Blog: Leonie BarrieUS-China tariff turmoil continues

Leonie Barrie | 27 August 2019

Ongoing US-China tariff turmoil continued to dominate just-style last week, culminating in President Trump tweeting that new tariffs due to take effect in September and December on Chinese imports – including all clothing and footwear – will now start at 15%

Trump's tweet appears to have been 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. But China’s move was itself a response to the US planning an extra tariff hike on $300bn in Chinese goods not yet caught up in the trade war – and it is this that has now been raised to 15%.

Research shows more than three-quarters of all apparel and footwear products imported into the US from China will be hit with the additional tariff on 1 September – amounting to about US$39bn worth of goods.

But just-style has also been told by industry-watchers that the intensifying trade spat 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, in particular, also stand to gain from the delay in the introduction of some new tariffs until December.

Yet the US cotton industry appears to be one of the biggest casualties of Trump's actions. And even if there's a truce in the US-China trade war, permanent damage may have already been done, according to industry consultant Robert Antoshak, in his latest monthly column on just-style.

Pre-negotiated vendor concessions are likely to bear the brunt of the new tariffs, and importers are being advised that they have just weeks to renegotiate prices with their vendors if they want to minimise the impact.

In another major development, 32 of the world's leading fashion and textile companies – including Adidas, H&M, Inditex, Nike and Gap – have joined a new coalition that has pledged to reduce the environmental impact of the apparel industry. Presented to heads of state during the G7 meeting in Biarritz, France, signatories have committed to achieving practical objectives in three areas: climate, biodiversity and oceans.

And jeans-maker Levi Strauss & Co is shifting from a singular "one-size-fits-all" strategy to water management in sourcing countries to a more responsive approach that sets stringent standards for supplier facilities and allows it to focus reduction efforts where they are needed most.

Meanwhile, in other news, Gap says it is working to mitigate the tariff threat as its Q2 profit tumbles; Zara has launched its first denim line made from repurposed jeans; and Li & Fung has swung to a first-half profit but customer bankruptcies weighed on turnover.

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