MAGIC 2017, fall 2017 fashion trends

Handbag retailers ended Thursday not knowing whether they would wake up to higher tariffs on the goods they ship from China as make-or-break trade talks got under way in Washington, D.C.

The administration and a delegation from China were due to meet Thursday evening after tensions between the two sides reached a boiling point this week when Chinese negotiators allegedly backtracked on a number of concessions previously made.

If a deal isn’t made quickly — or President Trump doesn’t back down — the administration had filed all the paperwork to be ready to pull the trigger on higher tariffs at midnight. That would push tariffs on $200 billion worth of imports, including travel goods like handbags and luggage, to 25 percent from 10 percent.

Ahead of his dinner with Chinese Vice President Liu He, President Trump told reporters that while a deal with China was still possible, his alternative plan to increase tariffs if talks fail was an “excellent one.”

“It’s an alternative I’ve spoken about for years. We’ll take in well over a $100 billion a year,” he told reporters at a White House event Thursday, adding that he received a “beautiful” letter from Chinese President Xi Jinping, with whom he hoped to speak via phone.

His comments did nothing to calm nervous investors, with the Dow Jones Industrial Average shedding 138.97 points to 25,828.36, while the S&P 500 closed 0.3 percent lower.

Among the retail stocks finishing the day in the red were J.C. Penney Co. Inc., down 3 percent to $1.28; Abercrombie & Fitch Co., down 2.6 percent to $28.46; G-III Apparel Group Ltd., down 2.5 percent to $37.89, and Stitch Fix Inc., down 1.4 percent to $26.30.

If Trump does press the tariff button, China is poised to retaliate, stating earlier this week that it “will be forced to take necessary countermeasures if the U.S. side puts the tariff measures into effect.”

Handbag retailers have been on somewhat of a roller-coaster ride over the past six months. Tariffs were due to rise to 25 percent in January, but the White House put those plans on ice as part of a 90-day truce with China, which was later extended.

With positive signals coming from the talks, the industry thought that the situation would be resolved soon, but that all changed over the weekend when Trump revealed on Twitter that negotiations had taken a turn for the worse.

The sharp change in direction came as a huge disappointment to many accessories’ retailers. One of those is Anne Harper, whose children’s accessories line OMG Accessories is sold nationwide through Nordstrom, Target and Dillard’s. She told WWD that a rise would “heavily impact the business.”

Her backpacks, which make up about 80 percent of the business, are already subject to 30 percent levies, which would mean the administration’s plans would push that up to 45 percent — something Harper describes as “not sustainable.”

In fashion, it’s not just handbags facing uncertainty as Trump has pledged to slap 25 percent tariffs on all Chinese imports that have not yet been targeted, dragging apparel and footwear into the fray.

While a date has not been set, the process could take several weeks and may involve hearings from those impacted on Capitol Hill.

In anticipation of this, the National Retail Federation expects retailers across the board to resume stocking up on merchandise before new tariffs can take effect.

“Tariff increases and new tariffs will mean higher costs for U.S. businesses, higher prices for American consumers and lost jobs for many American workers,” NRF vice president for supply chain and customs policy Jonathan Gold said.

“We encourage the administration to stay focused on a trade agreement, and we hope the negotiations will get back on track. It would be unfortunate to undermine the progress that has been made with more tit-for-tat tariffs that only punish Americans,” he added.

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