President Trump took to Twitter to announce news, stating the tariffs set for 15 December "will not be charged"

President Trump took to Twitter to announce news, stating the tariffs set for 15 December "will not be charged"

The United States and China have reached an agreement on a Phase One trade deal, in a move that will delay new tariffs that had been due to take effect over the weekend and reduces the rates currently imposed on most apparel and textile products.

The Office of the United States Trade Representative (USTR) on Friday (13 December) said that while tariffs of 25% will continue on about US$250bn of Chinese imports, the additional 15% tariffs that came into play in September on List 4A goods – which includes most apparel items imported from China – will be reduced to 7.5%.

The Section 301 tariff modifications by the US are in response to agreed structural reforms to China's economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange, the USTR says. The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of US goods and services in the coming years. And it establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement.

President Trump took to Twitter to announce the news, adding that the new tariffs set for 15 December will not be introduced – and that talks for Phase Two of the trade deal will start immediately rather than after the 2020 election:

"President Trump has focused on concluding a Phase One agreement that achieves meaningful, fully-enforceable structural changes and begins rebalancing the US-China trade relationship. This unprecedented agreement accomplishes those very significant goals and would not have been possible without the President's strong leadership," adds USTR Robert Lighthizer.

Industry reaction

The news has been welcomed as a step in the right direction by groups representing US apparel and footwear retailers, brands and importers and "could be a sign that the end of the trade war may be in sight," according to the American Apparel & Footwear Association (AAFA).

However, the group says it will continue to push for the removal of all punitive tariffs currently in place. "The trade war is a self-inflicted wound that has caused a lot of pain for America. The sooner these tariffs are eliminated, the better and we won't stop pressing our case until this happens," says AAFA CEO Rick Helfenbein.

The National Retail Federation (NRF) concurs that while the US and China are moving in the right direction on tariffs: "Tariffs create uncertainty and costs for American retail supply chains, and the trade war won't be over until they are eliminated completely" according to David French, NRF senior vice president for government relations. "We agree that we need to realign our relationship with China, but tariffs that harm American businesses, workers and consumers are not the answer and cannot be allowed to continue."

The US Fashion Industry Association (USFIA) adds: "We encourage President Trump and the Administration to move quickly to begin the Phase Two negotiations to find a solution to the trade war."

While Matt Priest, president and CEO of the Footwear Distributors and Retailers of America (FDRA), notes: "Footwear already faces a US$3 billion tariff burden every year. As negotiations continue, we urge the Administration to further eliminate high footwear tariffs that are hurting American footwear companies and consumers."

But the National Council of Textile Organizations (NCTO), which represents US textile manufacturers, including artificial and synthetic filament and fibre producers, points out that 301 duties on textile inputs will remain at a 25% tariff.

"NCTO has strongly supported applying tariffs on finished products as key negotiating leverage since textile and apparel production is a key pillar of the Chinese manufacturing economy. Today's announcement reduces tariffs on finished products at the same time it keeps tariffs in place on key inputs that aren't made in the US such as certain dyes, chemicals, and textile machinery. We believe a wiser approach would be to maintain penalty duties on finished Chinese products while reducing 301 duties on key inputs that are used by US manufacturers."

Click on the following link to see the punitive duties imposed so far on imports into the US from China, and the products on the hit-list: US-China tariff war – The textile and apparel hit-list.