Keep China in check: Don’t let Section 301 tariffs expire

The Office of the U.S. Trade Representative (USTR) will soon issue its congressionally mandated four-year review of Section 301 tariffs on billions of dollars of products from China. Its decisions will weigh heavily on the state of U.S. textile manufacturing.

These penalty tariffs on finished apparel and textile products are critical to checking abusive Chinese trade practices and leveling the playing field for domestic manufacturers and our free trade agreement partners.

China’s objective in trade has long been to exploit our market for its economic gain. From the perspectives of U.S. textile companies, Section 301 tariffs restore accountability to trade relations with China.

U.S. textile manufacturers have been severely harmed by China’s rampant intellectual property theft and predatory trade and labor practices, which have contributed to the direct loss of one million U.S. jobs in our sector.

Further, China’s substantial abuse of state-owned enterprises and subsidies and horrifying labor abuses in Xinjiang have enabled it to dominate world markets. This has hurt U.S. manufacturers and our free-trade agreement partners.

The U.S. textile industry has been a strong public supporter of Section 301 tariffs. It comprises 16,000 establishments, mostly across rural communities. These U.S. government trade enforcement actions, including the penalty tariffs, are particularly critical to U.S. small businesses, as they are less likely to have the resources, for example, to pursue a trade remedy case through anti-dumping or countervailing duty law and the substantial expenses they entail.

In turn, the Biden administration’s Section 301 penalty tariffs on finished textiles and apparel counteract China’s unfair trade advantages and give U.S. manufacturers a chance to compete. Removing these tariffs would reward China for harmful, predatory economic behavior that has put U.S. manufacturers at a competitive disadvantage. What’s more, it would do nothing to solve the inflation issues facing U.S. consumers and manufacturers right now.

It is important to dispel the fallacy of arguments perpetuated by certain importers. U.S. consumers are spending only 40 percent as much on clothing today as they were in 1960. In the 1960s, consumers spent 10.4 percent of a typical household’s annual budget on clothing, versus today at approximately 3.5 percent.

So we have seen a meteoric rise in the amount of apparel and home textile products consumers buy, yet we are, in fact, spending less. This race to the bottom has come at an enormous cost, with depressed wages globally, hollowed-out manufacturing communities and lost middle-class jobs, and the offshoring of this essential industry in the U.S.

The United States has gone from manufacturing 95 percent of our apparel down to 2 percent since 1960. In recent years, our industry has recalibrated supply chains to build strong, vibrant co-production ties with our free-trade agreement partners in the Western Hemisphere that play by the rules to survive this earth-shattering global economic shift. To further reward China by canceling the tariffs under the guise of “helping consumers” would be an ill-advised policy decision, and we appreciate that the Biden administration has stood firm on the penalty tariffs amid these frenzied calls.

We need to double down and address this massive subsidization and the forced labor practices that have led to a race to the bottom and are undermining domestic manufacturers.

In a formal submission filed by the National Council of Textile Organizations and the U.S. Industrial and Narrow Fabrics Institute to USTR, we expressed strong support for the continuation of current Section 301 penalty tariffs on finished textiles and apparel imports from China and further outlined the effectiveness of U.S. tariff actions.

We have also long advocated for a fair, transparent process to remove tariffs on textile machinery, certain chemicals and dyes and limited textile inputs that cannot be sourced domestically to help U.S. manufacturers compete against China.

The entire industry needs and deserves strong leadership from the U.S. government. Trade enforcement like these Section 301 actions is critical to preventing the overconcentration of essential products like personal protective equipment — many items of which our industry produces — in just one country.

It is vital that we maintain Section 301 tariffs, absent substantive improvements in China’s pervasive, predatory trade practices. Conversely, lifting these penalty duties will cement their destructive dominance of global manufacturing while failing to achieve the administration’s goal of easing inflationary pressures within the U.S. economy.

The nation’s economic future depends on our ability to compete in the global marketplace and meet critical domestic needs while maintaining vibrant supply chains. These penalty tariffs play a decisive role in giving American companies a chance to compete against aggressive foreign competitors. It is simply a matter of fairness.

Kimberly Glas is the president and CEO of the National Council of Textile Organizations and former Commerce Deputy Assistant Secretary for Textiles, Consumer Goods and Materials.