Latest news with #NateHerman
Yahoo
06-05-2025
- Business
- Yahoo
Markets Rally as Trump Backtracks, Pausing Tariffs For 90 Days
'Chaos' and 'paralysis' were the terms American Apparel and Footwear Association (AAFA) policy lead Nate Herman used to describe the current trade landscape and the industry's reaction to it. 'Ultimately no one wins in a trade war so we hope that today's dueling tariff increases will lead to a serious negotiation to resolve the long-standing trade issues between the U.S. and China,' she added. While the tempering of tensions with much of the trading world represents a step in the right direction, Hughes said she remains 'concerned about the escalating trade war with China.' 'We are relieved that President Trump is pausing the onerous reciprocal tariffs on most of our trading partners. Ninety days offers an opportunity to hold serious discussions about trade barriers and craft substantive market opening agreements,' Julia Hughes, president of the U.S. Fashion Industry Association (USFIA), told Sourcing Journal. 'Our motto at USFIA is 'Fashion Made Possible by Global Trade' and we know that fashion benefits from the opportunity to source across the globe.' Within minutes of the news breaking, the markets rallied. With the Dow Jones Industrial Average and the S&P 500 seeing their largest one-day gains since 2020. The president attributed the backtracking to the fact that 'these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States.' Highlighting the contrasting stance of about 75 other U.S. trading partners, which have rushed to the phones to implore the president to reconsider double-digit duty increases, Trump said he would authorize a 90-day pause—'and a substantially lowered Reciprocal Tariff during this period' of 10 percent, also effective as of Wednesday. But by early afternoon, the president seemed to realize all was not, in fact, cool. Hitting back at China, Trump posted that he would raise the stakes in the trade war, upping import duties on China-made goods to 125 percent, effective immediately. The stock market was rocked by news in the early morning hours that China had drastically escalated its retaliatory duties on the U.S., and the European Union approved 25-percent tariffs as a countermeasure to the president's steel and aluminum tariffs , announced last month. 'BE COOL! Everything is going to work out well,' Trump Truthed as the markets trembled. Story Continues 'There's no way to plan, because you don't know if what you're dealing with is going to change 20 minutes from now, two hours from now, two days from now, or two months from now,' he said. The 90-day deferral of reciprocal duties will provide some relief for brands that have orders on the way from offshore sourcing locales. 'I think the one thing that the reprieve does, if you want to say it does anything, is that people will get the current orders filled and not make any real changes to the to the current orders,' he said. As for the strategy of frontloading orders before the tariffs take effect? 'Bringing stuff in under the wire—that's been done, we're sort of past that point now, because everybody thought that April 2 was the deadline,' he said. Even if they could accelerate orders before the end of the duty deferrals, brands and retailers have been operating under the assumption that demand is going to take a nosedive in the coming months, Herman said. 'Not only were apparel, footwear and accessories prices going up, prices for every single product American families buy was going to go up. American consumers were just going to have less money overall, and they were going to balk at paying higher prices,' he said. 'American consumers are reacting to all this uncertainty by just pulling back altogether, and there was the assumption that demand was going to drop,' he added. In response, U.S. apparel firms are likely going to hold back on new orders or greatly reduce their volume. Trump's 10-percent universal baseline tariffs, which went into effect April 5, will have near-term impacts on pricing at retail, as well. 'You're going to start seeing prices go up as soon as late spring. I could see by Memorial Day… if not sooner.' Goods from China are their own beast—and the price hikes will be astronomical by comparison. Herman believes that Trump's tariff strategy may achieve one objective among many unintended consequences: 'I think no matter what, people are saying, 'We have to get out of China.' Everybody was trying to do that as much as they could as it was.' 'The question is, where do you go?' With only a 90-day reprieve from reciprocal duties, making future-facing decisions with long-term impacts is ill-advised, he believes. 'Is Vietnam safe? Is Cambodia safe? Is Bangladesh safe? Nobody knows,' he said. While Herman said AAFA's members, which include U.S. apparel makers, have seen inquiries about expanding onshore production, there's little opportunity for brands to offload real volume in America with such limited manufacturing capacity. Meanwhile, many of those outfits are dependent on China-made inputs and machinery that now face 125-percent duties. 'I heard about an apparel manufacturer that wasn't able to open a new plant because their machinery costs shot up $3 million or $4 million,' he said. 'This is handicapping U.S. manufacturing, which supposedly is the whole point of this process.' Meanwhile, the same American makers are feeling the sting of retaliatory duties from the country's biggest apparel, footwear and accessories export market, Canada, which took in $2.1 billion worth of those products in 2023, according to AAFA's most recent data. Canada's 25-percent tariffs on American made goods have already driven down business. And even as many acknowledge the troubling nature of China's dominance over the trade of fashion goods, the country represents a critical export market for U.S.-made products. China took in the most U.S. cotton, and the third-highest amount of American textiles and apparel, in 2023. Now, 'That market has been shut down,' Herman said. Footwear Distributors and Retailers of America (FDRA) president and CEO Matt Priest called the current tariff turbulence 'unprecedented' and 'historic for all the wrong reasons.' 'These are the types of duties that we saw 100 years ago,' he said. 