Get ready for more tariffs as President Donald Trump just revealed his next hand.
He told reporters aboard Air Force One that he has earmarked another $267 billion worth of Chinese imports that he can hit with levies on short notice, if provoked by China.
“I hate to say this, but behind that there is another $267 billion ready to go on short notice if I want,” he said, as reported by the Wall Street Journal. “That changes the equation.”
If Trump plays this hand, it will push the total amount of tariffs up to $517 billion, meaning every single Chinese product coming into the U.S. will be subject to levies, hurting the fashion sector, which is heavily reliant on China. The U.S. accepted $505.5 billion worth of imports from China last year. Within that, apparel came to $27 billion.
His remarks triggered a 100-point drop in the Dow Jones Industrial Average. It closed down 79.33 points, or 0.31 percent, at 25,916.54, while the S&P 500 ended the day 6.37 points, or 0.22 percent, lower, at 2,871.68.
Among those hardest hit in retail were Lands’ End Inc., down 9 percent to $20.02; Abercrombie & Fitch Co, 5.8 percent to $20.06; Vince Holdings Corp., 5.5 percent to $17.92, and G-III Apparel Group, Ltd., 4.3 percent to $44.05.
Trump has already implemented tariffs on goods totaling $50 billion and the government has been busy preparing to hit another $200 billion worth of products, many of which are consumer-facing, with additional 25 percent levies.
He added that these will come into force “very soon, depending on what happens”, dashing fashion retailers’ hopes for a last-minute white knight. Some had pinned their hopes on talks between the two countries, which took place last month, but failed to produce any meaningful resolutions.
What exactly will be taxed in the impending round of tariffs has yet to be finalized. The administration published a preliminary list of 6,031 types of products and U.S. Trade Representative Robert Lighthizer was charged with coming up with a final selection.
Those industries that stood to be impacted were given a chance to comment, but that window closed yesterday and the final list is expected any day.
As far as the fashion sector is concerned, the preliminary list featured a lot of accessories, including handbags. If they are not made exempt, some products — such as synthetic material handbags — could suffer a total of 45 percent entry tariffs as these products are already subject to 20 percent taxes.
Some retailers have said they would look to move production in light of levies, but Emanuel Chirico, chief executive officer of Calvin Klein and Tommy Hilfiger owner PVH recently poured cold water on this potential solution.
He told WWD that “supply is pretty full right now globally and to think that there’s just excess that could pick up China is a mistake.”
Instead, like many others, he believes a full-blown trade war where all Chinese imports are taxed would result in industrywide price hikes.