Trade War Looms over New York Fashion Week

Discussion questions:

  • Why does the U.S. textile industry call for additional tariffs on textile and apparel imports from China whereas U.S. fashion brands and apparel retailers oppose the tariffs?
  • Based on the trade theories we have learned so far, why or why not would you recommend President Trump to impose 25% punitive tariffs on imports from China?

Appendix: Comments on the Proposed Section 301 Tariffs on Imports from China (August 2018)

For the complete timeline of the U.S. Section 301 tariff action against China, please click HERE

Author: Sheng Lu

Professor @ University of Delaware

7 thoughts on “Trade War Looms over New York Fashion Week”

  1. After watching this video it leaves me with many questions. I am confused what these tariffs President Trump is pushing for are would do to benefit America. At the end of the video the reporter says that American prices on clothing would rise with these taxes and tariffs. Why would the president want this? Why would he want his people to pay more money? Is he doing this to make America more inclined to produce their items domestically instead of overseas? To me I do not think any more taxes on imports is a good idea. I think that America and China have a good relationship and trade business at the moment that each is benefiting from in their own ways. There are of course drawbacks to each nation, but overall in my perspective adding additional taxes is not the way to go for the American economy. I think for the overall economy these tariffs might be good, but for fashion brands and retailers prices are only going to rise and sales likely to fall. I do not think the president should impose these tariffs for the reasons I explained above.

    1. Great thoughts and questions! A little background about the Section 301 tariff action: In March 2018, the office of US trade representative (USTR) released the findings of its Section 301 investigation and found China’s acts, policies and practices related to technology transfer, intellectual property and innovation are unreasonable and discriminatory and burden or restrict U.S. commerce. Because China is unable to meet all the requirements for a change in its practices, the Trump administration decided to impose an additional tariff—both to “punish” China and force China to give in. It should be acknowledged that most US and EU companies agree that China’s IPR protection and technology transfer practices need improvement, including US fashion brands and retailers. However, many US companies disagree that tariff is a solution to the problem.

      Notably, in response to the US section 301 action, China is imposing punitive tariffs on American goods as well. US exporters, including cotton growers, are affected negatively—such as the article we read. Economically, nobody will be the winner of the trade war.

      If you are interested in, you can read this comment: http://www.usfashionindustry.com/pdf_files/USFIA-Post-Hearing-Written%20Comments-USTR-2018-0026.pdf

  2. This video was very interesting to watch and leaves me with many questions as well. Although China’s IPR protection and technology transfer practices do need improvement, I do not believe that the additional tariff to punish China is needed and will only hurt US companies and consumers. It’ll be interesting to see the results of the additional tariff after Monday and if it will hurt US companies and affect trade practices with China.

    1. great thought! I hope yesterday’s guest provides us with new perspectives about the potential impact of the section 301 action. What is of my concern is trade policy decision is NOT made based on economic reasons. There seem to be growing pressures which make top leaders in both countries have to take a strong stance on the dispute rather than “look weak” in front of the public …

  3. I found it interesting that there are a mix of answers from different designers about whether or not the trade war will affect their company. Some designers like Taoray Wang, who said that she doesn’t think the tariff will have much effect on her company because she does custom pieces instead of large production. This idea broaden my horizon because since she’s making one piece at a time, she is more flexible in terms of where she sources her materials from, whereas others they will most likely be strike hard because many of the plannings are done months in advance. After watching the video, I think no matter what, I still don’t believe the 25% punitive tariffs on imports from China is beneficial to us, the consumers. We will most likely get hurt the most because the prices of products are surely going to rise. If business had to pay more for their imports, then we had to pay more to purchase the products. Based on the absolute advantage theory, I don’t recommend President Trump to impose the 25% tax on the imported goods from China. I believed that specialization is the best and most beneficial way to trade. I think this country have done so much to get to where we are today, and I don’t think moving America backward to the times when we produce everything in the 19th century is an efficient solution to today’s economy.
    Yes, Americans in the early 1800s produced many things including textiles domestically. However, as time goes on, our technology and skills also advanced, and we grew older and more mature, so nowadays we have jobs that correspond to our strength, and likewise for other countries as well. The U.S. textile industry call for additional tariffs on textile and apparel imports from China because they want their business to go back to their good old days, but this is not going to happen, since we no longer have workers that best match with these jobs in the States.

    1. Thank you for sharing the great thoughts and your first-hand observation from the industry. Just a quick note–I agree that absolute advantage theory, comparative advantage theory, and factor proportion theory all suggest that specialization and free trade will benefit nations as a whole. And you can check this article, which provides a detailed breakdown of the products that will be affected by the section 301 action: https://piie.com/blogs/trade-investment-policy-watch/trump-and-china-formalize-tariffs-260-billion-imports-and-look

  4. I think that China’s IPR protection and technology transfer practices need improvement, but I do not think it is smart to punish China with the 25% tariffs. In the end, I think it will only hurt US companies and consumers. From learning about the absolute advantage theory, I do not think it is a good idea that President Trump imposes the 25% tax on imported goods from China. I understand that he wants to ‘scare’ China into giving into his negotiations, but I think if China specializes in clothing, they should continue to be able to export their products to the US. I believe that specialization is the most beneficial way to trade globally and the US should be able to accept that we cannot make every product the most efficiently here. I want to continue to follow this debate and watch what unfolds in the long run.

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