An industry analyst says he expects a proposed White House plan to impose tariffs on imported vehicles and auto parts to move forward and have a negative impact on carmakers and dealers. (July 19)
The largest fabric and craft retailer in the U.S. is caught in the crossfire of the Trump administration’s escalating trade war, and it says that could have a topsy-turvy effect: Prodding customers to buy finished products from China.
JOANN Stores, with 900 shops in 49 states, would be socked by the administration’s next round of $200 billion in tariffs on Chinese imports, About two-thirds of the popular chain’s items are made in China and about 500 would be affected by a 25 percent tariff, though the biggest impact would be on fleece, yarn and cotton fabric, says company spokeswoman Amanda Hayes.
JOANN sells those materials, along with tools such as sewing kits and paper-cutting machines, to consumers and businesses who then make products such as clothing, blankets, pillows and upholstery covers.
Small businesses, which typically sell the finished goods online, make up about 20 percent of the retailer’s customer base.
JOANN CEO Jill Soltau is set to request an exemption from the tariffs Thursday at a public hearing before the Office of the U.S. Trade Representative in Washington. Hundreds of other companies are also making their cases this week. JOANN already has filed a written plea for exemption.
The first two rounds of U.S. tariffs on Chinese goods totaling $50 billion a year in imports were largely aimed at industrial and technical products and attempted to spare American consumers of most of the higher costs. But the $200 billion third round, which could take effect as early as next month, would hit a wide variety of consumer goods, including refrigerators, burglar alarms, vegetables, handbags and burglar alarms.
Ironically, though, the duty on fleece, yarn and fabric would discourage American manufacturing, Hayes says.
“We think we’re definitely an unintended consequence,” Hayes says. The company, she says, has to buy the raw materials from China because the infrastructure to make them in large volumes no longer exists in the U.S.
Meanwhile, she says, the company would likely have to pass along the 25 percent tax to customers. That would “drive people to buy finished goods that are made elsewhere.” She notes that Chinese-made alternatives to the clothing and other products JOANN’s customers cobble together are not subject to the proposed tariffs.
“The goal of the latest round of tariffs is laudable, but including specific codes such as fleece and yarn would unintentionally create a made in America tax that would threaten jobs, restrict creative learning and hurt our customer’s ability to make and support those in need,” the company said in a statement.
Many of the finished products are donated to charities.
President Donald Trump says the US and the EU have agreed to work toward “zero tariffs” and “zero subsidies” on non-automobile goods. EU Commission President Jean-Claude Juncker says he has made a deal with Trump to try to ease trade tensions. (July 25)
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