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April 1, 2020

US planning three-month duty deferral for some apparel?

US apparel and footwear retailers and importers are cautiously optimistic at reports the Trump Administration is planning to stop collecting duties on imports for at least three months to help ease the economic fallout of the coronavirus.

US apparel and footwear retailers and importers are cautiously optimistic at reports the Trump Administration is planning to stop collecting duties on imports for at least three months to help ease the economic fallout of the coronavirus.

The deferral of duty payments “is critically important during a prolonged period of little to no revenue,” according to nearly 400 CEOs of small, medium, and large-sized companies from across the country who have written to President Trump in support of the move.

A letter sent yesterday (31 March), and signed by executives from Adidas North America, Levi Strauss & Co, Columbia Sportswear Company, Under Armour, Kontoor Brands, Delta Galil Industries and Jockey International, says: “We are urgently asking you to delay the collection of duties, including those that many companies were required to pay this past Friday, for a period of 90-180 days to give companies like ours access to cash that would normally be paid to the US government. 

“Delaying duties helps us preserve cash flow – critically important during a prolonged period of little to no revenue – allowing us to keep our businesses in operation so we can preserve US jobs. At the same time, delaying duties does not undermine the effect of tariffs on trade flows because the money is still due.” 

Companies are seeking help at a time when many are trying to stay afloat as sales slump amid store closures and the suspension of online operations under lockdowns to help limit the spread of the coronavirus (Covid-19). Efforts are also seeing workers laid off or furloughed, and executives taking pay cuts.

According to the Alliance for American Manufacturing, an executive order authorising the Treasury Department to direct US Customs and Border Protection to delay collecting tariffs for three months would apply to non-discriminatory items such as apparel and footwear.

However, the order will not apply to the Section 301 tariffs on Chinese goods, which currently add an additional 7.5% duty rate to apparel imports into the US from China.

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