\n<\/p>\n
It\u2019s complicated in a way that seems designed to ensure the tariffs take effect. According to Strickler, the new tariff angle gives the president a different way to accomplish \u201cwhatever he wants to do on tariffs with any specific country.\u201d<\/p>\n
While most in fashion are aligned on the goal of eliminating forced labor, Hughes says tariffs aren\u2019t the right remedy.<\/p>\n
When Uzbekistan was found to have forced labor in its supply chain, fashion\u2019s response was direct and effective. The Cotton Campaign\u2019s 2010 Uzbek Cotton Pledge got more than 300 companies on board to boycott cotton from the country. NGOs, human rights groups, and labor advocates added to the pressure, making Uzbekistan\u2019s lapse both a reputational and an economic problem. The country responded with labor reforms and increased traceability, and was able to recover some of its lost business.<\/p>\n
Tariffs are too indirect to be similarly effective, says Hughes. Forced labor risk is often embedded deep upstream, while tariffs hit the import transaction at the border. Imposing tariffs doesn\u2019t necessarily create a clean break with tainted supply or require traceability either. And for the pressure of punitive duties to work, the economic pain has to exceed the cost of changing labor practices.<\/p>\n
The tariff may be high enough to effect change, but whether it adequately addresses forced labor remains to be seen. Certainly, fashion will take a hit either way. The new tariffs are intended to replace the previous Section 301 reciprocal tariff and could similarly reach as high as 25%, depending on the country. Looking at Europe specifically, where forced labor standards are often tougher than in the US, a big question, Hughes said, is whether the EU will be hit by this.<\/p>\n
\u201cIt\u2019s hard to read the tea leaves,\u201d Hughes adds. \u201cI would expect that there would be different tariffs for different countries since there\u2019s a focus on some countries more than others.\u201d<\/p>\n
In case there wasn\u2019t yet enough for fashion to concern itself with, there\u2019s another Section 301 investigation currently underway at USTR, and hearings just wrapped Friday. This one is looking at whether countries are producing so much that it\u2019s harming US commerce. Again, Bangladesh, China, Vietnam, India, and others are on the chopping block. If the US decides those countries\u2019 practices are \u201cunreasonable\u201d, according to USTR, that could mean a separate tariff above and beyond the forced labor one. Combined, these two investigations are intended to yield at least the same tariff rate as the reciprocal 301 and \u201cmaybe higher\u201d, says Hughes.<\/p>\n
At the end of April, USTR also released its annual Special 301 Report, looking at the global state of intellectual property protection. In it, they named Vietnam as a target they could open a case against for IP violations. The US is \u201cratcheting up the pressure on Vietnam\u201d, says Hughes, adding that this could serve as yet another avenue for the administration to raise tariffs on the second largest supplier of clothing to the US.<\/p>\n
\u201cThey\u2019re looking for all mechanisms to be able to have the threat of tariffs,\u201d says Hughes. \u201cWe don\u2019t really have any indicators of where this might go.\u201d<\/p>\n<\/div>\n