The United States and China have inked a “phase one” trade agreement.
Today at the White House, President Donald Trump and Chinese Vice Premier Liu He signed a deal that not only addresses intellectual property protection and China’s increased purchase of U.S. goods but also the easing of nearly two years of tensions between the world’s two largest economies.
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However, the U.S. leader announced that tariffs already implemented on hundreds of billions of dollars of Chinese products will remain in place until a so-called “phase two” agreement is reached. (A timeline was not revealed.) While footwear and apparel industry leaders were positive on the trade development, they continued to urge the administration to roll back all existing duties on consumer goods.
“Any time you’re moving in a direction where you’re eliminating duties — even if the duties were exorbitant to start with — [it is] a good direction,” said Matt Priest, president and CEO of the Footwear Distributors and Retailers of America. “This agreement creates a little breathing room for the industry and a little more certainty, but we still think applying duties under 301 was not the right policy.”
The Office of the U.S. Trade Representative declared such tariffs following a Section 301 investigation that determined China’s technology transfer and intellectual property practices were “unreasonable and discriminatory.” American negotiators had aggressively sought better protection for U.S. intellectual property rights and wider access to China’s financial services sector as part of the “phase one” pact.
According to the FDRA, the shoe industry faces $3 billion in duties every year, and footwear tariffs still average more than 12% and go up to 67.5% on certain children’s shoes.
“They drive up costs for consumers, they make us less competitive [and] they take away money from footwear companies and retailers that could be invested in other capital investments, whether it’s job creation or developing more innovative product,” Priest said.
The AAFA echoed the sentiment.
“This is one of the most heavily tariffed industries,” said Steve Lamar, who took over as president and CEO at the start of the year following Rick Helfenbein’s exit. “These tariffs on footwear from China, our biggest supplier, are tariffs on top of what we’re already paying. Those taxes mean we can’t use those resources to invest in our supply chains, manufacturing or our workers, or to pass those savings onto consumers.”
The partial trade deal, which was confirmed in mid-December, came after more than a year and a half of the U.S and China imposing tit-for-tat tariffs on one another. Trump has also recently made headlines for America’s trade relations with neighbors Mexico and Canada as well as the European Union.
“The president has certainly weaponized tariffs, and he has perhaps also normalized the use of tariffs, where people are realizing that these tariffs are here to stay,” Lamar added. “The bad news here is that tariffs might be a part of our trade environment for many more years to come.”
Trade Deficit Narrowed in November Ahead of Truce in US-China Tariff Battle
Despite Trade Woes, Many Companies Aren’t Taking Action to Address Tariffs
Trump: ‘Formal Signing’ of Trade Deal Is ‘Being Arranged’