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The influence on textiles &apparels after Sino-US reach first-phase agreement

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 On Friday evening, China held a press conference announcing agreement on the document of the first phase of the Sino-US economic and trade agreement, covering 9 chapters including preamble, intellectual property, technology transfer, food and agricultural products, financial services, exchange rates and transparency, expanding trade, bilateral assessments and dispute settlement, and final clauses. Meanwhile, the two sides reached an agreement that the U.S. will fulfill its relevant commitment to phase out the imposition of additional tariffs on Chinese products and realize the transition of addition tariff from increasing to reducing. The United States announced that it would change the original tariff add of 30% on $250 billion worthy Chinese products from December 15 and alter “the impose of new tariffs on $180 billion products from December 15” into “tariff of $180 billion worthy goods will not be added”. Tariff of $250 billion products will sustain at 25%, and the tariff rate for the $120 billion worthy goods will be reduced from 15% to 7.5%.

What will it affect the textile and apparel market? The $120 billion worthy goods which was raised tariff from September 1 have covered most of the textile and apparel. The rest $180 billion worthy Chinese goods planned to implement from December 15 actually involve a small proportion of textiles and apparels. According to the first phase agreement, the additional tariff for the $120 billion worthy goods which cover most of the textiles and apparels will be revised down to 7.5% from the original 15% and the tariff for the $180 billion worthy goods including a small share of textiles and apparels will not be raised. In addition, for the earlier $250 billion worthy goods covering all the chemical fibers and some textiles, the additional tariff maintains at 25%.

As for the influence on the textiles and apparels made of chemical fiber, market players are suggested to hold cautious and optimistic view. The optimistic aspect lies in the improvement of mindset and expectation as it indicates periodical suspension of Sino-US trade war, and the overall status is moving toward better direction. In addition, the tariff for the textiles and apparel involved in has been cut, especially the reduction of additional tariff for $300 worthy Chinese goods covering most textiles and apparels from 15% to 7.5%, and the tariff for a small portion of goods will not be raised. Therefore, the first phase Sino-US trade agreement is greatly helpful for the textiles and apparels sector, with more apparent impact compared with other goods.

The cautiousness lies on:

1. The tariff involved in Sino-US trade conflict has not been totally removed, especially in textiles and apparels made of chemical fiber. only tariff for some goods is revised down to 7.5% from 15%.

2. Currently, the two parties only reach agreement on the document, and subsequent legal procedures and endorsement of both parties are still needed, still having variables.

3. If there are major differences between the two parties in the implementation of the agreement in the future, it is not ruled out that the agreement will be abolished and Sino-US trade frictions will be repeated. Finally, after reaching an agreement on the first stage, will there be an increase in foreign trade orders?

Export orders for textiles and apparels are likely to grow after the tariff being adjusted down, but the growth may be limited when not all the additional tariff is being removed and variables still exists. Market players are anticipated to wait for clearer tendency in later period.

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