Tariffs Could Impact T-shirts, Food and Drink Trade with China and Europe

By Brendan Menapace

President Trump has made international trade one of the tenets of his platform since his presidential campaign for began. Following his election, the president has questioned the effectiveness of trade agreements like the Trans-Pacific Partnership, NAFTA and more.

Trump has brought up the idea of tariffs on steel and aluminum imports. Most recently, the president cited the trade deficit the U.S. currently has with China as a reason to impose tariffs on Chinese imports, specifically targeting technology and telecommunications, but causing ramifications for domestic apparel companies, as basics such as T-shirts and jeans are present on his list.

A source with knowledge of the president and his administration's plans told Reuters that the tariffs could apply to up to 100 products. The report also claimed that the tariffs could apply to basic apparel items commonly imported, which has lobbyists for groups like the Retail Industry Leaders Association (RILA) concerned.

"We're not talking about fancy cashmere sweaters, Hun Quach, a lobbyist for RILA told Reuters. "We're talking about cotton T-shirts and jeans, and shoes that kids wear for back-to-school."

This news is especially noteworthy as we've seen companies built on domestic manufacturing shift some operations abroad, like we saw with American Apparel after its restructure.

While the original news took aim at China, Trump's bluster has caused European trade partners to take precautions, too.

The Washington Post reported today that the European Union published a 10-page list of American products that it could impose retaliatory tariffs on if Trump included the E.U. in his proposed tariffs on steel and aluminum. What's more, Treasury Secretary Steven Mnuchin has raised the idea of imposing individual tariffs on E.U. members, which goes against the bloc's structure of negotiating trade policy as a single entity. An E.U. official told the Post that doing so would be "absolutely non-acceptable" and "be very disruptive for transatlantic relations."

It could be a coincidence, but some if the items the E.U. listed seem to take aim at specific members of the administration and legislative branch.

The Washington Post wrote:

Among them: Bourbon, a specialty of Senate Majority Leader Mitch McConnell’s Kentucky; cranberries which grow in House Speaker Paul D. Ryan’s native Wisconsin; orange juice from Florida and tobacco from North Carolina, two political swing states that are rich in electoral votes.

"It's pretty clear they're trying to wake up American legislators, who are the only ones in government who can influence the president on this issue," Chad Brown, a trade expert at the Peterson Institute for International Economics, told the Post.

This comes just two weeks after the president tweeted that "trade wars are good, and easy to win."

When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!

— Donald J. Trump (@realDonaldTrump) March 2, 2018

Last March, Mexico canceled all sugar exports to the U.S. due to an understaffed U.S. Department of Commerce, which caused tension between the two countries leading up to still-ongoing, tumultuous discussions over the fate of NAFTA.

As those talks continue, and tensions related to trade with China and the E.U. become more strained, the implications of importing and exporting not only basic apparel but now food and drink items remain foggy.