hermes birkin bag

Count fashion as collateral damage in the growing trade battle between the U.S. and France

The administration of President Trump said late Friday that it would impose 25 percent duties on $1.3 billion worth of French fashion goods, the response to a digital services tax in France that impacts companies such as Amazon, Apple, Google and Facebook.

The office of U.S. Trade Representative Robert Lighthizer said it would delay implementation of the action for up to 180 days if “the Trade Representative determines that substantial progress is being made, or that a delay is necessary or desirable to obtain U.S. rights or satisfactory solution.” 

That gives the U.S. and France until Jan. 6 to hold “bilateral and multilateral discussions that could lead to a satisfactory resolution of this matter,” the USTR said. 

When first proposed in December, the duties on French goods were set at 100 percent, so the result, while punishing for companies importing certain goods, was not as bad as it could have been. 

Still, the measure hits a large swath of the fashion industry and could make it more expensive to import a variety of French-made beauty products and handbags — from eye makeup preparations and soap to handbags wrought in materials ranging from reptile leather or plastic.

The tariffs are tied to a trade fight that has nothing to do with fashion — and one that goes alongside the many other trade fights Trump has engaged in, mostly notably with China. 

The heavyweight match between U.S. and China has reached a kind of standstill, likely until after the November elections, and now the same seems to be the case in Trump’s tiff with France. 

In December, the U.S. Trade Representative’s office declared a digital services tax in France was “unreasonable or discriminatory and burdens or restricts U.S. commerce.” The fix was to impose duties of 100 percent on some imports from France, including handbags, cosmetics, wine and cheese. 

Fashion turned out to fight the proposed tariff increase at public hearings in January. 

Nate Herman, senior vice president for policy at the American Apparel & Footwear Association, said: “Our industry has absolutely nothing to do with the issue — a dispute between the U.S. and France over France’s digital services tax.”

(This type of thing has happened before and going the other way across the Atlantic, for instance when Europe boosted tariffs on U.S.-made jeans in a spat over steel and aluminum.)

Herman noted that U.S. companies imported more than 1.4 million handbags from France in 2018 — more than twice the number recorded the prior year. 

“And our American workers design, develop, market and sell these handbags to American consumers,” Herman said. “If a punitive tariff is imposed by the U.S. government, our members will be forced to source fewer handbags, which will obviously lead to lower sales, which impacts our workers — American workers.”

The tariffs could impact some of the largest French luxury names, although business is down in the U.S. and just about everywhere else given the coronavirus pandemic. 

Hermès produces all of its handbags in France, where it counts 42 production facilities. 

Both LVMH Moët Hennessy Louis Vuitton and Kering count America as a major market, although LVMH has set up production in the U.S. and Kering makes the bulk of its accessories in Italy.

Among the categories subject to a 25 percent boost in tariffs are:

* Eye makeup preparations
* Manicure or pedicure preparations
* Beauty or makeup powders, whether or not compressed
* Beauty or makeup preparations & preparations for the care of the skin, excl.
* Medicaments but incl. sunscreen or sun tan preparations, nesoi
* Castile soap in the form of bars, cakes or molded pieces or shapes
* Soap, nesoi; organic surface-active products used as soap, in bars, cakes, pieces, soap-impregnated paper, wadding, felt, for toilet use
* Soap; organic surface-active products used as soap, in bars, cakes, pieces; soap-impregnated paper, wadding, felt, not for toilet use
* Soap, not in the form of bars, cakes, molded pieces or shapes
* Organic surface-active products for wash skin, in liquid or cream, contain any
aromatic/mod aromatic surface-active agent, put up for retail
* Organic surface-active products and preparations for washing the skin, in liquid or
cream form, put up for retail sale, nesoi
* Handbags, with or without shoulder strap or without handle, with outer surface of
reptile leather
* Handbags, with or without shoulder strap or without handle, with outer surface of
leather, composition or patent leather, nesoi, n/o $20 ea.
* Handbags, with or without shoulder strap or without handle, with outer surface of
leather, composition or patent leather, nesoi, over $20 ea.
* Handbags, with or without shoulder straps or without handle, with outer surface of
sheeting of plastics
* Handbags with or without shoulder strap or without handle, with outer surface of
textile materials, wholly or in part of braid, nesoi
* Handbags with or without shoulder strap or without handle, with outer surface of
cotton, not of pile or tufted construction or braid
* Handbags with or w/o shoulder strap or w/o handle, outer surface of veg. fibers, exc.
cotton, not of pile or tufted construction or braid
* Handbags with or w/o shoulder strap or w/o handle, with outer surface containing
85 perent or more of silk, not braided
* Handbags with or without shoulder strap or without handle, with outer surface of
MMF materials
* Handbags with or without shoulder strap or without handle, with outer surface of
textile materials nesoi

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