More than 200 top retail CEOs, have come together hoping to steering the US away from imposing tariffs on Vietnam. Top executives from athletic giants including Adidas and Nike, designer labels such as Kenneth Cole and Steve Madden, as well as apparel chains J. Crew and Gap wrote to President Donald Trump, asking him implored not to slap punitive levies on goods coming from the Southeast Asian country, considered the second largest supplier of shoes to the US.
They agreed their trading partners must abide by global trade rules, and support enhanced bilateral engagement with Vietnam to resolve concerns. However, responding with tariffs would undermine American global competitiveness and harm American businesses and consumers at a time when they can least afford it, as they are struggling from the impacts of COVID-19.
Late last summer, the Department of Treasury found Vietnam had manipulated its currency in a specific trade case that involved tires. The Office of the US Trade Representative launched an investigation into the country’s “acts, policies, and practices that may contribute to the undervaluation of its currency and the resultant harm caused to US commerce.” In so doing, Washington used Section 301 of the 1974 Trade Act — the law it used to impose tariffs on China, which ultimately launched a protracted trade war between the world’s two largest economies.
Amid rising labor costs and escalation of the Washington-Beijing trade dispute many companies have moved their production from China to Vietnam. Similarly, many companies shifted sourcing to Vietnam as a direct result of the China 301 tariffs and supply chain diversification efforts. Placing tariffs on imports from Vietnam would punish those companies who made the sourcing shift as the administration had asked. If those duties get approval, more than half of all apparel and footwear sold in America could be hit with cumulative tariffs as high as 25 to 50 per cent. Making the situation worse, trade groups are preparing for possible retaliatory tariffs if US ends up taxing Vietnamese products. According to the International Trade Commission, US textile and apparel exports to Vietnam rose $97 million from 2015 to 2019, while US footwear exports increased by $170 million.