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NRF: Americans will pay nearly 7 billion USD more for clothing and shoes with new tariffs

By Marjorie van Elven

Jun 24, 2019

Business

The National Retail Federation (NRF) has joined the voices against tariffs of up to 25 percent on imports of approximately 300 billion US dollars in Chinese goods, as proposed by the Office of the US Trade Representative. “We find that the proposed tariffs, especially at 25 percent, would be too large for US retailers to absorb and, once passed on, would result in prices higher than many consumers would be willing to pay”, says the NRF in a report about the estimated impact of the tariffs on several categories, including apparel and footwear. According to the report, American consumers would pay 4.4 billion US dollars more for apparel and 2.5 billion US dollars more for footwear.

“Prices for apparel & footwear will rise across the board”

China accounts for 35 percent of the total apparel imports in the United States, the NRF says, almost 2.5 times greater than the total value of apparel imports from the next largest foreign source of supply, Vietnam. “Even though there are some alternative sources of supply, both domestic and foreign, it takes time for these producers to be able to meet the large quantity demands that Chinese suppliers are able to provide, at the same level of quality and ‘time to market’”, explains the report, noting that Vietnam and other sourcing countries like Indonesia, Mexico, Honduras, Bangladesh and El Salvador would be the only ones benefiting from the new tariffs, as their annual export revenues would grow from about 150 million US dollars to 300 million US dollars.

American consumers would not benefit from the new tariffs at all, with low-income families being particularly affected, the NRF argues. Low-income families already spend three times as much of their after-tax income in apparel items as do high-income households. “Prices for apparel will rise across the board”, warned the report. “Prices of apparel from China would increase by 22 percent, and by 2 percent for products from US supplier. Overall US prices for apparel generally (from all sources combined) would rise by 5 percent. As a result, US consumers are forced to reduce overall purchases by 11 percent”, says the NRF. “After accounting for domestic manufacturing gains and new tariff revenue, the result is a net 2.2 billion loss for the US economy, with the burden carried by US consumers”.

As for footwear, China accounts for 58 percent of imports, more than three times more than runner-up Vietnam. According to the NRF, if the new tariffs are adopted, prices of footwear from China would rise by 21 percent, and by 3 percent for products from US supplier. Overall US prices for footwear would increase by 8 percent, forcing Americans to reduce footwear purchases by 15 percent.

Once again, manufacturers from other countries would be the biggest winners, not the US. The NRF estimates that Vietnam would get nearly half of the 1.5 billion US dollars in expected revenue gains for non-Chinese sources, followed by Indonesia and Italy which, together, would account for 21 percent of revenue gains. Low-income families currently spend about four times as much of their income on footwear as higher-income households. The result, even after considering domestic manufacturing gains, would be a 1.2 billion US dollar loss for the US economy.

Image: Pixabay