It has been almost a month since the United States announced equivalent tariffs on April 2nd, and in the past three weeks, the booking volume of freight containers from China to the United States has decreased by 60%, and Sino US freight has almost come to a standstill! This is fatal for the American retail industry, which is filled with Chinese products on supermarket shelves. Especially in the textile and clothing industry that requires a large amount of imports but has a relatively thin profit margin, the price of clothing in the United States may rise by 65% in the next year.
US retailers collectively raise prices
The Lianhe Zaobao reported on the evening of April 26 that the CEOs of retail giants including Wal Mart, Target, Home Depot and others went to the White House to put pressure on adjusting tariff policies, because the soaring supply chain costs have become unbearable for enterprises.
According to the Wall Street Journal on the 26th, Wal Mart and other American retailers have notified Chinese suppliers to resume shipment. Several Chinese export suppliers said that after communicating with the US government, major US retailers, including Wal Mart, had informed some Chinese suppliers to resume shipment, and the tariff was borne by the US buyer. Prior to this, temu、 Cross border e-commerce companies such as Xiyin have also announced price increases.
According to survey data from the University of Michigan, inflation expectations in the United States have significantly rebounded to 6.7% in the coming year, the highest since December 1981. In 1981, during the global oil crisis, the Federal Reserve raised interest rates to 20% in response to the super inflation at the time. However, with the current $36 trillion US Treasury bond size, even if the Fed maintains the current interest rate without lowering it, it will be difficult for the US fiscal system to withstand it. The consequences of imposing tariffs are gradually emerging.
Clothing prices may increase by 65%
American consumers have been struggling with significant inflation in recent years, especially in the clothing industry.
In 2024, clothing and home appliance prices increased by 12% year-on-year, while residents’ income growth was only 3.5%, leading to consumption downgrade and even “food and clothing choices”.
According to CNN, 98% of clothing products in the United States rely on imports. According to an analysis by the Yale University Budget Lab, due to tariff policies, clothing prices in the United States may rise by 65% in the next year, and shoe prices may increase by up to 87%. Among them, many low-priced basic clothing items favored by American consumers, such as T-shirts priced at a few dollars each, have been hit the hardest by tariffs.
The report states that basic clothing items such as T-shirts, underwear, socks, and other essential items have stable demand, and retailers restock frequently, requiring more frequent imports. As a result, tariff costs will be passed on to consumers more quickly. The profit margin of cheap basic clothing is already very low, and the price increase will be even greater under the impact of tariffs; The largest demand for such goods is among low-income households in the United States.
A large portion of low-income families in the United States are supporters of Trump, who chose him in the election due to severe inflation during Biden’s past four years in office, but did not expect to suffer even more severe inflation shocks.
Will the textile tax rate become 35%?
In the process of imposing tariffs this round, it is actually Trump’s iron fisted warehouse that has been hurt even more. Allowing the situation to develop like this is definitely not acceptable, but canceling tariffs like this is definitely not acceptable and cannot be explained to voters.
According to a report by The Wall Street Journal on the 23rd, senior US officials have revealed that the Trump administration is considering multiple options.
The first option is to lower the tariff rate on Chinese goods to approximately 50% -65%.
The second scheme is called the “grading scheme”, in which the US will classify goods imported from China into those that do not pose a threat to US national security and those that have strategic significance to US national interests. According to US media, in the “classification scheme”, the US will impose a 35% tariff on the first category of goods and a tariff rate of at least 100% on the second category of goods.
As textiles do not pose a national security threat, if this plan is adopted, textiles will be subject to a general tariff of 35%. If the final tariff is really calculated at 35%, combined with the nearly 17% tax rate imposed in 2019 and the total 20% tariff imposed twice this year under the pretext of fentanyl, the total tax rate may even be reduced compared to April 2nd.
In response to a reporter’s question, Chinese Foreign Ministry spokesperson Guo Jiakun stated that China has already introduced its relevant position and reiterated that this tariff war was initiated by the United States, and China’s attitude is consistent and clear. If the US really wants to solve the problem through dialogue and negotiation, it should abandon the tactic of extreme pressure, stop threatening and blackmailing, and engage in dialogue with China on the basis of equality, respect, and mutual benefit.
Market mentality hits bottom and rebounds
At present, this round of tariff increases has evolved from an initial encounter to a protracted war, and many textile companies have gradually recovered from their initial confusion and started normal market operations.
It is impossible to say that tariffs have no impact at all, after all, such a large consumer market as the United States has been cut off in half at once. However, if it is said that without the US market, it would be impossible to survive, then it is not at all.
Entering late April, the market sentiment gradually bottomed out and rebounded after reaching freezing point, with orders still being placed and weaving companies resuming silk preparation. Raw material prices even showed a slight rebound.
Not only can there be occasional positive news from the US side, but China is also exploring new market demand through stimulating domestic demand and lowering the threshold for departure tax refunds. In the upcoming May Day Golden Week, the market may usher in a new round of consumption peak.
Dongguan Liansheng Non woven Technology Co., Ltd. was established in May 2020. It is a large-scale non-woven fabric production enterprise integrating research and development, production, and sales. It can produce various colors of PP spunbond non-woven fabrics with a width of less than 3.2 meters from 9 grams to 300 grams.
Post time: Apr-30-2025