Fashion Intel & Analysis

Following the Office of the U.S. Trade Representative’s hearing in August on the proposed list of $200 billion in tariffs, the United States Fashion Industry Association (USFIA) filed comments yesterday urging the Administration to remove certain apparel products and consumer goods from the list.

“The Administration has proposed tariffs on many items manufactured and sold by USFIA members, which will have a direct impact on American consumers, especially during the back-to-school and holiday shopping seasons,” we said. “Of particular concern to USFIA’s member companies and consumers are the proposed tariffs on hats and headwear in HTSUS Chapter 65; luggage and handbags in Chapters 42 and 46; leather and faux leather apparel and products in Chapter 42; and lamps and furniture in Chapter 94. Our members also have concerns about the proposed tariffs on cookware in Chapter 73; picture frames in Chapter 83; plastic articles including rainwear and hangers in Chapter 39; certain electrical equipment including vacuum cleaners and television sets in Chapter 85; paper products in Chapter 48; articles of wood including jewelry boxes in Chapter 44; aluminum products including sanitary ware in Chapter 76; feathers used for stuffing and down in Chapter 5; textile products including felt and nonwovens and certain yarns in Chapter 56; and specialty textile products including embroidery in Chapter 58.”

The comments explain how the tariffs will harm consumers and jobs in the United States, while doing nothing to solve the IPR challenges with China; furthermore, the tariffs will actually discourage sourcing and manufacturing within the United States. The comments are available here.

In addition, USFIA joined multi-industry comments from a coalition of more than 150 trade associations representing U.S. retailers, manufacturers, farmers, technology companies, natural gas and oil companies and other industries. “Our organizations agree that longstanding issues in China have negatively impacted many U.S. companies, and we support the administration’s efforts to negotiate meaningful, binding and long-term solutions with the Chinese government, (but) applying these high levels of tariffs on Chinese products will continue to miss the mark,” we said.

USFIA joined additional comments from apparel, soft-goods, and retail associations, as well, available here.

Today, the day after an expected 6,000+ comments were submitted for the record, President Trump said he is planning to move ahead with the $200 billion in tariffs and threatened an additional $267 billion in new tariffs. “We’ve taxed them $50 billion — that’s on technology,” the president said. “Now we’ve added another $200 billion. And I hate to say that, but behind that, there’s another $267 billion ready to go on short notice if I want. That totally changes the equation,” he told reporters on Air Force One.

ILA Members Approve 6-Year Contract Extension

Yesterday, the International Longshoremen’s Association (ILA) local members approved the six-year contract extension with the United States Maritime Alliance. In a statement, the ILA said the agreement will “bring generous pay increases, landmark protections against job-killing fully automated ports and labor peace and stability through September 30, 2024.”

The trade war intensifies as China warns that it will retaliate if the United States implements any new tariff measures. "If the United States, regardless of opposition, adopts any new tariff measures, China will be forced to roll out necessary retaliatory measures," said Gao Feng, spokesman for China’s Ministry of Commerce. The Trump Administration is currently considering a third list of tariffs totaling $200 billion, which include several consumer products as well as textiles, bags, and other fashion items. Following the recent U.S. Trade Representative hearing on the list, during which USFIA President Julia Hughes testified, the Administration is accepting public comments through the end of the day today. USFIA will share our final comments, as well as other industry-wide comments, tomorrow after the comment period has closed.

For the latest updates on trade policy and the trade war, we encourage you to join the USFIA State of the Industry Virtual Townhall next Thursday, September 13th. This free, one-hour webinar is open to members and affiliates only. Click here to register.

USFIA Urges Labor to Keep Uzbekistan on Child Labor List

Earlier this week, the United States Fashion Industry Association (USFIA) joined a letter organized by the Cotton Campaign to the U.S. Department of Labor opposing the recent decision to remove cotton from Uzbekistan on the list of products made with forced or child labor. (More information on the decision is available in the Federal Register.) The Cotton Campaign argues that, despite some progress in Uzbekistan, cases of forced child labor still occurred during the 2017 harvest and local school administrators and teachers remained under pressure to force children into the fields to meet their annual cotton quotas. As a result, it is premature to remove Uzbek cotton from the EO13126 list until it can be verified that the Uzbek government has fully enacted the reforms to eliminate the drivers of forced child labor, particularly subjecting school officials to production quotas. The letter is available here.

Levi’s Announces New Gun Violence Prevention Measures

Chip Bergh, CEO of Levi Strauss & Co., penned an op-ed this week announcing that the company is increasing support for gun violence prevention. “You may wonder why a company that doesn’t manufacture or sell guns is wading into this issue, but for us, it’s simple. Americans shouldn’t have to live in fear of gun violence. It’s an issue that affects all of us—all generations and all walks of life,” he writes in Fortune. In particular, Levi’s established the Safer Tomorrow Fund, providing more than $1 million in grants to nonprofits and youth activists who are working to end gun violence in America, as well as partnering with Everytown for Gun Safety, and increasing the employee donation match program and volunteer opportunities. The full op-ed is available here.

