Date: Thursday, November 16th, 2023
Source: Sourcing Journal
The Footwear Distributors of America has a message ahead of the Biden administration’s announcement regarding footwear tariffs: get rid of them.
In a Monday letter sent to U.S. Trade Representative Katherine Tai and U.S. Secretary of Commerce Gina Raimondo, FDRA president and CEO Matt Priest urged the administration to eliminate the Section 301 tariffs on China, which he said have had adverse effects on American businesses and working class consumers who have had to grapple with higher costs.
The letter was sent on the eve of President Biden’s meeting with Chinese President Xi Jinping on Wednesday, where the leaders will discuss U.S.-China relations.
In August 2017, the United States began an investigation under Section 301 of the Trade Act of 1974 of China’s technology and intellectual property related practices that the United States believed adversely affected U.S. businesses. In 2018, the United States concluded that China was failing to make changes to those policies and practices and that punitive tariffs of up to 25 percent should be imposed. Thus, Section 301 tariffs were applied to U.S. imports from China of apparel, footwear, travel goods and furniture in 2018 and 2019.
“Hitting U.S. businesses and consumers with added footwear costs is incapable of changing Chinese behavior,” read FDRA’s letter. “China does not pay the tariffs; U.S. businesses and consumers pay the tariffs. China also does not include footwear as a key tenet of its industrial policy. If the goal of the tariffs is to incentivize U.S. companies to leave China, this simply does not work with footwear due to limited sourcing options.”
When it comes to footwear, Section 301 tariffs of 15 percent were imposed on about half of the footwear imported from China on Sept. 1, 2019. Those tariffs were later reduced on Feb. 14, 2020, to 7.5 percent.
FDRA, along with the American Apparel & Footwear Association (AAFA), the National Retail Federation (NRF), the Retail Industry Leaders Association (RILA), and the United States Fashion Industry Association (USFIA) in January released a joint study calling out the “detrimental economic impacts” the Section 301 tariffs on China have had on American businesses and consumers.
According to the study, higher costs and prices from the tariffs fell on U.S. companies and American families — and the tariffs also led to significant indirect costs, including those associated with attempts to establish bifurcated supply chains.
“Footwear is taxed at an average rate of 12 percent, while all other imported consumer goods are taxed at an average rate of just 1.9 percent,” Priest noted in the letter. “Footwear tariffs reach rates of 37.5 percent, 48 percent, and higher. In fact, some of the highest rates in the entire U.S. Tariff Code fall on low value shoes and children’s shoes, disproportionately impacting working class families at a time when they can least afford it.”
In October, FDRA found that footwear prices rose a modest 1.1 percent from a year earlier, the sharpest increase in eleven month.