New US tariffs set to hit Chinese clothing imports will rise from 10% to 15%

New US tariffs set to hit Chinese clothing imports will rise from 10% to 15%

There have been more twists and turns in the tit-for-tat trade war between the US and China, with the office of the United States Trade Representative (USTR) confirming it has received instructions from President Trump to hike tariffs on about US$550bn worth of Chinese imports – including all clothing and footwear – by a further 5%.

Announcing the plans in a tweet over the weekend, Trump said additional new tariffs due to take effect in September and December on Chinese imports will now start at 15%, instead of the 10% the industry was expecting. 

Yet the President seemed in a more optimistic mood yesterday (26 August), taking to the social media platform to state his "great respect" for China's President Xi and noting that trade "talks are continuing" between the two countries.

Trump's latest tweet came after China's vice premier, Liu He, who has been leading the talks with Washington, said China is willing to resolve its trade dispute with the United States through "calm" negotiations and "resolutely opposes the escalation of the conflict," according to Reuters which cited a government transcript.

The President's tweet also came three days after he "ordered" American companies via twitter to "immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA."

Trump's decision to raise the scheduled punitive tariff rate from 10% to 15% on top of existing tariffs applied on US imports from China was triggered by China saying it will levy additional tariffs of 5% or 10% on more than 5,000 goods worth about $75bn imported from the US. The rises on both sides will take effect on 1 September and 15 December, and China's gesture will hit nearly all Chinese imports from the US.

On top of this, current punitive tariffs on $250bn in Chinese goods will rise from 25% to 30% on 1 October following a notice and comment period.

"Clearly the Trump administration's use of tit-for-tat tariff hikes are not part of any coherent strategy for China," fumes Rick Helfenbein, president and CEO of the American Apparel & Footwear Association (AAFA). 

"For two and a half years we have been promised a new and innovative approach, yet what we've been given is a 1930s trade strategy that will be a disaster for American consumers, American businesses, and the American economy. 

"Meanwhile, the President has said he wants American businesses to stop working in China, yet he doesn't seem to understand that moving a supply chain is incredibly complicated and expensive. It takes years to build relationships that meet compliance standards and deliver quality products, yet we have been given weeks and in this case days.

"This is not how you negotiate. This is a tit-for-tat exercise that is hurting Americans and distracting from the task at hand – creating a sustainable trade agreement that solves long-standing and deep-seated issues."

AAFA has calculated that 77% of US imports of apparel, footwear, and home textiles from China appear on the administration's list of products that will be hit with an additional tariff on 1 September. This is despite claims by the administration that it had delayed many tariffs on holiday goods until 15 December to protect American consumers.

The National Retail Federation (NRF) has responded by pointing out that it's impossible for businesses to plan for the future in this type of environment. 

Recent articles published on just-style suggest the intensifying trade war is proving to be an opportunity for some larger Chinese clothing manufacturing firms who have been building capacity overseas, notably in Southeast Asia – especially Vietnam.

China's hosiery makers also stand to gain from the delay in the introduction of some new tariffs until December.

Some US brands are mitigating the potential impact of new China tariffs. Here's how.

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