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January 4, 2021

US-China tariff war – The textile and apparel hit-list updated

Amid the rapidly shifting goalposts of the US-China tariff war and the addition of punitive duties on textiles and apparel imported into the US from China, we’ve taken an updated look at the latest actions and the products on the hit-list.

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The tit-for-tat trade war between the US and China was instigated by a Section 301 investigation into China’s acts, policies, and practices related to technology transfer, intellectual property and innovation. Punitive tariffs were first introduced on US imports from China in July 2018.

The stakes were upped on 1 August 2019, when the Trump administration announced plans to impose an additional 10% punitive tariff on US$300bn of imports from China – including almost all textiles and apparel. 

Then, on 23 August 2019, after China outlined retaliatory measures against US products, President Trump decided the scheduled punitive tariff rate would rise from 10% to 15%. This was on top of the most favoured nation (MFN) rate applied by the WTO on US imports from China – which averaged 14.4% for knitted apparel (HS chapter 61) and 10.4% for woven apparel (HS chapter 62) in 2018.

The additional 15% punitive rate (Tranche 4A) applied from 1 September 2019 to most apparel items (HS chapters 61 and 62) imported into the US from China. Additional apparel items – for which China’s share of US world imports is largely more than 75% – were were set to see tariffs imposed from 15 December 2019 (Tranche 4B).  

However, on 13 December 2019, the US reached a ‘Phase One’ trade agreement with China. As part of the deal, the Trump administration said the 15% punitive tariffs on Tranche 4A products would be reduced to 7.5% around 30 days after the signing of the agreement. It was officially signed on 15 January 2020, meaning the 15% punitive tariffs on Tranche 4A products were reduced to 7.5% from 14 February 2020. Meanwhile, the scheduled tariff increase for Tranche 4B products is currently suspended.

Although less impactful for the clothing sector, punitive tariffs continue on about $250bn of Chinese imports. Around US$3.7bn in textile imports into the US from China are affected, which applies to Tranches 1, 2 and 3. 

The tables below summarise the textile and apparel products covered by the US-China trade war and the tariff rates – and have been updated to reflect the latest moves – which include the extension of some Section 301 tariff exclusions on imports from 1 January 2021 until 31 March 2021.

Note: HS Chapters 50 to 63; trade value in 2018 (data source: USTR, 2019; USITC, 2019)

Textiles and Apparel (HS Chapters 50-62) excluded from US Section 301 Actions against Chinese products (as of 1 January 2021)

*Note: Extended until 31 March 2021. See Table 2A

*Note: Extended until 31 March 2021. See Table 2A

Trade data source: USITC (2019)

*Trade data source: USITC (2019) **Previously scheduled to take effect on 15 December 2019

Appendix: Textile and apparel products covered by the US-China tariff war (as of August 2019):

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What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
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Enter your details here to receive your free Whitepaper.

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