Although Trump’s Thursday orders imposing a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum are not set to directly affect retail and fashion companies, executives are worried that the move will somehow trickle down or turn into a full-blown trade war with other countries.
“The retail industry is extremely concerned by the administration’s apparent desire to ignite a trade war,” Matthew Shay, president and chief executive officer of the National Retail Federation, said.
Shay added that “a tariff is a tax, plain and simple” and one on Americans, and alluded to ongoing negotiations around a revised North American Free Trade Agreements, with chatter increasing in recent weeks that Trump may pull the U.S. out of the deal entirely. Shay also said there’s a continued threat of “additional tariffs on consumer goods from China.”
“The true greatness of America cannot be realized when we build walls blocking the free flow of commerce in today’s global economy,” Shay said.
As of Wednesday, the Commerce Department said the U.S. trade deficit has increased 5 percent from a year ago to $56.6 billion, the highest level since 2008.
For now, Canada and Mexico, the other countries involved in NAFTA, are exempt from the steel and aluminum tariffs.
But the macro effects of the tariffs are also a concern and a spokeswoman for the U.S. Fashion Industry Association said, “We know these tariffs will be catastrophic for the U.S. economy and jobs.”
“We’re not being partisan or subjective, it’s trade policy 101, and we can expect widespread net job loss in the U.S. as a result, according to early studies, not to mention regressive taxes on American consumers,” the spokeswoman said. “While our members don’t import a lot of steel and aluminum, these tariffs could result in disastrous consequences for them.”
Hun Quach, vice president of international trade at the Retail Industry Leaders Association, said earlier this week that a U.S.-led trade war will “zap consumer spending and American exports.”
Other countries not excluded from the tariffs are already gearing up to retaliate in ways that will hit the fashion industry directly. The European Union’s trade commissioners preemptively said on Wednesday that Europe would impose its own tariffs on goods, including denim and T-shirts.
“The root cause of the problem in the steel and aluminum sector is global overcapacity,” commissioner Cecilia Malmström said. “It is rooted in the fact that a lot of steel and aluminum production takes place under massive state subsidies, and under non-market conditions. This can only be addressed by cooperation, getting to the source of the problem and working together. What is clear is that turning inward is not the answer. Protectionism cannot be the answer, it never is.”
For More, See: