffs on Mexico, saying these tariffs would hurt U.S. businesses and consumers while jeopardizing Congressional approval of USMCA. "Tariffs on Mexican imports would harm U.S. consumers, workers, farmers and businesses of all sizes across all sectors, making us less competitive and undermining efforts to negotiate strong trade deals in the future. We oppose unilateral tariffs and any subsequent retaliation. We are committed to working together to pass USMCA through Congress, but a successful effort depends on keeping North American trade tariff-free." 

There has been no deal announced yet between the U.S. and Mexico that would stop the 5% tariff on all goods from Mexico, which is supposed to go into effect Monday, June 10. We are keeping an eye out for a potential deal. In a tweet earlier today, President Trump said there is a good chance the U.S. and Mexico could strike a deal on immigration, “If we are able to make the deal with Mexico, & there is a good chance that we will, they will begin purchasing farm & agricultural products at very high levels, starting immediately. If we are unable to make the deal, Mexico will begin paying tariffs at the 5% level on Monday,” Trump tweeted.  

Senator Cory Gardner (R-CO) is also expressing opposition to the use of tariffs as a retaliation mechanism. Gardner distributed a letter to his Republican colleagues this afternoon warning the proposed tariffs on China, Mexico, and Europe would negate all the economic benefits of tax reform. The full letter can be found here. 

On Friday, USTR issued a statement that they would be extending the increase of the List 3 tariffs from June 1 to June 15. Covered products that were exported from China to the U.S. prior to May 10, 2019 will remain subject to an additional 10 percent tariff if they enter into the U.S. before June 15, 2019. Originally, the deadline to enter the U.S. before the goods would be subject to an additional 25 percent tariff was June 1, 2019. A Federal Register notice will be published this week with additional details, and we will share that information when it is available.