High tariff could hurt U.S. denim producers
Published 5:00 am Saturday, May 11, 2013
There’s a wrinkle in the outlook for expensive women’s designer jeans.
Europe has more than tripled a tariff on the high-end denim creations, which could snag the boom for pricey pants.
This month, the European Union duty on women’s denim trousers manufactured in the United States jumped to 38 percent from 12 percent.
The increase, if passed along to customers in the form of price increases, could put a damper on denim exports to Europe, currently a growing market for U.S. denim makers.
But it is expected to disproportionately affect California denim makers, who make roughly three-quarters of American high-end denim. Low-end jeans are primarily manufactured abroad because of cheaper labor costs.
“When you look at the international markets and growth potential … clearly Europe is a prime area,” said Tom Travis, a Miami lawyer who specializes in international trade and customs law. The tariff “comes at an inopportune time for a growing industry that continues to look for additional markets outside the U.S.”
The tariff increase, which was announced April 17, is seen as retaliation by the EU against the U.S. for failing to fully comply with a 2002 World Trade Organization ruling against the Byrd Amendment, which was a law that allowed the U.S. to levy additional duties on “unfairly traded” goods.
Critics say the United States has continued to adopt additional tariffs, and as a result, other countries are raising tariffs on U.S. goods.
The trade standoff is expected to slow sales of American jeans brands that have cachet with European fashionistas.
The women’s “premium” jeans business — involving pants that cost $75 or more — accounts for 22 percent of the global jeans market, according to San Francisco research firm Global Industry Analysts Inc.