Apparel-Import Tariffs May Rise

A proposed rule change by the U.S. Customs & Border Protection agency could force apparel and footwear importers to pay millions of dollars, in additional duties, on products they make abroad and import into the U.S.
Apparel importer groups have formed a new coalition to oppose the switch. The rule at the center of the debate is known as the "First Sale Rule," which allows a company to determine the value of an imported finished product on the cost of the item at the point of the first sale in the supply chain — such as factory to wholesaler. The proposal would peg the final value to the point of importation, generally meaning the actual wholesale price.
Customs calculates duties based on the value of a product and companies using the existing rule essentially pay lower duties because the value of the product is lower in the beginning of the supply chain process. Apparel importers shipped $96.5 billion worth of apparel and textiles to the U.S. for the year ended Nov. 30.
Customs argued that most other WTO member countries determine the value of imported products based on the final price before importation.
This could increase apparel tariffs by as much as 15 percent. Possibly equating to hundreds of millions of dollars for the apparel-industry; therefore, companies would have to increase the price of their products.