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China’s New Tariff Plan: Export Charges Cover 148 Product Categories

China will impose tariffs on 148 apparel categories starting Saturday in an apparent response to international pressure to control its exports.

WASHINGTON — China will impose tariffs on 148 categories starting Saturday in an apparent response to international pressure to control its apparel and textile exports.

The move coincides with the elimination of the remaining vestiges of a 30-year-old quota system among World Trade Organization member countries.

The Chinese government said it will levy duties ranging from 2.4 cents to 3.6 cents per piece or per set of clothing, and 6 cents per kilogram for parts or accessories. Among the targeted export categories are T-shirts, underwear, nightwear and robes, outerwear, trousers, blouses and tracksuits. (See related table below.)

China exported $139.1 million in cotton trousers to the U.S. for the year ended Oct. 31. China could conceivably collect $3.3 million to $5 million in tariffs in that category alone. Similarly, imports of cotton dressing gowns from China totaled $132.1 million during the first 10 months of the year. Chinese tariffs would range from $3.1 million to $4.8 million.

The Chinese Ministry of Commerce caught industry observers off guard in mid-December when it announced it would tax its own exports. Lobbyists and industry executives said the move was meant to demonstrate the country is controlling its industry’s growth in commodity products and to assuage global fears that its apparel exports will decimate industries around the world and imperil some 30 million jobs in the developing world when quotas are lifted.

Industry veterans also have speculated that China made the move to recoup some of the revenue it will lose when the quota system expires and quota charges are dropped. Quotas have long been traded as a commodity in countries such as China, with prices rising as product categories began to be filled by the end of the year.

Executives reacting to the recent export tariff list claimed that, although the tariffs are relatively miniscule, they add to the overall cost of the garment and eat into profit margins.

In the long run, the tariffs are not expected to curtail the overall massive growth in China’s apparel exports, although they could discourage price slashing and encourage the Chinese to focus on better merchandise. U.S. importers and retailers said unexpected additional costs are difficult to absorb, but claimed the tariffs would not force them to pull business out of China.

This story first appeared in the December 29, 2004 issue of WWD.  Subscribe Today.

“For some commodity items, that tariff could be quite a bit,” said Wendy Wieland Martin, vice president for international trade at Kellwood Co. “If someone is bringing in underwear or panties and paying $2 per garment, another couple of cents is another couple of cents.”

She conceded, however, that in the overall scheme of things, the tariffs “probably won’t mean a lot” to the bottom line.

Brenda Jacobs, counsel for the U.S. Association of Importers of Textiles & Apparel, said, “Every little bit is a piece of margin. It sounds small when you talk about the singular, but you have to think about the quantities people are dealing with and that is where the concern is.”

U.S. textile and fiber producers, on the other hand, are skeptical of China’s action, claiming the tariffs would have to be much higher to offset the advantages conferred upon Chinese exporters by the nation’s fixed exchange rate and tax-rebate programs.

Industry executives, both domestic and international, have suggested China made the move to discourage the U.S. and European Union from taking more aggressive action against its exports in the form of safeguard quotas. The U.S. is currently reviewing 12 petitions and is set to make its first rulings in early February.

Categories Included in China Tariff Plan
WASHINGTON — China released a list of 148 apparel export categories on which it will impose tariffs ranging from $.024 to $.036 per piece or per set of clothing and $.06 per kilogram for parts or accessories, beginning Saturday. The following is a partial list of the targeted products:

Knits (women’s and men’s):
  • Cotton and man-made fiber T-shirts.
  • Cotton and man-made fiber underwear.
  • Cotton and man-made fiber slips and petticoats.
  • Cotton and man-made fiber underwear.
  • Cotton and man-made fiber dressing gowns and robes.
  • Cotton and man-made fiber suits, blazers, trousers and skirts.
  • Wool, cotton and man-made fiber overcoats, capes and cloaks.
  • Wool trousers.
  • Rayon, Tencel, silk and vegetable fiber trousers.
Wovens (women’s and men’s):
  • Wool, cotton and man-made fiber overcoats and raincoats.
  • Wool, cotton and man-made fiber suits, blazers and dresses.
  • Wool, cotton and man-made fiber dress shirts and blouses.
  • Cotton and man-made fiber underwear, pajamas, nightwear and robes.
  • Man-made fiber and cotton slips and petticoats.
  • Man-made fiber tracksuits, ski suits, and swimwear.