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Richloom Fabrics Executive Outlined Ways 25 Percent Tariff Hurts US Textiles and Counterproductive to Trump Goals

September 1, 2018

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Richloom Fabrics Group COO Michael Saivetz.
Richloom Fabrics Group COO Michael Saivetz.

By RAY PARKER

Richloom Fabrics Group COO Michael Saivetz raised concerns last week in Washington about the looming 25 percent tariff on Chinese exports, especially since it hits textiles sold as inputs but not those sold as finished goods.

“The increase is going to be passed on to the US consumer,” Saivetz said in an interview. “[The new tariff is] making it less competitive for American manufacturers.”

Even worse, he said, the new tariff will likely impact this year’s Christmas season.

President Donald Trump’s administration will likely begin tariffs this month on more than half of all Chinese exports to the United States, including a 25 percent tariff on upholstery, decorative fabrics, and other material.

The US Trade Representative’s office in Washington held public comments until August 30 on the proposed tariffs, specifically the Trump administration's plan to levy $250 billion in tariffs on China for unfair trade practices under Section 301 of the 1974 Trade Act.

Richloom COO Saivetz explained to government officials how the tariff would affect Richloom Fabrics, its more than 250 employees, and American textile manufacturers. “Those US jobs depend on our extensive international and domestic supply chain,” Saivetz said in Washington on August 20. “Our domestic production accounts for in excess of 25 percent of our total business, which would be at risk.”

Saivetz explained one of those business sectors.  “For example, for the booming RV industry, we produce millions of yards of polyurethane fabric,” he said to officials. “With the resurgence of the American RV industry, this product now makes up 10 percent of Richloom’s sales. China is the primary source for this product and we could not easily or quickly shift to alternative sources.”

“Indeed, the proposed tariffs will have the unintended consequence of harming US manufacturing and pushing jobs offshore,” Saivetz testified. “In some cases, finished goods face no tariffs, while fabric inputs are threatened with 25 percent duties. Soft-home products, such as bedding, curtains, and pillow-products, are omitted from tariffs. … Tariffs on fabric will give a competitive advantage to foreign producers of finished products.”

Not all Richloom products come from China.  Saivetz pointed out the company uses mills in Massachusetts. It also supplies US manufacturers in North Carolina, Mississippi and Indiana.  Other products, like outdoor fabric, which makes up 20 percent of Richloom's business, are not sourced from China.

Trade talks ended last week between American and Chinese negotiating teams without any progress. The Trump administration has had three main demands, according to The Wall Street Journal. The Chinese appeared willing to negotiate on two of them.

The first was that China purchase additional American goods, while the second involved opening Chinese markets. The third item targeted Chinese industrial policy, such as subsidies to Chinese high-tech firms, which American officials said violates “intellectual property rights.”

Saivetz addressed this issue in Washington.  “The tariffs on fabric products will not serve the broader purpose of protecting US technology or innovation,” he told the committee. “Fabric production is not an industrial priority for China, nor is it an industry where US intellectual property is at risk. Richloom’s intellectual property is in its fabric design, which is done in the US by skilled American employees.”

Read Richloom Fabrics Group COO Michael Saivetz’s full testimony by clicking on the link.

If you have a news tip, contact Associate Editor Ray Parker by email: Ray@fabricsandfurnishings.com

 


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