Throughout the campaign season, President-elect Donald Trump was a frequent critic of U.S. trade policy, pledging that he would rip up the North American Free Trade Agreement and slap high tariffs on goods coming to this country from China and Mexico.
But his statements were not especially specific, fueling a fair amount of uncertainty for the retail industry, which relies heavily on imported goods to fill store shelves. And Trump hasn’t backed off this kind of rhetoric since his surprise win, most recently issuing a series of tweets on Sunday in which he said that companies that move jobs overseas will be subject to a 35 percent levy.
Now, retailers are largely in a wait-and-see mode as they try to figure out how or whether Trump’s decrees will translate into real-world policy.
“From our perspective, the 35 percent tariff is worrisome,” said Hun Quach, vice president of international trade at the Retail Industry Leaders Association. “Because our foremost priority is our consumers, our customers. We want to make sure we’re selling the goods that our customers want to buy at the price they want to pay.”
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That’s because if retailers suddenly had to pay much higher taxes on the goods they sell, they’d have to find a way to offset those costs. And that might come in the form of higher prices for shoppers.
“Thinking about trade more generally in the longer term, there are elements of an aggressive ‘America first’ policy that are challenging,” said David French, senior vice president for government relations at the National Retail Federation. “And we would like to see a more comprehensive understanding of the role that trade plays for consumers, for retailers, in terms of delivering high-quality goods.”
The president-elect’s tweets seemed to suggest he seeks to implement a 35 percent tariff on companies that move jobs overseas in the future. And so for industries such as the apparel and footwear industry, that specific policy might not be terribly meaningful.
“We’re an industry that’s been global for a generation,” said Stephen Lamar, an executive vice president at American Apparel & Footwear Association, a trade group.
Indeed, the AAFA says that some 98.4 percent of shoes and some 97.3 percent of clothing sold in the United States is imported.
“To us, the argument isn’t really about bringing jobs back or stopping jobs from leaving, but how do we just flat out create new jobs in the United States?” Lamar said.
Lamar said those new jobs could be in emerging areas such as robotics and 3D printing, which might be used to manufacture clothes. Also, there is activity around so-called “smart fabrics” that include embedded sensors or other tech.
Lamar said he did not detect a particularly high level of anxiety among his trade group’s members in the wake of Trump’s election.
“People, to be honest, are asking the same kinds of questions they asked eight years ago,” Lamar said, referring to the last time the White House changed hands from one party to another.
As retailers build out their supply chains, French said they have many other factors to think about besides trade policy: In the apparel world, for example, trends now move at a lightning pace, meaning companies are scrambling to find ways to produce clothing more quickly and closer to the date it will actually land in stores.
“When it comes to trade, I think retailers are looking at all of their options, all of the time — and this was whether it was President-elect Trump or President-elect Clinton,” French said.
Date: December 06, 2016