As New Trade Rep. Comes Onboard, Retail Sets Sights on Tariffs

With the Senate’s unopposed confirmation on Wednesday of U.S. Trade Representative Katherine Tai, the retail industry has put forth a trade policy wishlist aimed at cutting tariffs on apparel imports.

The issue of raised tariffs on finished goods imports from China has particularly vexed the clothing and apparel retail industry, which has argued that such import taxes lead to retailers transferring additional costs to consumers. During the prior administration of former President Donald Trump, increased tariffs on Chinese imports went into effect on various categories of merchandise, including apparel, following a U.S. probe under the Section 301 of the Trade Act of 1974. After earlier rounds of tariff increases, the ensuing phase one deal between the U.S. and China in 2019 averted certain tariff increases, though the average tariffs on Chinese imports stands at roughly 19 percent, according to the Peterson Institute for International economics. 

“Our industry has historically faced high tariffs, many of which are assessed at levels that were set more than 90 years ago,” the American Apparel & Footwear Association’s president and chief executive officer Steve Lamar wrote in the group’s letter to Tai on Thursday.

“I look forward to developing a close partnership with you in this new role as we work together to advance a trade policy that is vital to our country’s economic and foreign policy interests,” he wrote. 

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The industry views Tai’s confirmation as a moment of shift for U.S. trade policy, given U.S. trade officials’ ongoing review of current trade policies, and Tai’s remarks to the Senate Finance Committee earlier in her confirmation process indicating that she views tariffs as just one tool in the office’s chest. “I know the opportunities and limitations in our existing toolbox,” Tai wrote in her testimony to the committee in February. “And I know how important it is to build what the president has termed ‘a united front of U.S. allies.’”

The retail industry also generally expects Tai and the Biden administration to take a collaborative approach to trade policy, engaging the retail industry more in decision-making, said Beth Hughes, AAFA’s vice president of trade and customs policy.

“We take this as a hopeful sign that while they’re still undertaking this China policy review, they’re really looking to see if the tariffs have done the job they set out to do,” said Hughes. “We think the answer is ‘no,’ and, hopefully, we’ll start to see tariff relief.”  

Retailers have indicated in recent years that they are seeking to diversify their supply chain, but change on that front has been slow. In 2020, U.S. imports of fabrics, textiles and apparel still came mostly from China, followed by India and Vietnam, according to a report released in February by the Office of Textiles and Apparel. 

Industry professionals expect to see the Biden administration’s shifts in tariffs policy more in the long term, rather than any quick reversal of its predecessor’s policies.  

“The Biden administration is going to take a step back and look at the entire approach for China before they make sudden moves,” said Randy Rucker, partner at Faegre Drinker Biddle & Reath LLP, who advises companies on import and tariff issues. 

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