No sector is safe.
The fashion industry is already bracing itself to be hit by higher levies on Chinese imports in September and now it seems likely that more would follow soon after.
In an interview aired on CNBC Friday morning, President Trump doubled down on his threat to raise levies on all Chinese imports to the U.S. if China further provokes the White House.
He said he was “ready to go to 500” — referring to the $505.5 billion worth of Chinese imports that the U.S. accepted in 2017 — and insisted he was doing “the right thing” for the country after having “been ripped off by China for a long time.”
The S&P 500 closed down 0.09 percent at 2,801.83, while the Dow Jones Industrial Average was 0.03 percent lower at 25,058.12 as the escalating tit-for-tat trade war rattled investors.
To date, the Trump administration has only slapped higher levies on $34 billion worth of Chinese imports, but another $16 billion have been earmarked for an unspecified later date and an additional $200 billion worth will also likely be implemented in September after China retaliated to the first round of tariffs.
The fashion sector emerged unscathed after the first round, but was not so lucky the second time, with multiple items — from textiles to handbags to footwear and suitcases appearing on the list of $200 billion worth of items that are next in the firing line for additional 10 percent levies.
A move to raise levies on virtually every single Chinese import would hit the fashion sector hard as it is heavily dependent on China, with government data showing the U.S. imported $27 billion worth of apparel from the country last year, accounting for 34 percent of all apparel imports. That is more apparel than was imported from any other country, dwarfing second-place Vietnam at $12 billion.
Rick Helfenbein, president and ceo of American Apparel & Footwear Association, said: “It is time to stop using the American consumer as a pawn in this conflict. Tariffs are taxes. Period. This is a short-sighted approach that will hit low-income Americans the hardest, imposing new hidden taxes on everything they must buy for themselves and their families.”
China was not the only one that Trump took a swipe at Friday. Soon after his interview, he moved to Twitter to accuse China and the European Union of manipulating their currencies, while voicing concerns over the Federal Reserve’s succession of interest-rate rises.
After years of crisis-induced near-zero levels, the central bank has lifted rates seven times since 2017 and has indicated several more are to come over the next couple of years.
“China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day — taking away our big competitive edge. As usual, not a level playing field,” Trump wrote.
“The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates – Really?”
This is the first time he has publicly criticized the U.S. central bank and goes against the White House tradition of not commenting on Fed decisions as it is an independent institution.
Average current effective duty rates
Hats – 5.5%
Travel goods – 12.3%
Footwear – 11.3%
Knit apparel – 14.2%
Woven apparel – 13.2%
Average overall tariff rate is only 1.4%