Rebecca Minkoff Pre-Fall 2016

Today marks the first day of USTR hearings related to Trump administration-proposed tariffs on $200 billion of goods annually shipped in from China.

Small and large businesses will present five minutes of testimony that attempts to reconcile why their associated categories should be exempt from a 25 percent levy.

Handbags are among that massive lot. If handbags are not excluded, some products — such as synthetic material handbags — could see a total of 45 percent entry tariffs. Even before trade reform was enacted, these products were taxed at about 20 percent.

In recent days, Rebecca Minkoff filed a request to testify before the Section 301 committee, while Jessica Alba’s Honest Co. filed on-the-record commentary about adverse effects the company faces should the tariffs be passed.

The USTR will hear some 368 testimonies over the next two weeks. While the hearings were originally scheduled to take place from Aug. 20 to 23, an outpouring of requests saw the USTR adding two days (Aug. 24 and 27) to the agenda.

This third wave of goods — some 6,031 types of products — is by far the largest lot to be called for tariffs yet. The second tariff wave called upon some 284 categories that amount to $16 billion in annual goods. After USTR hearings, only five categories were deemed exempt.

But as accessory industry professionals like Minkoff and Accessories Council president Karen Giberson ready their testimony, the Trump administration is reportedly already looking to settle with China.

On Friday afternoon, Dow Jones reported that delegations from the U.S. and China are to meet on Aug. 22 and 23 to discuss methods that could de-escalate the tit-for-tat trade war between Trump and Chinese leader Xi Jinping.

For now, however, the USTR hearings will proceed. Well-known names from across the business world — including Dell Technologies, Dole Packaged food, Fitbit and GE Appliances — are among the testimonies to be heard.

Fashion, Giberson feels, will be underrepresented at the hearings. She is set to testify on behalf of the Council of Fashion Designers of America as well as the Accessories Council. “I think I expected to see more,” she said. “I feel like what we have to say has to be spot-on, because it’s not like the panel will hear our story from multiple people. I wasn’t sure if this was the right thing to do when I started this process, but now I’m really sure.”

Aside from Minkoff (who was not available for comment) and trade lobbyist groups like the National Retail Federation and the American Apparel & Footwear Association, there are few heavy-hitting fashion industry names on the hearings agenda. The AAFA says it expects some brands to file on-the-record comments before the Sept. 6 comment deadline.

Giberson said of fashion’s minimal involvement: “I’m really surprised how many people are not that familiar with what’s going on. Some others think the tariffs will go into place temporarily because we will solve trade issues with China. There is another school of thought that says, ‘Oh it probably won’t happen,’ there is some naïveté.”

Categories that displayed high-level engagement include the bicycle industry and the lighting industry.

In her written testimony, Giberson points out that handbags are already subject to tariffs and that tacking on 25 percent would create “rates on par, or higher than, goods from countries that do not have Normal Trade Relation status such as Cuba and North Korea.” Her research concluded that low-cost handbags could see a 50 percent reduction in sales should the tariffs be passed.

Giberson’s testimony touches on small-scale accessory businesses with “sales of $2 million or less and are women and minority-owned businesses. These businesses have limited financial resources and do not have the budgets to find alternative manufacturing sources, let alone switch production in a timely manner that could potentially minimize the impact of this action.” She is set to present in the hearings’ first panel on Monday morning.

The Accessories Council is bringing two members to also testify — direct-to-consumer label Dagne Dover and small-scale Philadelphia-based brand MinkeeBlue.

As the AAFA’s executive vice president Stephen Lamar pointed out, the call for tariffs includes all bags — not just handbags alone. “I will talk about handbags but then the Sports and Fitness Industry Association will also talk about bags and backpacks from their perspective,” Lamar said, noting that this adds fuel to the argument to exempt handbags from tariffs.

The AAFA’s testimony, also scheduled for Monday morning, will point out that “Tariffs are a hidden tax on U.S. consumers, that tariffs are a tax on U.S. manufacturing, tariffs are a tax on the U.S.’s global value chain that employs millions of Americans and tariff proposals triggered retaliation from China, which hurts U.S. exports.”

While Minkoff was not available for comment, her request to testify said: “If the tariffs are enacted, it will take months, if not years, for us to make the changes necessary for our business to continue to be competitive. It would not be an exaggeration to say that these tariffs pose an existential threat to our business.” She is scheduled to testify in the hearings’ final panel on Aug. 27.

load comments
blog comments powered by Disqus