It has been nearly a month since the United States announced reciprocal tariffs on April 2nd. In the past three weeks, the booking volume of freight containers from China to the United States has dropped by 60%, and Sino-US freight transportation has almost come to a standstill! This is fatal for the American retail industry where supermarket shelves are filled with Chinese goods. Especially in the textile and garment industry, which 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 coming year.
Retailers in the United States collectively raised prices
The Lianhe Zaobao reported on the evening of April 26 that the ceos of retail giants including Walmart, Target and Home Appliance collectively went to the White House to pressure the adjustment of tariff policies, as the soaring supply chain costs have become unbearable for enterprises.
According to a report by The Wall Street Journal on the 26th, US retailers such as Walmart have informed Chinese suppliers to resume shipments. Several Chinese export suppliers said that major US retailers, including Walmart, have informed some Chinese suppliers to resume shipping after communicating with the US government, and the tariffs will be borne by US buyers. Before this, cross-border e-commerce enterprises such as temu and Shein also announced price hikes one after another.
Survey data from the University of Michigan shows that inflation expectations in the United States for the coming year have rebounded significantly to 6.7%, the highest since December 1981. In 1981, the world was in the midst of the oil crisis. To deal with the hyperinflation at that time, the Federal Reserve raised interest rates by 20% in one go. However, with the current scale of 36 trillion US dollars of US Treasury bonds, not only would the Federal Reserve not raise interest rates, but even if it maintained the current interest rates without cutting them, the US fiscal situation would be hard to sustain. The adverse effects brought about by the additional tariffs are gradually emerging.
Clothing prices may rise by 65%
American consumers have been plagued by huge inflation in recent years, and this is especially true in the clothing industry.
In 2024, the prices of clothing and home appliances rose by 12% year-on-year, while the growth rate of residents' income was only 3.5%, leading to a downgrade in consumption and even a "choice of food and clothing".
According to CNN, 98% of the clothing products in the United States rely on imports. According to an analysis by Yale University's Budget Laboratory, due to the impact of tariff policies, the prices of clothing in the United States may rise by 65% in the coming year, and the prices of footwear could increase by as much as 87%. Among them, cheap basic clothing such as T-shirts that cost a few dollars each, which are favored by many American consumers, have been most severely impacted by tariffs.
It is reported that the demand for basic clothing items such as T-shirts, underwear and socks remains stable. Sellers have a high frequency of restocking and need to import more frequently. As a result, the cost of tariffs will be passed on to consumers more quickly. The profit margin of cheap basic clothing is already very low. Under the impact of tariffs, the price increase will be even greater. It is precisely the low-income families in the United States that have the greatest demand for such goods.
A large proportion of low-income families in the United States are supporters of Trump. It was precisely because of the severe inflation during Biden's four-year tenure that he chose Trump in the general election, but they did not expect to suffer a more severe inflation shock.
Will the tax rate on textiles become 35%?
In this round of tariff hikes, it is Trump's solid vote base that has been hurt even more. It is definitely not acceptable to let the situation develop like this, but it is also not feasible to simply cancel the tariffs, as it cannot be explained to the voters either.
According to a report by The Wall Street Journal on the 23rd, senior US officials disclosed that the Trump administration is considering multiple options.
The first option is that the tariff rate imposed on Chinese goods may be reduced to approximately 50%-65%.
The second plan is called the "classification plan". The US side will classify the goods imported from China into those that are said to "pose no threat to the national security of the United States" and those that are said to "be of strategic significance to the national interests of the United States". Us media reported that in the "tiered plan", the US side 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 are commodities that do not pose a threat to national security, if this plan is followed, a general 35% tariff will be imposed on textiles. If the final tariff is indeed calculated at 35%, combined with the nearly 17% rate imposed in 2019 and the two 20% tariffs imposed this year under the pretext of fentanyl, the total tariff rate may even be lower than that on April 2nd.
In response to a journalist's question, Chinese Foreign Ministry Spokesperson Guo Jiakun said that China has already introduced its relevant position and once again emphasized that this tariff war was initiated by the US side and China's attitude is consistent and clear. If the US side truly intends to solve the problem through dialogue and negotiation, it should abandon the approach of exerting maximum pressure, stop threats and blackmail, and engage in dialogue with China on the basis of equality, respect and mutual benefit.
Market sentiment has bottomed out and rebounded
At present, this round of additional tariffs has transformed from an initial encounter into a protracted battle. Many textile enterprises have gradually recovered from their initial confusion and resumed normal market operations.
It is impossible to say that there is no impact at all from tariffs. After all, such a huge consumer market as the United States has been cut by a large margin in an instant. But to say that it would be completely impossible to survive without the US market is not that likely.
By the end of April, market sentiment, which had hit rock bottom, gradually bottomed out and rebounded. Orders were still being placed, weaving enterprises resumed preparing silk, and even raw material prices saw a slight increase.
Not only does the United States occasionally release positive news, but China is also exploring new market demands by stimulating domestic demand and lowering the threshold for departure tax refunds. During the upcoming May Day Golden Week, the market may witness another new peak in consumption.
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