What the Next Round of US-China Trade Talks Could Mean for Footwear

After signaling positive progress in trade talks with China, Treasury Secretary Steven Mnuchin said that he and other United States officials will head to Beijing next week to negotiate a deal to settle their monthslong tariff dispute before a crucial March deadline.

Joining Mnuchin is U.S. Trade Rep. Robert Lighthizer, who led a meeting with Chinese Vice Premier Liu He last week in Washington, where delegates from the two countries discussed their differences over China’s intellectual property practices. They also touched on U.S. demands for the structural transformation of the Chinese economy and China’s pledge to persuade state-owned companies to buy more U.S. products.

“Ambassador Lighthizer and myself and a large team are on our way to Beijing next week. We are committed to continue these talks,” Mnuchin said in an interview with CNBC. “We’re putting in an enormous amount of effort to try to hit this deadline and get a deal, so that’s our objective.”

As part of a 90-day financial truce, the White House put on hold its threat to raise levies from 10 percent to 25 percent on $200 billion worth of Chinese goods. If the countries fail to reach a deal by the March 1 deadline, the U.S. has promised to go ahead with the planned tariff increase. (Washington has already imposed tariffs on a collective $250 billion in the country’s imports, while Beijing retaliated with duties on $110 billion in U.S. products.)

In his State of the Union address last night, President Donald Trump reiterated his administration’s stance on trade: “We are now making it clear to China that after years of targeting our industries and stealing our intellectual property, the theft of American jobs and wealth has come to an end. Therefore, we recently imposed tariffs on $250 billion dollars of Chinese goods — and now our Treasury is receiving billions and billions of dollars.”

Trump has previously expressed confidence about reaching a comprehensive trade accord with China, provided that its markets open broadly to U.S. firms and a meeting with Chinese President Xi Jinping is scheduled in the near future. Without these assurances, he has warned that no deal will be made.

“I don’t blame China for taking advantage of us; I blame our leaders and representatives for allowing this travesty to happen. I have great respect for President Xi, and we are now working on a new trade deal with China,” Trump added in his speech. “But it must include real, structural change to end unfair trade practices, reduce our chronic trade deficit and protect American jobs.”

With the bulk of footwear manufactured in China, industry leaders have articulated their concerns about the U.S.’s trade dynamic with other countries as well as the potential movement of some companies’ production lines to cheaper shores such as Vietnam. The most recent tranche of tariffs already affects clothing and accessories, including handbags and wallets, with the fourth set, which would hit $257 billion in goods, expected to impact footwear.

“‘Uncertainty’ is the watchword right now, and finding ways to eliminate that uncertainty is job No. 1,” American Apparel & Footwear Association EVP Steve Lamar said in a recent interview with FN. “One of the ways to eliminate that uncertainty is to hope for the best but assume the worst and plan for it … Companies are really doing a lot of scenario planning to try and figure out how to live in a world where footwear from China is met with a 25 percent tariff.”

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