Could handbag retailers be in line for some good news this year?
As part of the 90-day truce in the trade war that China and the U.S. agreed upon at the end of last year, negotiators from the two superpowers have been hard at work in Beijing this week and it appears that the talks, which are set to continue Wednesday, have been positive.
First, President Donald Trump took to Twitter to tell his followers that “talks with China are going very well,” while the Wall Street Journal later reported the two sides have made progress on narrowing their differences, particularly on purchases of U.S. goods and services.
While the report stressed they are still far from making a deal, the news buoyed markets and the Dow Jones Industrial Average closed up 256 points, or 1.1 percent to 23,787.45. Among the day’s gainers were Farfetch, up 4.1 percent to $19.52; Macy’s Inc 3.1 percent to $30.83; G-III Apparel Group, 2.8 percent to $31.18; PVH Corp., 2.8 percent to $101.35, and Guess Inc., 2.8 percent to $22.62.
Retailers selling handbags are certainly hoping for a resolution. While the rest of the fashion sector escaped relatively unscathed in the tit-for-tat trade war that dominated 2018, handbags were not so lucky.
Alongside a raft of other consumer-facing goods, totaling $200 billion in imports, handbags were hit with 10 percent levies last year. That was set to rise to 25 percent on Jan. 1, but the U.S. halted those plans as part of the negotiations.
But if the talks fail, the Trump administration has said that tariffs would rise after all. That would also mean that levies on a further $267 billion of goods — something Trump has threatened — would become much more likely. If that happens, the total amount of tariffs would surpass the value of all Chinese imports the U.S. accepted in 2017.
Already the higher duties and general uncertainty have impacted imports. The Global Port Tracker by the National Retail Federation and Hackett Associates showed import growth at the U.S.’s major retail container ports slowed down in November after a months-long rush to beat increased tariffs on goods from China.
U.S. ports covered by Tracker handled 1.81 million 20-foot equivalent units in November. That marked an increase of 2.5 percent from a year earlier, but a slowdown from growth of 11.4 percent logged in October.
“With the holiday season behind us, the immediate pressure to stock up on merchandise has passed but retailers remain concerned about tariffs and their impact on the nation’s economy,” NRF vice president for Supply Chain and Customs Policy Jonathan Gold said.