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Preference Programs Offer Way to Avoid Additional Duties on Apparel, Footwear, Bags, Hats

Thursday, October 11, 2018
Sandler, Travis & Rosenberg Trade Report

As the impact of the Trump administration’s Section 301 tariff hikes on imports from China spreads, and the threat of duty increases on even more Chinese goods continues to grow, businesses are looking for ways to minimize their exposure to these additional costs. For importers of apparel, footwear, hats, and bags, several existing U.S. trade preference programs offer the opportunity to avoid not only the China tariffs but also the everyday duties these products face.

Bags and hats from China are currently subject to an additional ten percent duty through the end of 2018 and will see that amount jump to 25 percent as of Jan. 1, 2019. Apparel and footwear do not appear on any of the three lists of Chinese goods the White House has thus far subjected to tariff increases. However, President Trump has threatened to raise duties on another $267 billion worth of imports from China, which would cover virtually all goods not already on one of those three lists, including apparel and footwear.

Elise Shibles, a Sandler, Travis & Rosenberg attorney with extensive experience in the textile and apparel indsutry, states that three preference programs – the African Growth and Opportunity Act, the Haiti HOPE Act, and the free trade agreement the U.S. has with the Dominican Republic and Central America – offer strategic opportunities for sourcing bags, hats, apparel, and footwear in such a way that they would be free of not only the Section 301 tariffs on China but also all U.S. import duties. With these goods subject to some of the highest most-favored-nation rates the U.S. imposes (up to 32 percent), Shibles says, that amounts to a significant savings.

CAFTA-DR is a permanent agreement and both AGOA and Haiti HOPE have been authorized through 2025. Shibles will be conducting separate webinars over the next several weeks to review the details of these programs and how they can be used to minimize duty exposure. Click here, here, and here for more information and to register to attend.

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