Trade War Seen Rolling On

WWD Digital Daily - - News - BY KATHRYN HOP­KINS

Pres­i­dent Trump is ex­pected to con­tinue to pur­sue his trade poli­cies through ex­ec­u­tive ac­tions.

Democrats might have won back the House of Rep­re­sen­ta­tives, promis­ing to bring a more ro­bust set of checks and bal­ances to Wash­ing­ton, D.C., but ex­perts aren’t look­ing for the switch to help fash­ion com­pa­nies strug­gling through the trade war with China.

As Amer­i­cans moved on from the hotly con­tested midterm elec­tions — which car­ried the po­ten­tial for mas­sive re­buke of Trump’s Amer­ica-first poli­cies, but ended with a more mixed re­sult — an anal­y­sis by eco­nomic con­sul­tancy IHS Global In­sight said pol­icy grid­lock would “al­most cer­tainly in­crease.”

Wall Street, which has had plenty of change to digest un­der Trump, cel­e­brated what seemed to be a more sta­tus quo pol­icy en­vi­ron­ment, and pushed the Dow Jones In­dus­trial Av­er­age up 545.29 points, or 2.1 per­cent, to 26,180.30. The re­tail and fash­ion gain­ers in­cluded Ama­zon. com, up 6.9 per­cent to $1,755.49; Canada Goose Hold­ings Inc., 3.9 per­cent to

$61.59; Dil­lard’s Inc., 3.8 per­cent to $79.40; Alibaba Group Hold­ing, 3.4 per­cent to $152.50; Stitch Fix Inc., 2.6 per­cent to $28.17, and Hanes­brands Inc., 2.4 per­cent to $16.91.

IHS noted Trump will still be able to pur­sue his trade agenda through ex­ec­u­tive ac­tions tar­get­ing “trade im­bal­ances” as well as “al­leged Chi­nese in­tel­lec­tual prop­erty theft and forced tech­nol­ogy trans­fers.”

House Democrats are ex­pected to largely use in­for­mal meth­ods to re­act to the U.S.-China stand­off that are un­likely to re­sult in any fun­da­men­tal changes to the ad­min­is­tra­tion’s trade poli­cies.

David Spooner, a part­ner at Barnes & Thorn­burg and a for­mer trade of­fi­cial un­der Pres­i­dent Ge­orge W. Bush, added that while the House will make Trump’s life “mis­er­able,” it is “highly un­likely” to ac­tu­ally move to reign in the Pres­i­dent’s trade author­ity through re­peal­ing tar­iffs out­right or mov­ing to amend the law that gives Trump the power to im­pose tar­iffs.

There could be some noise made re­gard­ing spe­cific prod­ucts tar­geted by the ad­min­is­tra­tion in Con­gres­sional hear­ings on the ex­clu­sion process.

“I don’t think the tar­iffs will go away, but I think we’ll see a lit­tle more prob­ing into how the de­ci­sions were made and whether or not prod­ucts should be ex­cluded,” said Spooner, who was speak­ing at the U.S. Fash­ion In­dus­try As­so­ci­a­tion’s ap­parel im­porters trade and trans­porta­tion con­fer­ence in New York Wed­nes­day.

There also might not be so much dis­tance be­tween Congress and the White House on key Chi­nese trade is­sues, such as the deficit in goods and in­tel­lec­tual prop­erty rights, which are is­sues that have been brew­ing in Wash­ing­ton for over a decade.

“Congress, on both sides of the aisle, largely agrees that the U.S. should get tough on trade with China, and there­fore won’t re­peal the tar­iffs al­to­gether,” Spooner said.

Erin En­nis, se­nior vice pres­i­dent of the U.S.-China Busi­ness Coun­cil, said the best chance for res­o­lu­tion with China will come on Dec. 1, when Trump meets Pres­i­dent Xi Jin­ping in Buenos Aires at the end of the G20 Sum­mit.

But she stressed that if those talks don’t go well, there is a 50/50 chance of a fourth round of tar­iffs hikes on im­ports from China.

After tar­get­ing around $250 bil­lion of Chi­nese im­ports in three sep­a­rate tranches, Trump has ear­marked an­other $267 bil­lion worth of Chi­nese im­ports that he can hit with levies on short no­tice.

While many be­lieve this would cover ev­ery sin­gle Chi­nese im­port, En­nis stressed that this may not be the case as the pres­i­dent could dou­ble tar­iffs on some prod­ucts.

“We don’t know if that means they’re lit­er­ally go­ing to have a list that has ev­ery­thing else or if, be­cause of con­cerns of no al­ter­na­tive sources of those prod­ucts and what the im­pact might be on U.S. con­sumers, they might go back to some of the pre­vi­ous lists and sim­ply pro­pose an in­creased tar­iff,” she said.

For now, it seems the in­dus­try, which re­lies heav­ily on im­ports from China, will sim­ply have to wait and see.

Bill Jack­son, as­sis­tant U.S. Trade Rep­re­sen­ta­tive for Tex­tiles, also made a show­ing at the con­fer­ence, but kept mum on de­tails.

“I know that the pol­icy of us­ing the tar­iffs through the 301 [process to en­force U.S. rights in trade agree­ments] has been con­tro­ver­sial, but I think that it’s fair to say that we’ve got­ten the at­ten­tion of the Chi­nese on this,” he told the re­tail-heavy au­di­ence.

“I think we all can agree that we would like to see this sit­u­a­tion re­solved with­out fur­ther im­pact on our trade, but the Pres­i­dent is very keen to en­sure that he brings some­thing home that’s mean­ing­ful and im­por­tant and af­fects the un­der­ly­ing is­sues over the long term,” he said.

Demo­cratic House Mi­nor­ity leaderNancy Pelosi and Demo­cratic Con­gres­sional Cam­paign Com­mit­tee chair Ben Ray Lu­jan re­act to early re­turns from the 2018 midterm general elec­tion.

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