Tariffs were clearly on everyone’s mind at the recent Atlanta and Chicago Bridal Markets, many asking about the current status and impact on industry, some assuming a pause was in effect on Chinese imported goods, and a few believing that exporting countries pay import tariffs.

As of this writing, this is the reality:

-Tariffs on apparel imported from China continue to be charged at 37.5% of the stated value of goods.

This 37.5% is broken down as follows:

-7.5% established during the first Trump administration and carried forward by Biden administration

-20% applied to address the Fentanyl crisis implemented in early April of this year

-an additional 10% applied to all countries as a universal tariff during trade negotiations with each, also implemented in April

Important detail: This tariff rate of 37.5% does NOT include duties (approximately 16% for dresses and accessories). Duties plus the 37.5% tariff account for a current TOTAL impact of 53.5%

Note:
Duties and tariffs are different types of fees imposed on goods entering the US to generate revenue for the government and/or to protect domestic industries.

Duties are based on specific product characteristics and are generally permanent set by international trade agreements.
Tariffs cover a broad category of taxes or restrictions on imports and exports, and may change relatively quickly as we have experienced recently.

-There is no pause on tariffs applied to apparel and goods imported from China.

This according to President Trump’s August 12 executive order entitled “Continuing the Suspension of Heightened Tariffs on China.”

President Trump extended the tariff truce between the US and China in place since May that prevented rates as high as 125% from taking effect during a negotiation timetable that now ends November 10.

Potential outcomes after November 10 depend on negotiations: deadline could again be extended; an increase or decrease in rates; a locking in long-term of existing tariffs.

Regardless of the outcome of these ongoing negotiations, one thing seems clear just based on the trade deals already finalized with specific countries… tariffs are here for the long term.

Consequently both our brides/customers and every segment of the supply chain will need to adapt to this “new” normal. For the industry, this means carefully assessing pricing strategies, looking for steps to improve operational efficiencies, possibly evaluating alternative supply sources, working closely with trusted vendors... all while considering the long-term impact of price increases on consumer demand and market position.

-Current tariffs on other formal apparel producing and exporting countries:
Brazil: 50%            India: 50%            Myanmar: 40%            Mexico: 25%            Canada: 25%

Taiwan: 20%            Vietnam: 20%

-US consumers to soon see impact of tariffs on the price of their goods and services.
US importers across all industries have mitigated consumer prices by absorbing increased costs in the short term, but are increasingly raising prices to protect their margins and businesses.

According to a recent report by Jan Hatzius, chief economist of the investment bank Goldman Sachs, US businesses have so far shouldered most of the financial pain from tariffs, with the share picked up by consumers expected to rise sharply in coming months.

Fortune magazine, quoting from the report, stated that as of June, consumers had absorbed 22% of total tariff costs, with that number projected to increase to 67% by October. Hatzius was also quoted as predicting that the burden of tariffs for businesses will shrink from 64% down to 8%.

There are parallels in formal apparel industry: brands and private label apparel and accessory companies initially absorbed some or all of additional tariff expenses, but as evidenced at recent markets are steadily increasing prices.

Retailers initially did the same… and appear to be moving to increasing prices by a certain percentage overall, and moving away from tariff surcharges on invoices to their brides.

-Exporting countries do not pay import tariffs… consumers ultimately do.
Simply put, a tariff is a tax on imports, which is charged to the importer at the border before release of imported goods. Those fees may be absorbed to a certain extent by the importing company, often based on the amount, but are generally passed through to their distributors/retailers, who then price the goods to the consumer accordingly.