After threatening 100% tariffs on Chinese goods starting 1 November, President Donald Trump confirmed on Thursday that he and President Xi Jinping reached an agreement for lower levies.
The “fentanyl tariff” (a tariff on China, Canada and Mexico, to encourage countries to stop the flow of the drug into the US) will be lowered from 20% to 10%, Trump told reporters on Thursday. The president added that the total tariffs on China will therefore reduce from 57% to 47%, though it isn’t clear how it’ll square up with the 55% tariff announced in June.
For fashion, the focus should be on the now 10% tariff and the worldwide 10% global reciprocal tariff on imports, says Stephen Lamar, CEO of the American Apparel Footwear Association (AAFA). The total for brands importing products from China could wind up higher or lower than the 45% to 47% average, as fashion industry imports are already subject to varied and high duties. (This is a combination of Most-Favored-Nation tariff rates and Section 301 tariffs, the two existing duties that clothing, footwear and accessories are already subject to.)
Lamar is still waiting to learn the details of the agreement. “At the AAFA, we are very careful to focus not so much on what people are saying through social media and fact sheets, but what they’re actually saying through the executive orders,” he explains. But reports so far seem positive, he adds. “The words that are coming out from both sides — the US and China — and the supplemental words coming not just from the president, but from Ambassador [Jamieson] Greer and others that were in the room, are certainly suggesting that the threats have tapered away, tariff rates are being reduced and that we’re on a solid path to a more stable relationship.”
The CEO is cautiously optimistic that the new agreement will mean the end to the drawn-out tariff tête-à-tête between the US and China. “We’ve had a lot of tariff news in the last couple of months, but this is the first that is maybe putting a smile on people’s faces,” Lamar says.
Jessica Ramírez, retail consultant and founder of The Consumer Collective, wasn’t too concerned about the 100% tariff going into effect in the first place. “This is what we’ve seen all year, where there is a threat of increased tariffs, negotiations go through and it comes in lower than expected,” she says. “So in that sense, it’s just a trend we’ve seen across the board with any sort of tariff in almost all countries.” Lamar says he “firmly believed” it would be implemented were there no negotiations, with the point being to trigger said negotiations.
Ramírez perceives the tariff reduction news as a win for brands. “10% is significant. I’m not going to say it isn’t,” she says. Across the board, brands have already increased prices (Adidas, for instance, addressed uplifts in its Q3 earnings), and are continuing efforts to mitigate tariff impact. “They’re surgical increases, but they are there,” Ramírez says, adding that this is a win-win for companies and their customers.
The real hope is for more clarity and stability. Industry players are optimistic that this latest deal may signal an end to the back and forth between the two countries. For fashion, this volatility was a major hurdle, as brands sought to navigate production in a country so susceptible to tariff fluctuations. “Both sides should take a long-term view and focus on the benefits of cooperation, rather than falling into a vicious cycle of mutual retaliation,” Xi said in a Chinese statement.
“Uncertainty has been one of the big industry complaints and concerns for the year now,” Lamar says. “We have a lot of that still in front of us, but hopefully it’s the first step in what will become a more stable period in US-China relations.”
This is especially important as the year comes to a close, Lamar adds. “People are still bringing product in for holiday. People now are beginning to look at next year for spring, all the complications surrounding timing for Lunar New Year and everything else,” he says. “So if this piece of uncertainty can be removed from the equation, then I think that really gives people a little more assurance of how they’re going to be able to plan things.”
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