'Prices go up, sales go down, jobs get lost:' Apparel trade group CEO sounds alarm on tariffs
The U.S. and China ended trade negotiations Friday without a deal just hours after President Trump promised new tariffs on China if an agreement is not reached. And with no set deadline, Trump’s tweets are particularly worrisome to leaders in the retail space.
“Our industry is particularly exposed for a host of reasons,” said Rick Helfenbein, president and CEO of the American Apparel & Footwear Association on Yahoo Finance’s YFi PM. “We are kind of trapped. These tariffs will hurt us. They will hurt retail particularly badly.”
The Trump administration more than doubled U.S. tariffs on $200 billion in Chinese imports to 25% from 10%. The President threatened an additional 25% on almost all remaining $325 billion in goods from China.
And with 41% of all apparel produced in China, according to Helfenbein, President Trump’s threat to raise tariffs to 25% could have long-term implications.
“It’s painful,” said Helfenbein. “All of a sudden [last] Sunday at noon, the President tweets ‘we’re going to 25%.’ That bothered us. We weren’t able to grieve on the last $200 billion, and we don’t know if we’ll be able to grieve on the next $325 billion.”
Is the timing right?
But proponents of the U.S.’s move say this economic environment is the right time to play hardball.
“Right now we have great earnings in this country,” said The Brewer Group CEO Jack Brewer. “I don’t know that the President would have come out with a stance this hard if we didn’t have a 3.2% GDP number on the last report. When you are in the middle of a negotiation this big, you have to use all your guns.”
While Treasury Secretary Steven Mnuchin said talks were ‘constructive,’ President Trump tweeted tariffs ‘may or may not be removed depending on what happens with respect to future negotiations!’
Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries. The relationship between President Xi and myself remains a very strong one, and conversations....
— Donald J. Trump (@realDonaldTrump) May 10, 2019
....into the future will continue. In the meantime, the United States has imposed Tariffs on China, which may or may not be removed depending on what happens with respect to future negotiations!
— Donald J. Trump (@realDonaldTrump) May 10, 2019
And Helfenbein holds the timeline of negotiations is crucial.
“This is a problem,” Helfenbein noted. “You will be baking inflation into our system. It’s pretty simple: prices go up, sales go down, jobs get lost.”
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