Tech tax threat would "punish" US apparel companies - Just Style
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Tech tax threat would “punish” US apparel companies

By Leonie Barrie 07 May 2021 (Last Updated June 3rd, 2021 09:45)

Plans by the Biden Administration to impose punitive tariffs of up to 25% on a raft of items – including textiles and clothing – imported from Australia, India, Italy, Spain, Turkey and the United Kingdom are being strongly opposed by US brands, retailers and importers.

The proposals are in response to a Digital Services Tax (DST) by the six countries targeting US technology firms, including search engines, social media services and online marketplaces.

In a testimony to the US Trade Representative (USTR) hearing on the matter, Beth Hughes, vice president for trade and customs policy at the American Apparel & Footwear Association (AAFA), said new punitive duties on US imports “would result in great harm to our industry and exacerbate supply chain disruption issues during the Covid-19 pandemic.”

The proposal covers several textile and apparel products (HS Chapters 50-63) from these six countries, including:

  • Austria: 5209.12.00, 5402.49.91, 5404.19.10, 5404.19.80, 5603.94.10, 5603.94.90
  • India: 5109.90.90, 6212.10.50
  • Italy: all 8-digit codes under 6103, 6104, 6110, 6117,6203,6204,6211,6215
  • Spain: no textile and apparel products covered
  • Turkey: all 8-digit codes under 5702, 5703, 6302 and 6303.91.00
  • UK: 6104.43.20, 6201.12.20, 6201.92.45, 6202.12.20, 6202.13.40,6202.92.90, 6204.43.40, 6204.44.40, 6204.49.10, 6205.20.20, 6215.10.00

Hughes noted that many AAFA member companies have sought out new suppliers due to the Section 301 action against China several years ago – with the six countries helping to fill the resulting gap.

“India is the 5th largest supplier of accessories to the US. Italy is our 6th largest supplier of footwear and 9th for accessories. US imports from Spain of accessories have tripled and footwear has nearly doubled since 2010. US apparel imports from Turkey have doubled in the past decade. US apparel imports from the UK and US footwear imports from Austria have experienced steady growth.

“The growth in each of these categories in the countries in question furthers the national interest of diversifying supply chains away from China. However, the proposed set of actions would seek to punish the US companies who have made much needed progress in this area to find supply chain partners.”

She also stressed that “apparel, footwear, and accessories have nothing to do with digital services. Because of this lack of connection, imposing punitive tariffs on US imports for apparel, footwear, and accessories from these countries will do nothing to change their behaviour in this dispute.”

In March, the UK’s fashion and textile sector expressed its disappointment over the potential implementation of punitive tariffs by the US.