Over the weekend, Trump announced that the United States would indefinitely retreat from a potential trade war with its southern neighbor after the country agreed to deploy its National Guard in an effort to curb the flow of asylum-seekers from Central America. Ten days ago, the president vowed to slap a 5% tariff on all imports from Mexico unless it took measures to crack down on immigration.
Leaders from footwear trade organizations, including the Footwear Distributors and Retailers of America and the American Apparel and Footwear Association, welcomed the news but warned of the impact of Trump’s threats on businesses and consumers.
“It is important to note that this entire process was extremely disruptive for our members,” AAFA president and CEO Rick Helfenbein told FN. “We do not see taxing Americans as a negotiating tactic and will continue to discourage any reckless weaponizing of tariffs in our testimony to the administration at this month’s hearings on China tariffs.”
Additionally, FDRA president and CEO Matt Priest said that “imposing a massive tax increase on every American would have been disastrous, at a time when shoes sourced from China are facing a new 25 percent tariff on top of record high footwear tariffs. All of these trade actions are driving uncertainty for American businesses which negatively impacts the economy and our consumers.”
Trump and Chinese president Xi Jinping are scheduled to meet at the G-20 Summit this month following a year of tit-for-tat tariff threats. In early May, trade negotiations between Washington and Beijing collapsed, leading the former to raise tariffs from 10% to 25% on $200 billion worth of Chinese goods. A separate list of products was also released by the Office of the U.S. Trade Representative, suggesting another 25% hike in levies that would impact footwear and other accessories.
In a two-part tweet this morning, Trump lauded the U.S.-Mexico agreement but didn’t rule out tariffs in the future. The 5% duty would begin on June 10, and the rate could increase up to 25% if the White House’s policy demands fail to be met.
“We have fully signed and documented another very important part of the Immigration and Security deal with Mexico, one that the U.S. has been asking about getting for many years. It will be revealed in the not too distant future and will need a vote by Mexico’s Legislative body!” Trump wrote on Twitter. “We do not anticipate a problem with the vote but, if for any reason the approval is not forthcoming, Tariffs will be reinstated!”
The deal also eased investors’ worries, sending the Dow Jones Industrial Average up 0.65%, or 170 points, at market open on Monday. The S&P 500 gained 1%, or nearly 30 points, and the Nasdaq Composite also rose 1%, or 82 points.
Watch the highlights at the 2018 FNAAs.
How US Trade Tensions With China and Mexico Can Impact Interest Rates
Why Trump’s Latest Tariff Threat Against Mexico Has the Shoe Industry Worried