Page 12 - February-March-2020

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US-China trade deal

Phase One leaves much

to be desired, especially

for textiles

The rapidly shifting goalposts of the US-China tariff tration said the 15 percent punitive tariffs on Tranche
war suddenly took a positive step back as both 4A products would be halved to 7.5 percent. Howev-
countries found some common ground and finally er, it would come into effect 30 days after the signing
signed the phase one of a trade agreement. Indus- of the agreement, which was done on 15th January
tries all around took a breath of relief as both presi- 2020, which means the reduction in the tariff would
dents sat down and inked the deal on 15th January take effect on 14th February 2020.
2020. Delegations from both sides had finally
reached a ‘Phase One’ deal on 13th December Tranche 4A covers around $3.7 billion in textile,
2019. apparel, and home textile products.

Although this is a relief for business on both sides, For Tranche 4B, a planned increase in tariff from 10
much is still left to be desired, especially for the percent to 15 percent has been suspended and the
textiles and garments sectors. Since 2018, the US products, including around $4.7 billion US imports in
had slapped tariffs on US$550 billion worth of textile, apparel, and home textile products, will
Chinese products. China, in turn, set tariffs on continue to have 10% tariff imposed on them.
US$185 billion worth of US goods.
Under the phase one agreement, China has also
The US imposed 25 percent tariff rate on tranches 1, agreed to purchase $200 billion more US products
2, and 3, which are still in effect. Tranches 1 and 2 do compared to its baseline of $186 billion in 2017.
not cover any textile or apparel products, but in These will include farming and other products.
tranche 3, around $3.7 billion textile products are
bearing the brunt of the tariff and will continue to do Steve Lamar, president and CEO of the American
so until a ‘Phase Two’ of the deal comes around. Apparel & Footwear Association, said 92 percent of
apparel, 53 percent of footwear, 68 percent of home
The only area that the current deal covers is tranche textiles, and all of the travel goods and accessories
4A and 4B. As part of the deal, the Trump adminis- imported from China will continue to be hit.

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