Adidas, Ralph Lauren Among Fashion Names Fighting Vietnam Tariff Threat in Trump’s Last Days




By Arthur Friedman

JANUARY 8, 2021 11:11AM Sourcing Journal


A coalition of hundreds of fashion industry brands, retailers and trade organizations wrote a letter to President Trump on Thursday urging him to refrain from imposing “punitive tariffs” on goods from Vietnam, a major hub for fashion sourcing.

The Trump administration and the U.S. Trade Representative (USTR) have used Section 301 violations as the premise for imposing tariffs against China for a wide range of products, and have threatened to do the same against Vietnam, currently the No. 2 supplier of apparel to the U.S, according to the group spanning Adidas to Nike to Ralph Lauren to Tory Burch. “We agree that our trading partners must abide by global trade rules and we support enhanced bilateral engagement with Vietnam to resolve concerns,” the coalition said. “However, responding with tariffs would undermine American global competitiveness and harm American businesses and consumers at a time when they can least afford it, as they are struggling from the impacts of COVID-19.” The group said it’s particularly concerned about the prospects of additional tariffs being applied to U.S. imports of apparel, footwear, technology components, luggage and travel goods, furniture, and accessories from Vietnam. Imports of these products already face some of the highest duties the U.S. government charges, it added.

“If additional tariffs are applied to U.S. imports from Vietnam, it would mean that more than half of all apparel and footwear and more than three quarters of all accessories sold in the U.S. would be hit with cumulative tariffs as high as 25 percent to 50 percent,” it said. “Many companies shifted sourcing to Vietnam as a direct result of the China 301 tariffs and supply chain diversification efforts. Placing tariffs on imports from Vietnam would punish those companies who made the sourcing shift as the administration had asked.” The coalition, which also includes Under Armour, Steve Madden and Toms, noted that Vietnam is also a major export market for U.S. job-creating textile, chemical, hardwood and agricultural products, and that imports of raw materials from Vietnam are critical inputs used by U.S. manufacturers of finished goods. The letter cited U.S. International Trade Commission data that showed U.S. textile and apparel exports to Vietnam increased by $97 million from 2015 to 2019. During that same time, U.S. footwear exports to Vietnam increased by $170 million.

“We urge the administration to avoid tariffs and instead utilize more targeted tools that are specifically intended to address currency and timber concerns,” it added. In testimony submitted in November to a USTR hearing, which the National Council of Textile Organizations (NCTO) said Thursday still represents its position, the group, which represents the U.S. textile production chain, said it “has been severely impacted in recent decades by Vietnam’s unfair and often illegal international trade practices.”

“As such, our industry supports the President’s efforts to rebalance our current trade relationship with predatory competitors by addressing longstanding and highly damaging government-sanctioned initiatives that have allowed state-sponsored economies to unfairly dominate global textile and apparel markets,” NCTO said. “Consequently, we strongly endorse this important and long overdue Section 301 investigation into Vietnam’s currency practices.” NCTO noted that the United States is the largest single­-country importer of textile and apparel products in the world and that the U.S. trade deficit in textiles and apparel is the third largest of any sector. “Vietnam’s activities in the textile and apparel sector not only damage U.S. production and workers, but also undermine our current free trade and preference partnerships, such as those associated with USMCA, DR-CAFTA, CBTPA, Haiti HOPE/HELP and AGOA,” NCTO said.

“All these arrangements are tied to preferential pricing benefits derived from the elimination of U.S. duties. Vietnam is able to offset any preferential pricing benefits intended for free trade partners by artificially lowering the cost of their textile and apparel exports through the…system of state-sponsored subsidies and a purposely undervalued currency,” it added. “Their illegal practices threaten the over 2 million jobs supplied directly by the textile/apparel industry throughout U.S. free trade and preference regions, along with the $36 billion in two-way trade between the U.S. and these preferential trade partners.”* These practices “should disqualify Vietnam and other non-market economies from being eligible for inclusion in any free trade or preferential trading arrangement with the United States,” NCTO said. “The benefits derived from centralized industrial planning and macro subsidies, such as currency devaluation, make it virtually impossible for manufacturers operating under free market principles to compete with Vietnamese counterparts.”

NCTO believes any tariff penalties or other remedies associated with the outcome of this case should include textile and apparel products and is warranted by “Vietnam’s predatory practices that have been used to drive massive textile and apparel trade deficits with the United States, undermine U.S. textile production, and displace U.S. textile workers.” Trump has signaled a desire to impose the tariffs, but the week’s events have led to calls for his removal from office, and the 12 days he has left in his term could conspire to leave the issue unaddressed. While President-elect Joe Biden has said he would likely leave tariffs Trump slapped on Chinese imports in place, he hasn’t commented on any action around Vietnam.

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