How Else Can We Stuff Tariffs into the Industry’s Bag?
By Nate Herman
All of you know the stories of your customers trying to stuff too much in their carry-ons or backpacks or totes, so much so that the bag in question busts under the pressure, or the airline forces the customer to check their bag.
That is pretty much how the industry feels right now. We are so overstuffed with tariffs that we are about to figuratively bust out of business as a result.
Why? First, the China tariffs. On May 10, President Donald J. Trump raised punitive tariffs on U.S. imports of all travel goods from China from 10% to 25%. This 25% tariff is on top of the incredibly high 8%, 10%, 17.6%, 18.6%, and 20% normal tariffs we already pay on our imports of travel goods. Example: U.S. imports of textile luggage/backpacks from China now face a 42.6% tariff (17.6% + 25%). With 82% of all U.S. travel goods imports coming from China, this 25% tariff will stuff the industry’s bag to never before seen proportions, a bag that was already under stress from the previous 10% punitive tariff.
But that’s not all! President Trump has threatened to remove Generalized System of Preferences (GSP) benefits from some of our best alternative suppliers to China. Remember when, thanks to the hard work of TGA and many of you, we convinced Congress and two Presidents (including President Trump) to allow travel goods imported from GSP-eligible developing countries to enter the United States duty-free starting back in July 2017? Many of you took advantage, moving production out of China to countries like Cambodia, India, Indonesia, Myanmar, Thailand, and elsewhere.
If, however, Trump follows through on his threat to withdraw GSP benefits for certain GSP countries – India, Indonesia, Thailand, and Turkey – you will go from paying nothing back to paying 8%, 10%, 17.6%, 18.6%, and 20% tariffs. Trump may well have already removed benefits from India and Turkey by the time you read this column.
But wait, there’s more! Did you know that the United States and Europe are in a major dispute over aircraft subsidies? You might ask, why should I care? Or what does this have to do with me? Well, in retaliation for Europe’s alleged subsidies to Airbus, the U.S. government has proposed retaliatory tariffs on U.S. imports of European handbags. In turn, in retaliation for U.S. subsidies to Boeing, Europe proposed punitive tariffs on imports of U.S.-made travel goods. Makes a lot of sense, right?
Add all these together and you have an industry virtually bursting at the seams under the strain of all these tariffs being stuffed into our proverbial bag. Under these uncertain times, the landscape for our bag could change quickly, or we could be traveling by car instead. Regardless, TGA will continue the fight to give you, and your bag, some relief.
For more information, please contact TGA’s Nate Herman at nate@travel-goods.org or 202-853-9351.