An outline on the trade deal between the U.S. and the European Union (EU) has some good tariff news for the fashion and shoe industries.
The tariff cap for the reciprocal rate is 15 percent, and more importantly, the duty is not stacked on top of existing high rates.
“We are grateful to U.S. President Donald J. Trump, E.U. President Ursula von der Leyen, and the rest of the negotiating teams for ensuring that the new 15 percent reciprocal rate is not-stacked on top of existing high most-favored nation (MFN) rates that the U.S. fashion industry has long been paying on imports of inputs, equipment, and finished goods,” said American Apparel and Footwear Association president and chief executive officer Steve Lamar and the Council of Fashion Designers of America president Steven Kolb in a joint statement.
The two also noted that the non-stacking concept should be the framework for other trade deals.
“We are urging the U.S. to embrace this vital non-stacking concept in other deals so that fashion industry can continue to directly and indirectly support more than 10 million U.S. workers as we design, make, market, and sell safe, affordable, authentic, and responsibly-made clothes, shoes, and accessories,” they said.
The U.S. and the EU on Thursday disclosed their joint statement regarding their agreement on reciprocal, fair and balanced trade. Among a number of key points in the outline was this statement on tariff rates: “The United States commits to apply the higher of either the U.S. Most Favored Nation (MFN) tariff rate or a tariff rate of 15 percent, comprised of the MFN tariff and a reciprocal tariff, on originating goods of the European Union.”
The joint statement on the trade outline also said the two would “negotiate rules of origin that ensure that the benefits of the Agreement on Reciprocal Trade accrue predominately to the United States and the European Union.” They also said they would work together to ensure strong protection of internationally recognized labor rights, including the elimination of forced labor in supply chains.
When the U.S.-EU trade deal was first disclosed on July 27, the White House didn’t issue a fast sheet until a day later that provided some details for ongoing negotiations, but left open questions regarding clarity on tariff rates and their implementation. Thursday’s update now clarifies the 15 percent tariff levy for EU imports for the 27-member trade bloc. The trading bloc includes Italy, Spain, Portugal, and Germany, all key players in the footwear industry.
Trump first raised the imposition of global reciprocal tariffs on April 2. Implementation was followed by a subsequent 90-day pause to allow for trade talks while imports, with the exception of China, were taxed at a temporary 10 percent rate.
“At this stage, many details of the agreement remain undefined or have yet to be made public. Nevertheless, the reduction of uncertainty in the international context is, in itself, a positive development for companies and for the sector as a whole,” said Paulo Goncalves, director of communications at APICCAPS (Portuguese Footwear, Components, Leather Goods Manufacturers’ Association) at the time. He also described a 5 percent increase to the tariff rate, based on the average effective rate of 10 percent in 2024 for Portuguese footwear, as a positive given the unpredictability over the last several months.
EU President Ursula von de Leyen had noted last month in a comment to a CNBC reporter that the tariff rate would not be stacked. But the footwear and apparel industries were waiting further word from the White House on the details, given Trump’s history of shifting trade deadlines, as well as an earlier threat of a 30 percent tariff rate on EU imports. Thursday’s U.S.-EU joint statement now provides clarity on implementation, one that hopefully hints at how tariff rates will be calculated in trade deals with other countries.
