In a bid to boost the economy amid the coronavirus pandemic, President Donald Trump has allowed American businesses to delay their payments on a range of import tariffs for the next three months.
The move, which was announced late Sunday by the Treasury Department and the Customs and Border Protection, gives a 90-day payment extension to United States importers who have suffered “significant financial hardship” during the outbreak.
“By postponing the deadline to deposit certain duties, taxes and fees for 90 days, we are providing much-needed relief to affected businesses,” said Treasury Secretary Steven Mnuchin. “This will protect American jobs and help these businesses get through this time.”
Although it fell short of a deferral or elimination in duties urged by trade groups and retailers, the measure received some praise from industry leaders. They agreed that the postponing duties would provide liquidity and help companies preserve cash flow at a time when funds are increasingly running out due to widespread store closures and subsequently declining sales.
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The deferral came just before many importers faced batch of tariff payments due this week. To qualify for the extension, a company’s business operations must be fully or partially suspended during March or April as a result of coronavirus-induced federal travel and commerce restrictions. (Their gross receipts for mid-March to end of March or April must be less than 60% of those in the prior year period.)
The partial reprieve does not cover duties on the more than $360 billion worth of Chinese goods that were taxed during the protracted financial dispute between Washington and Beijing.
Over the past few weeks, Trump has been considering whether to allow limited duty extensions — an issue that has been at the forefront of the footwear agenda, particularly during the U.S.-China trade war. The Footwear Distributors and Retailers of America had sought the administration’s temporary postponement of duties through letters and calls as early as March 10.
“Our companies and workers are struggling right now, and we need this action more than ever,” said president and CEO Matt Priest. “To all in our industry, the fight is not over. We will keep doing all we can in support of all American shoe companies during this time.”
The American Apparel and Footwear Association also applauded the move but urged the removal of all punitive tariffs on shoes and clothing as well as textiles and other accessories.
“There is more that can and should be done,” added president and CEO Steve Lamar. “Limiting the goods that qualify for deferral will in turn limit the relief that is provided for America’s employers and also limits the beneficial impact for U.S. supply chains that have been mobilized to meet the personal protective equipment shortage we face domestically.”
The past month has been brutal for many fashion and footwear companies, which have been forced to keep stores shuttered and reduce operations across the country, on top of furloughing workers and cutting executive salaries, amid extended social distancing guidelines.
Late in March, the government passed a massive stimulus package to send direct payments and grant unemployment benefits to millions of Americans. The measure included $500 billion for loans, loan guarantees or other assistance to businesses, states and municipalities, as well as $349 billion for the Small Business Administration to guarantee loans to companies and nonprofits with fewer than 500 employees. (The tap for small businesses has run dry; however, a second deal to replenish the loan program is currently making its way through Congress.)
This story was updated to include comments from the AAFA.
Footwear Industry Could Soon See More Coronavirus Relief With Tariff Payment Delay