Trade Groups' Study Says Section 301 Tariffs on Furniture, Apparel, Shoes Driving Prices Up

A study sponsored by five trade groups said that while tariffs of 7.5% to 25% on Chinese consumer goods imports have caused some trade diversion out of China, the primary result has been higher prices for customers.

The study, published Jan. 17, said that luggage and other bags have the highest total tariff now, at an average of almost 39%, but the biggest change was for furniture, which faced no tariffs before the tariffs on Chinese goods, and now faces 25% tariffs. The study quoted an anonymous retailer who said its furniture prices rose 23% last year as a result, after two years of smaller hikes.

The U.S. Fashion Industry Association, the Retail Industry Leaders Association, the National Retail Federation, the American Apparel and Footwear Association and the Footwear Distributors and Retailers Association paid for the study.

It said that nearly 90% of apparel imports face an additional 7.5% tariff, and out of 1,290 exclusion requests from the sector, only 5%, or 69, were approved.

China now accounts for 22% of world apparel imports, down from a third before the trade action, the study said.

All travel goods -- backpacks, luggage, handbags, wallets -- face 25% tariffs if they are of Chinese origin, and importers paid almost $800 million in tariffs on these imports last year, the study said. There were 860 travel goods exclusion requests, and 7%, or 56, were approved.

The study said that even though there had been a shift to other Asian countries once travel goods were added to the Generalized System of Preferences, sourcing is moving back to China after GSP's expiration two years ago. Even though tariffs on goods from GSP countries are 17% to 20%, rather than almost 40%, "products sourced from GSP eligible countries [are] less competitive compared to manufacturers in China," the study said.

About half of Chinese footwear categories face a 7.5% Section 301 tariff, which cost importers more than $450 million last year, the study said -- and no exclusions were granted in the sector. China produced 53% of shoes imported to the U.S. in 2018, and it's now 40%.

Furniture had the biggest change, with China losing half its market share in the category in the U.S. -- it now provides 25% of U.S. furniture imports.

The Office of the U.S. Trade Representative is considering adjustments to the Section 301 action as part of a quadrennial review. The comment period will close at 11:59 p.m. Jan. 17.