The governments of the U.S. and China have signed a “phase one” trade deal that was confirmed in December after a year and a half of back-and-forth tariff impositions. The deal covers intellectual property rights, which China has been known to circumvent in a variety of ways, and ensures that China will increase its imports from the U.S.
It doesn’t impose new duties on products imported into the U.S. from China, as previously threatened by U.S. President Donald Trump, and halves some other duties to 7.5 percent, but it does not remove current tariffs on hundreds of billions of dollars of Chinese goods. These will remain in place until, in some unknown future, China and the U.S. agree to “phase two.”
The footwear and apparel industries are pleased but unsatisfied, as they would like to see all tariffs lifted. Matt Priest, president and chief executive of the Footwear Distributors and Retailers of America (FDRA), believes that the deal “creates a little breathing room for the industry and a little more certainty” but that “applying duties under 301 was not the right policy.”
According to the FDRA, the shoe industry pays $3 billion in duties every year, with the applicable tariffs averaging more than 12 percent and rising to 67.5 percent on certain children’s shoes. Steve Lamar, who became president and CEO of the American Apparel and Footwear Association (AAFA) at the start of the year, observes that Trump’s tariffs on Chinese-made footwear “are tariffs on top of what we’re already paying” and therefore limit the industry’s investments in supply chains, manufacturing and labor. Trump, he continues, “has certainly weaponized tariffs,” which “might be a part of our trade environment for many more years to come.”