'We're having a cultural experience that none of us have ever lived through.' Priest said the trade group's members have been firing off emails and texts and blowing phones off the hook with urgent questions about how to cost goods and whether to cancel orders since the president made his most recent tariff announcement. Asked whether they're worried about raising prices, revamping sourcing strategies or moving out of China, he said, 'All of the above.' 'It clearly depends on your exposure to China and other markets, and where you sit relative to the footwear marketplace in the U.S.—what's your average selling price and which retailers you engage with, what's the profile of your customer?' he said. Many footwear firms source predominantly from China, and they're particularly concerned. Vietnam, another footwear haven, is safe from escalated duties for several months, but may see a ramp up when the pause lifts, and shoe retailers have to factor those anticipated costs. An FDRA member illustrated the conundrum for Priest, saying, 'I've got to figure out how to sell the same shoe to the customer that I sold last year for double the price this year.' This will be especially tough for those that sell into mass retail, as cost-conscious consumers will be the first to retreat due to sticker shock. But shoppers across the board will contend with higher prices, smaller selections and weakened spending power. 'There's going to be damage done to the consumer,' Priest said, noting that he anticipates prices will go up within weeks, not months. 'And then I think about the number of canceled orders I've heard about just in the last 36 hours, and I just kind of wonder, what about supply? What's going to be available to the consumer?' he said. 'I think it's going to be less and less options if this trajectory continues from a tariff perspective, because a lot of shoes are just not going to be commercially viable to import. It's just not going to be worth it.' U.S. footwear companies are caught between a rock and a hard place when it comes to costing and profitability. 'The fact of the matter is, when an importer brings in product, they've got to pay the bill to U.S. Customs,' he said. 'It takes time to recuperate their cost and make a little profit as they sell through that product. If you're paying a 125-percent duty, or even North of that, you're going to front to U.S. government hundreds of thousands of dollars that you weren't expecting.' This could prove too big a lift for small- and medium-sized importers, imperiling their very business models. 'We celebrate the pause, we're grateful to catch our breath for a moment with some of these countries, but China is still driving a lot of concern for our members,' Priest said. 'None of it is positive in a sense that it creates certainty or the opportunity to sell shoes to American consumers and competitive pricing. That's all under threat right now, and we're seeing that play out in real time.' Amidst the chaos, Wall Street finally exhaled on Wednesday. Shares of fashion stocks rallied strongly on the news, showing just how much the threat of a global economic collapse can help Trump finesse the Art of the Deal. A basket of 70 fashion-specific stocks trading in the U.S. gained nearly $57 billion in market capitalization for the day. Leading the way higher was Capri Holdings, which saw its shares jump 31.1 percent to $16.36, helped along by the tariff switch and hopes that the company might sell Versace to Prada. The other big gainers included VF Corp., up 27.5 percent to $12.42; Kohls Corp., 25.6 percent to $7.76; Levi Strauss & Co., 20.2 percent to $14.93, and Macy's Inc., 18.5 percent to $11.87. Those kinds of gains are not normal, but they are in sync with the times. The CBOE Volatility Index, better known as Wall Street's Fear Gauge, fell 36 percent after the about face on tariffs. The President has proven much more ready to shake things up in his second term and investors as well as retailers are going to have to get used to living with that reality. — With contributions from Evan Clark
Fibre2Fashion
21-04-2025
- Business
- Fibre2Fashion
AAFA warns of severe impact from USTR's new shipping tariffs on China
American Apparel & Footwear Association (AAFA) has warned of serious consequences following the US Trade Representative's (USTR) announcement to impose steep new taxes on ships calling at US ports. The action follows a Section 301 investigation into China's practices in the maritime, logistics, and shipbuilding sectors. AAFA has actively opposed these measures, testifying at a USTR hearing on March 24 and submitting formal comments against the proposal. The association also conducted a study concluding that the proposed fees would harm US farmers, workers, and the broader economy. American Apparel & Footwear Association (AAFA) has criticised the US Trade Representative's move to impose phased fees on Chinese vessels and tariffs of 20 to 100 per cent on shipping equipment following a Section 301 probe. AAFA, which testified against the plan, warns the measures will hurt US farmers, workers, and the wider economy by disrupting trade and raising consumer costs. The new action introduces a phased fee structure targeting Chinese vessel operators, vessel owners, and Chinese-built ships. Additionally, USTR proposes tariffs ranging from 20 per cent to 100 per cent on vital transportation equipment such as containers, chassis, and ship-to-shore cranes. These measures will reduce US trade, result in losses for American businesses, and increase costs for US consumers, AAFA said in a press release. 'We are deeply concerned that the newly announced port fees and shipping mandates are destined to have devastating consequences for American workers, consumers, and exporters. These measures are driving up shipping costs, shrinking GDP, and reducing US exports. When ocean carriers raise rates, American families will pay the price through higher costs and growing product shortages, at a time when they can least afford,' said Nate Herman, AAFA senior vice president of policy . 'We fully support strengthening the US maritime industry, but penalising shippers for not using American-flagged or built vessels, when they cost up to five times more and remain in limited supply, is counterproductive. It is telling that the administration made this announcement after markets closed today [April 17], and when the markets won't open again until Monday, masking a decision that is bad for the economy - bad for American farmers, bad for American manufacturers, bad for American businesses, and bad for hardworking American families," Herman added. Fibre2Fashion News Desk (KD)
