In a message to the United States Trade Representative (USTR), Beth Hughes, the vice president of trade and customs policy at AAFA, expressed her perspective on the efficacy of the Section 301 China tariffs. According to Hughes, these tariffs have proven to be ineffective in addressing the US’ concerns regarding China’s policies and practices.
Hughes advised the USTR to explore alternative trade tools and measures that do not adversely affect US companies and consumers while still addressing China’s purported unfair practices and policies. She emphasized the need for a more transparent and inclusive exclusions process for products covered by the Section 301 tariffs.
Specifically, Hughes called for the suspension of all Section 301 tariffs moving forward and advocated for the retroactive reinstatement of expired tariff exclusions. She urged the USTR to shift away from these ineffective actions and pursue alternative strategies to confront China’s practices.
Hughes highlighted the negative impact of the tariffs on AAFA members’ supply chains, citing increased unpredictability and rising prices for apparel, footwear, and travel goods for US consumers. She referenced the USTR’s 2022 Report to Congress on China’s WTO Compliance, which suggested that the Section 301 tariffs did not adequately address fundamental concerns about China’s policies and their impact on the US economy and workforce.
Hughes underscored the impact of trade on US consumers, particularly those with lower incomes, during times of high inflation. She highlighted that a significant portion of apparel, footwear, and related goods sold in the US are imported, yet the country maintains high duties on these products, resulting in higher prices for consumers.
Using examples, Hughes illustrated how the average trade weighted tariff rates for knit apparel, woven apparel, and footwear were substantially higher compared to the overall average tariff rate for all products in 2023. This disparity in tariff rates disproportionately affects consumers purchasing these items.
Hughes also revealed that the amount of tariffs collected on imports of US apparel, footwear, textiles, and travel goods exceeded $17 billion in 2023. Despite representing only a small percentage of all US imports by value, the industry contributed significantly to duty collections.
Furthermore, Hughes addressed ongoing challenges in China’s intellectual property (IP) and e-commerce legal systems. She highlighted loopholes that allow criminals to exploit online platforms for infringement and counterfeit sales, making it difficult to effectively address these issues.
The American Apparel & Footwear Association (AAFA) has put forward several recommendations regarding Section 301 China tariff exclusions:
- Renewal of Current Exclusions: AAFA suggests that all current exclusions should be renewed permanently. This recommendation is based on the bipartisan support received for these exclusions from two different administrations, indicating that the economic justifications for these exclusions persist and are likely to continue.
- Retroactive Extension of Exclusions: AAFA recommends retroactively extending existing exclusions for the 10-month period when they were temporarily expired between January 2021 and October 2021. The association believes that there is widespread consensus that these products deserve full exclusions and that it is unfair to companies and workers affected by these tariffs for the exclusions to have lapsed.
- Establishment of a New Exclusions Process: AAFA suggests opening up a new exclusions process for any items that continue to face Section 301 tariffs. This process would allow affected parties to petition the government for review based on any changed circumstances since the initial imposition of tariffs.
- Completion of Four-Year Review: AAFA calls for the completion of the four-year review that affects all Section 301 tariffs, particularly those on textiles, apparel, footwear, travel goods, and related items. Despite opposition to the original imposition of these tariffs, the administration is legally obligated to review them. AAFA highlights the repeated delays in this review process and urges its prompt completion.
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