Trump Administration Set to Announce 90-Day Deferral of Some Apparel Tariffs (China Excluded)
The president is reportedly set to give the green light to delay certain tariff payments by three months. On the surface, this sounds like a large concession in the ongoing back and forth between the U.S. and China, but it only pertains to what Bloomberg called “most-favored nation duties,” which means tariffs put in place as a result of “enforcement action,” like those on Chinese goods, are still in place.
The most-favored nation tariffs are imposed on countries that export a certain number of products to the U.S., notably footwear and apparel. The Bloomberg article specifically mentioned items like ski jackets, baby garments and sneakers can have anywhere from a 27 percent to 60 percent duties.
According to Sourcing Journal, almost 400 companies signed a letter to President Trump asking him to delay duties to ease the economic burden of the COVID-19 crisis. The letter was signed by executives at big-name apparel companies like Adidas, Levi Strauss & Co., Under Armour and more.
“Delaying duties helps us preserve cash flow—critically important during a prolonged period of little to no revenue—allowing us to keep our business in operation so we can preserve U.S. jobs,” the letter said. “At the same time, delaying duties does not undermine the effect of tariffs on trade flows because the money is still due.”
According to reports, the tariff delay would last 90 days, and is still waiting the final sign-off from the president. But, sources claim that it is just a matter of time until it's announced.
It’s good news for importers, but domestic manufacturers are against the move.
“At a time of financial hardship and unrest as a result of the coronavirus, [Customs and Border Patrol] should not reintroduce unfairly traded goods to cause American workers further economic pain because of lobbying efforts of stateless companies,” the Coalition for a Prosperous America wrote in a letter to acting CBP commissioner Mark Morgan. “This effort by CBP will only exacerbate the financial situation of countless Americans.”
“This approach might very well be a death blow for domestic manufacturers simply trying to stay in business and for their workers struggling to survive,” Michael Wessel of the United Steelworkers Union said, according to Bloomberg. “Letting importers off the hook for such an extended period from having to pay duties at this critical time could be the difference between survival and bankruptcy.”
So, is this a good move? It depends which side you’re on.