China doesn’t pay the tariffs. American businesses and consumers do.
The Big Picture
On August 18, 2017, the Trump administration initiated a Section 301 investigation “to determine whether acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce.”
Since that time, the administration has threatened or imposed punitive tariffs on $550 billion worth of U.S. imports from China. As the source of 42% of apparel, 69% of footwear, and 82% of travel goods sold in the U.S. market, this move has been described as an existential threat to the industry.
Current State of Play
Currently, members are being hit with a 25% punitive tariff on items included in three lists released by the administration since early 2018 – also known as “Tranches 1-3” that together total $250 billion worth of U.S. imports from China. Products identified on these lists include leather apparel, hats, accessories, textiles, travel goods (handbags, backpacks, luggage), and hangers. On August 23, the Trump administration indicated that the tariff rate on these products will be increased to 30% on October 1, however this has since been delayed to October 15. These punitive tariffs are in addition to tariffs that were already in place for these products.
Meanwhile, the administration is moving forward with a crippling “Tranche 4” of products to be hit with a 15% punitive tariff. This list includes shoes, clothes, and all other U.S. imports from China totaling $300 billion worth of imports beginning September 1, 2019 and December 15, 2019.
Find AAFA letters and testimony to the administration, as well as press statements, in our News room. Follow us @apparelfootwear and on LinkedIn for our latest announcements and press interviews.
How to Engage
We encourage all members to take the following steps:
- Contact Congress: It is essential that all members contact their representatives to emphasize how punitive tariffs will impact your business and American jobs. Members can also encourage representatives to pass legislation to rein in the Executive Branch’s tariff making abilities. AAFA has form letters available in our Legislative Action Center that can be sent today. Additionally, AAFA can facilitate in-person meetings with representatives in Washington.
- Apply for exclusions: The administration is accepting applications for exclusions (details | web portal) from tariffs imposed on Tranche 3 – including travel goods, textiles, hats, and leather/plastic apparel – through September 30, 2019. If approved, the exclusion would provide your company with a rebate on tariffs paid to date and remove punitive tariffs on the approved products for one year. AAFA members are encouraged to review our member-only webinar on the Tranche 3 exclusion process. (Note: A new exclusion process for Tranche 4 is expected soon).
- Utilize AAFA support materials: AAFA has developed several supporting materials for members trying to keep up with the latest tariff actions and for those looking to diversify supply chains. The following materials and groups require an AAFA membership:
Not an AAFA member? Sign up for the open-industry AAFA Weekly Brief and contact email@example.com to learn how to join and to gain access to member-only resources and committees.