The Neverending Story
By Nate Herman
This issue’s column is – you guessed it – about the China trade war. As Gomer Pyle used to say, “Surprise, surprise, surprise.”
Why? Because there is no end in sight to the existential threat – a man-made threat – that could determine the future, the very existence, of the industry. As you all know well by now, on September 24, a day that will live in infamy in our industry, President Donald J. Trump imposed 10% punitive tariffs on all travel goods imported from China to the U.S. This 10% tariff is on top of the incredibly high 8%, 10%, 17.6%, 18.6%, and 20% tariffs we already pay on our travel goods imports. With 84% of all U.S. travel goods imports coming from China, this 10% duty is an albatross around the industry’s neck.
With the all-important holiday season approaching, many of you temporarily absorbed the 10% increase in tariffs – at a great cost – to ensure strong sales during a critical time. But that time has passed and most of you are either raising prices or seeing price increases across the board.
The only silver lining – maybe we should call it a tin lining – is that the 10% punitive tariffs did not automatically increase to 25% on January 1 as originally expected. President Trump temporarily delayed those tariffs to allow for negotiations with China. As of the time of my writing, it remains unclear whether a deal will be struck by the new March 1 deadline, or whether the tariff increase will be delayed again for further negotiations.
However, if negotiations don’t go well it means that by the time you read this column that albatross we mentioned just got a lot heavier, meaning President Trump increased the duties to 25% on March 2. If this happens, the 17.6% tariff you normally pay on that textile carry-on or tote, or the 20% you pay on that hard-sided large suitcase will all of sudden be 42.6% or 45%, respectively.
President Trump says he wants to tax China to stop them from stealing U.S. technology and intellectual property. But, as we all know, China doesn’t pay the tariffs, we do, and in turn, our customers do too.
Meanwhile, President Trump continues to threaten the few potential alternative suppliers to China currently available to our industry. As many readers know, the Travel Goods Association (TGA) waged a successful five-year battle to get travel goods added to the Generalized System of Preferences program. As a result, today, U.S. travel goods imports from over 100 countries, not including China or Vietnam, can enter the United States duty-free. Yet, as we speak, President Trump is in the process of reviewing GSP eligibility for India, Indonesia, and Thailand, three major alternative suppliers. TGA is fighting hard to ensure benefits are not withdrawn for these countries, but we won’t know the final decision until later this year, increasing uncertainty for the industry when we can least afford it.
Regrettably, nothing has changed from my last column. President Trump still hasn’t learned from history that no one wins a trade war. The trade war the United States launched with the Smoot-Hawley Tariff Act of 1930 was one of the main contributors to the Great Depression. And our economy is much more reliant on global supply chains than it was 89 years ago. This trade war will hurt your consumers, your workers, your business, and the U.S. economy.
And Congress is still not likely to rein in President Trump. Under Article 1, Section 8 of the U.S. Constitution, Congress has the sole authority to regulate trade. Regrettably, Congress has ceded much of that authority to presidents over the last six decades. What’s worse is that, despite the election, where Democrats now control the House, Congress still has shown no appetite to take that power back.
So, TGA is taking the battle to the heartland as a founding member of Americans for Free Trade (americansforfreetrade.com) to educate President Trump and the American people that @TariffsHurt the heartland, and every other part of the United States – negatively impacting workers, businesses, farmers, and hardworking American families.
Travel goods brands like Minkee Blue and travel goods retailers like Luggage Shop of Lubbock are making their voices heard, telling their stories to Congress, the press, and on social media. We need more of you to tell your stories. TGA will help make sure your stories are heard. Only then will the situation change.
For more information, please contact TGA’s Nate Herman at firstname.lastname@example.org or 202-853-9351.