US retailers urge caution over China trade

Mark Lane | 20th March 2018

WASHINGTON – A raft of leading US apparel retailers with combined revenues of US$1.5 trillion, including Gap, Target Corp, Levi Strauss and VF Corporation, have signed a letter to President Trump urging him to avoid a trade war with China. The Retail Industry Leaders Association, American Apparel & Footwear Association and National Retail Federation claim consumers will be hit hardest if the US imposes retaliatory tariffs on China as the price of ordinary household goods such as clothing soars.

The letter points out that 41 per cent of clothing purchased in the US is made in China, making US consumers highly vulnerable in a trade war.

The White House has recently indicated it would consider remedial actions under Section 301 of the Trade Act as part of an investigation into allegedly unfair Chinese technology and intellectual property policies and practices. Under section 301, the President has unilateral and discretionary action to retaliate against China. The retaliation package could include widespread tariffs on consumer goods. America’s retailers joined together to ask the President to consider the impact to working families before taking action.

The signers said: “… we are concerned about the negative impact as you consider remedial actions under Section 301 of the Trade Act could have on America’s working families…applying any additional broad-based tariff would worsen this inequity and punish American working families with higher prices on household basics like clothing, shoes, electronics, and home goods. As you continue to investigate harmful technology and intellectual property practices, we ask that any remedy carefully consider the impact on consumer prices. We must do right by American families while also addressing harmful technology practices.”

Sandy Kennedy, president of RILA, said that imposed tariffs could set the industry back, arguing: “This is not American industries crying wolf. Higher tariffs will mean higher costs to businesses and in turn higher prices for American families. After a major tax reform victory, widespread tariffs on everyday consumer goods will wipe out much of the benefits realised by the average American household. We must do right by American families, and make sure they are not the ones who will pay for China’s harmful technology practices.”

Rick Helfenbein, president and CEO of AAFA said: “Tariffs are a hidden tax on Americans – plain and simple. More than 41 percent of clothing, 72 percent of footwear, and 84 percent of travel goods sold in the U.S. are made in China. A tariff on these products would be a tax on every American. In addition to increasing costs for American families, this action could result in retaliatory tariffs that target American businesses, resulting in job losses. At the end of the day, this could be disastrous for American families, American workers, and American businesses.”