Today, USFIA President Julia Hughes is scheduled to testify during the Office of the U.S. Trade Representative’s hearing on the proposed tariffs on approximately $200 billion worth of Chinese products under Section 301 of the Trade Act of 1974. She will testify on a panel with the National Retail Federation (NRF), China Chamber of Commerce for Import and Export of Textiles, and Jo-Ann Stores, LLC, among others. Her testimony as prepared for delivery is available here. (As of this writing, the hearings was delayed due to a chemical leak at the hearing site, the U.S. International Trade Commission. It’s unclear whether Hughes' panel will continue today as planned or be delayed until another day; we will keep members informed. The hearing was originally scheduled for six days.)

Joann Stores has launched a campaign to stop the “Made in America Tax” (@made_tax), the proposed tariffs on fabrics and craft supplies. In addition, the Juvenile Products Manufacturers Association has started a #nobabytariffs campaign on social media and are using the following graphic. We encourage companies to engage on social media if possible.

Meanwhile, yesterday, Hughes spoke to National Public Radio’s Marketplace about the impact of tariffs on fashion products, particularly the impact on consumers. You can hear the entire interview at https://www.marketplace.org/2018/08/22/business/fate-fashion-trade-war

Today, August 27th, the United States and Mexico announced “preliminary agreement in principle” of a bilateral trade deal, which President Trump said will replace the North American Free Trade Agreement (NAFTA). During the announcement, President Trump said he plans to “terminate” NAFTA and support the new U.S.-Mexico Trade Agreement.

According to the Office of the U.S. Trade Representative (USTR), the deal has a new textile chapter to “incentivize greater United States and Mexican production in textiles and apparel trade, strengthen customs enforcement, and facilitate broader consultation and cooperation among the Parties on issues related to textiles and apparel trade.” In particular, the deal will “promote greater use of Made-in-the-USA fibers, yarns, and fabrics by limiting rules that allow for some use of non-NAFTA inputs in textile and apparel trade and requiring that sewing thread, pocketing fabric, narrow elastic bands, and coated fabric, when incorporated in apparel and other finished products, be made in the region for those finished products to qualify for trade benefits.” According to our sources at USTR, the agreement eliminates the visible linings rule, which was a priority for some USFIA members.

One of the most important elements in this re-negotiation of NAFTA is how the current Tariff Preference Levels (TPLs) will be treated. The USTR statement does not specifically answer that question, and we will send another update when we do have details. From conversations with USTR, we do not believe that there are major changes in the TPLs, but we cannot confirm that. The agreement also establishes a textile chapter for U.S.-Mexico trade, including textile-specific verification and customs cooperation provisions that provide new tools for strengthening customs enforcement and preventing fraud and circumvention in this important sector. “The new Textiles chapter provisions are stronger than those in NAFTA 1.0 with respect to both enforcement and incentivizing North American production of textiles,” says USTR. We will provide a link to the USTR fact sheet about the agreement when it’s available online.

U.S. Trade Representative Lighthizer said the Administration plans to formally notify Congress of the deal on Friday, so the parties can sign the deal at the end of November.

CBP to Hold CTPAT Conference in September in Orlando

U.S. Customs & Border Protection (CBP) will hold the Customs Trade Partnership Against Terrorism (CTPAT) 2018 Conference from September 12-13 in Orlando, Florida. Registration is now open at https://ctpatregistration.cbp.gov/index.asp?w=14

NRF Finds China Tariffs Would Disproportionately Affect Consumers of Furniture & Travel Goods

The National Retail Federation (NRF) has released a new study in conjunction with The Trade Partnership, Estimated Impacts of Proposed Tariffs on Imports from China: Furniture and Travel Goods. The study finds that the proposed tariffs would have a “substantial negative impact” on American consumers of furniture and travel goods; consumers would pay between $2.1 billion and $4.6 billion additional for furniture and between $578 million and $1.2 billion additional for travel goods. The full study is available here.

Following yesterday’s announcement that the Trump Administration will impose an additional 25% tariff on certain imports from China, today we have a statement from the Chinese Ministry of Commerce that they will take the same action on $16 billion worth of U.S. goods. This is not a surprise, but we are waiting to see what will be the next move. In the meantime, just a reminder that the Administration will hold three days of hearings on August 20 – 22 to hear from industry about the impact of the third group of products proposed for retaliatory tariffs. USFIA will testify at the hearing.

Industry Groups Ask Trump Administration to Update the Exclusion Process for Products Covered by the Section 301 Tariffs

USFIA joined with more than eighty industry groups to ask United States Trade Representative, Robert Lighthizer, for improvements to the exclusion process available for products that are affected by the penalty tariffs imposed under the 301 action against China. The letter contains proposals for product exclusion request procedures, and detailed recommendations regarding the criteria the Administration will use to evaluate product exclusion requests. Click here to read the full letter.

USDA Releases Report on China’s Proposed Supplemental Tariffs on U.S. Food and Agriculture Imports

The United States Department of Agriculture (USDA) released a report containing the unofficial translation of the announcement made on August 3rd by China’s State Council Tariff Committee (STCT) regarding China’s retaliatory tariffs. The complete translation and list of proposed supplemental tariffs on food and agriculture imports from the U.S. can be found here.