AAFA Weekly Brief
July 31, 2018

Newsletter at-a-glance

The Senate passed its version of the long-awaited Miscellaneous Tariff Bill last week, which would provide duty relief on products and inputs not made in the U.S. The bill will go back to the House before going to the President (see Trade). Meanwhile, the process to hit U.S. imports from China with punitive tariffs continues - details under AAFA News.
July 26: On Tuesday the Trump administration sought to buy votes and silence farmers by offering them $12 billion to stop complaining about lost business due to tariffs. But while those in our industry who focus on global supply chains can easily empathise with the farmers ... the difference is that the US government won't bail us out, writes Rick Helfenbein, president and CEO of the American Apparel & Footwear Association (AAFA). (Source: just-style, op-ed by AAFA's Rick Helfenbein - article unlocked)
July 26: ... While the results of Trump and Juncker's meeting may be "a step in the right direction," [Rick Helfenbein, president and CEO of the American Apparel & Footwear Association] said, concerns linger over trade agreements with China, Canada and Mexico — the United States' top three trading partners. (Source: Supply Chain Dive)
July 26: ... The Miscellaneous Tariff Bill Act, which passed the House in January, was approved by a voice vote as the chamber wrapped up its work for the week. Because the Senate amended the legislation, it will need to bounce back to and be passed again by the House — which left town on Thursday until September — before it can head to President Trump's desk. (Source: The Hill)
July 24: ... "Footwear tariffs tend to be among the most regressive," said Nate Herman, senior vice president of supply chain at the American Apparel & Footwear Association. "The lowest-priced shoes — children’s fabric tennis shoes you’d find at Walmart — have the highest tariffs, while higher-end men’s leather dress shoes are taxed a lot less," about 8.5 percent. (Source: Washington Post)
Supply Chain
July 29: ... Still, the U.S. and EU have some leverage left: Low tariffs for Cambodia’s garment industry, the largest employer in the country. The EU is now reviewing those benefits, citing the current political climate. The preferential tariffs have helped Cambodia achieve a median growth rate of 7.6 percent over the past two decades, outpacing other Southeast Asian nations. (Source: Bloomberg)
July 26: ... "We don’t want consumers to feel like the industry is hiding something. We want consumers to trust products that the industry is providing," [said Kristen Kern, government relations representative for the American Apparel & Footwear Association]. ... "Supporting research at this stage allows us to be transparent with the consumer." (Source: Sourcing Journal - article unlocked)
July 26: ... The [State Department] advisory also names more than 230 North Korean companies that have joint ventures with partners from China and other countries. The companies produce a variety of items, including apparel, small electronics and minerals. (Source: Associated Press)
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Brand Protection
July 31: ... The three-year-old company, which offers an eponymous online shopping platform, raised about $1.6 billion in a US IPO last week, reaching a valuation of about $30 billion on its first day of trading. But something is wrong on Pinduoduo. A careful look at the platform reveals scores of shoddy counterfeit products pretending to be from well-known brands—and increasingly, those brands are speaking up. (Source: Quartz)
July 26: ... Wearing apparel and accessories again topped the list of America's most counterfeited items. CBP seized 5,223 shipments of counterfeit clothes, accounting for over 15% of all seized shipments. (Source: USA Today)
July 23: ... The fake store has gone to extremes to replicate the original Supreme store experience, with identical interior fixtures, hip-hop playing, and even the same plastic bag. The only giveaway is the small logo affixed to the end of the Supreme mark, which may look like a registered trademark logo to the untrained eye, but upon closer inspection is a custom mark that reads "NYC," further differentiating the counterfeit brand from the bona fide bogo. (Source: Highsnobiety)
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Tariff update - U.S./EU agree to hold talks: During a joint press conference on July 25, President Trump and European Commission President Juncker said they had agreed to discuss resolving the trade dispute between the two trading partners, with the goal of working toward "zero tariffs, zero non-tariff barriers, and zero subsidies." AAFA President and CEO Rick Helfenbein applauded the announcement, but expressed concern with the remaining "contentious relations with other trading nations" in a statement that evening.

Meanwhile, the process to hit U.S. imports from China with punitive tariffs continues. Here's a breakdown of the tariffs currently in effect or under consideration:

List 1 (25% tariff on $50 billion) - Proposed on April 6 as a result of the Section 301 investigation conducted by the U.S. Trade Representative. This list has since been broken into two separate lists:

List 1A (25% on $34 billion) - Tariffs on this list went into effect on July 6 and were followed by China's retaliatory tariffs.

List 1B (25% on $16 billion) - Hearings took place last week and AAFA submitted comments for the record.

List 2 (10% on $200 Billion) - Proposed on July 10 in response to retaliatory tariffs initiated by China on List 1A (July 6). AAFA has requested to testify during the public hearing (August 20-23) regarding the $200 billion list. This list includes several product lines important to the industry, including textiles, travel goods, hats, specialty apparel, and accessories.

For insight on the ongoing trade war and the impact on the industry, download AAFA's Trade War Heat Map (member login required). Interested in regular tariff updates? Contact Membership to learn how to join the Government Relations Committee.

AAFA in Seattle next week! AAFA is bringing its Traceability Seminar, Environmental Committee, and Social Responsibility Committee meetings to Seattle next week. This is a great opportunity to hear from industry experts and connect with colleagues on important issues. The Traceability Seminar is sold out, please contact Katie Gissendanner to be added to the wait list.

See all of AAFA’s latest letters, comments, and testimony here.

Congress and government agencies solicit comments on a range of issues that may affect your business – find a list of comment opportunities here.

Member Welcome: DHL

DHL has a wide range of solutions that can be tailored to your business' particular needs. Our aim is to optimize and improve your supply chain, helping you gain a competitive advantage.

AAFA Events
August & September
August 2 Webinar: Managing Brand Success in an Unpredictable World
August 7 Environmental Committee Meeting
August 8 Traceability Seminar
August 9 Social Responsibility Committee Meeting
August 22 Webinar: Managing Transportation Risks
September 27 AAFA Footwear Workshop 
Visit our events calendar for all AAFA webinars and industry events.

Award-winning journalist Andrew Stevens to keynote the AAFA Executive Think Tank in Hong Kong on October 24.


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