China Tariffs in the Hot Seat

Date: Monday, May 9th, 2022
Source: Sourcing Journal

As the U.S. Trade Representative (USTR) announced this week that it will begin a statutory four-year review of the China 301 tariffs, the National Council of Textile Organizations (NCTO) reiterated its stance for keeping them in place.

“Our position has not wavered–the U.S. must maintain Section 301 tariffs on finished products, in the absence of substantive improvements in China’s pervasive, predatory trade practices,” NCTO president and CEO Kim Glas, said. “Lifting these penalty duties will cement China’s destructive dominance of global manufacturing and will do nothing to achieve the administration’s goal of easing inflationary pressures, as apparel prices out of China continue to hit rock bottom regardless of the Section 301 tariffs.”

USTR announced that leading up to the four-year anniversaries of the tariff actions in the Section 301 investigation of “China’s Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation,” it was giving notice to representatives of domestic industries that benefit from the tariff actions and had previously submitted comments in support of them.

In that notice, USTR said it was also giving industry representatives the opportunity to ask to keep the tariffs in place. If it receives a request for continuation, which NCTO plans to submit, USTR said it will conduct a review of the tariff actions. Requests for continuation must be submitted prior to the four-year anniversary of the action on July 6. If one or more requests for continuation are submitted, USTR will publish an additional notice after July 6 announcing the continuation of the tariff action and will proceed with a review of the tariffs.  The review will include an opportunity for all interested persons to provide comments.

“We have long advocated for the 301 penalty tariffs to remain on finished textile and apparel products from China,” Glas said. “Not only do they increase the government’s negotiating leverage to address the Chinese government’s serious predatory trade practices that have hurt our domestic manufacturing sector and that of our free trade agreement partners for decades, they also send a strong message to China that the United States is committed to addressing systemic predatory trade practices that have undermined domestic industries and their workers.”

Glas said for decades, “China’s illegal actions” have undermined virtually every domestic manufacturing sector and contributed to the direct loss of millions of U.S. jobs. These devastating state-sponsored practices, she noted, which include intellectual property theft, pervasive state-ownership of manufacturing, industrial subsidies, and “abhorrent labor and human rights abuses in the Xinjiang region,” have allowed China to dominate the global marketplace, which has had severe ramifications on American workers and Western Hemisphere trade allies.

“As sourcing executives seek to de-risk out of China for these products, our sector is experiencing massive investment in the U.S. and Western Hemisphere supply chains,” Glas said. “In fact, we expect approximately $1 billion of investment announced in the United States and Central America this year alone, as penalty tariffs have played a key role in sourcing shifts.”

NCTO has long advocated for the tariffs to be maintained on finished textile and apparel products to ensure the U.S. addresses larger systemic issues that she said have substantially hurt the domestic manufacturing sector and offshored jobs.

“Tariffs are a reasonable and necessary mechanism to support U.S. jobs, offset unacceptable practices and strengthen the national economy,” Glas said. “They help partially level the playing field for American manufacturers and workers trying to compete against unfair and illegal trade practices ranging from intellectual property theft and forced labor, to state-sponsored subsidies that have been perpetuated by the Chinese government. These products have flooded the U.S. market and put our domestic producers and their jobs at risk and have significantly contributed to offshoring and the destruction of the middle-class jobs. It’s critical we maintain key negotiating leverage to address these predatory trade behaviors.”

She noted that NCTO has also advocated for a “fair, transparent process” to remove tariffs on certain limited textile machinery, chemicals and dyes that cannot be sourced domestically to help U.S. manufacturers compete against China.

Industry groups such as the American Apparel & Footwear Association (AAFA) have taken a contrary stance on the issue, citing higher prices on apparel imports caused by the tariffs. Steve Lamar, AAFA president and CEO, said recently that the administration still doesn’t “connect the corrosive effect of tariffs, persistent tariffs, on inflation, and that’s the point that we keep trying to make to them, so they see that tariff reduction can lead to lower pricing.”

He and others have also pointed out that the Chinese government doesn’t pay the tariffs, but U.S. importers do.


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