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Matt Priest: we are 100% against the duties
We spoke with the President & CEO of the Footwear Distributors & Retailers of America to go over the topic of the moment: the US threat of duties on footwear imported from Spain, Italy and the UK
The United States Trade Representative (USTR) initiated investigations into 10 jurisdictions (territories) back in June 2020, under the Trump Administration. In question were the digital service taxes (DSTs) adopted or under consideration in each territory. Back in January, the agency concluded that DSTs in the United Kingdom, Austria, Spain, Italy, India, and Turkey were subject to action under Section 301 of the Trade Act of 1974 for “placing such burdens on US companies”. In the meantime, investigations into the European Union, Brazil, Indonesia, and Czech Republic were terminated, as DSTs were not adopted.
Now, the USTR is collecting public comments on the potential implementation of tariffs to a list of goods from 6 US trading partners, and the threat is real as tariffs can go up to 25%. Footwear is on the list of products that could be taxed for Spain, Italy and the UK.
The deadline to submit a request to appear at a hearing was the 21st of April and the deadline to submit written comments is the 30th of April. During the first weeks of May, the public hearings will take place: one multijurisdictional and one for each trading partner. The process will continue, and there is no set deadline for a decision to be known.
What are the US trying to achieve with this? Is this pure retaliation from the DST adopted in certain countries?
Matt Priest tells us that he hopes this is just “a negotiation tool”. In fact, the US are trying to recuperate taxes they believe were unfairly applied to US companies operating in these markets. However, if one considers that the current Administration aims to repair the alliances with the European countries, it is difficult to envisage the application of such tariffs: “They (Biden Administration) are clearly wanting to drive a broader conversation around having a more uniform approach to the DST. The American economy produces a lot of companies that provide this kind of services and they have a lot of exposure to DST. If this is a patchwork approach it will be very difficult for companies to navigate it. I think the (Biden) Administration is trying to force the negotiations into a place where we reach a uniform approach and more predictability”.
All options seem to be on the table for the American Administration. However, one thing cannot be ignored: if this is a negotiation technique, one should not forget that “it is already having an impact on businesses, as the simple threat of tariffs is already reflected on the dropping volume of orders”, Matt adds.
When asked about FDRA’s position on the matter, Matt Priest did not hesitate: “We are 100% against the implementation of duties on US imports, for footwear and for everything else. We know these are just taxes, which will be passed on to the American consumers".
The timing couldn’t be worse according to the President and CEO of the FDRA: “We currently have a hypersensitive environment for inflation, as massive amounts of money are being dumped into our economy and given to consumers; on top of that, you have a massive increase in supply chain costs and queues of ships waiting to unload at our West Coast ports. The US-China trade war has already resulted in an increase in duties the US footwear industry is paying. Adding even more duties on top of our industry during these unprecedented times would add much unneeded pressure.”
Now, the USTR is collecting public comments on the potential implementation of tariffs to a list of goods from 6 US trading partners, and the threat is real as tariffs can go up to 25%. Footwear is on the list of products that could be taxed for Spain, Italy and the UK.
The deadline to submit a request to appear at a hearing was the 21st of April and the deadline to submit written comments is the 30th of April. During the first weeks of May, the public hearings will take place: one multijurisdictional and one for each trading partner. The process will continue, and there is no set deadline for a decision to be known.
What are the US trying to achieve with this? Is this pure retaliation from the DST adopted in certain countries?
Matt Priest tells us that he hopes this is just “a negotiation tool”. In fact, the US are trying to recuperate taxes they believe were unfairly applied to US companies operating in these markets. However, if one considers that the current Administration aims to repair the alliances with the European countries, it is difficult to envisage the application of such tariffs: “They (Biden Administration) are clearly wanting to drive a broader conversation around having a more uniform approach to the DST. The American economy produces a lot of companies that provide this kind of services and they have a lot of exposure to DST. If this is a patchwork approach it will be very difficult for companies to navigate it. I think the (Biden) Administration is trying to force the negotiations into a place where we reach a uniform approach and more predictability”.
All options seem to be on the table for the American Administration. However, one thing cannot be ignored: if this is a negotiation technique, one should not forget that “it is already having an impact on businesses, as the simple threat of tariffs is already reflected on the dropping volume of orders”, Matt adds.
When asked about FDRA’s position on the matter, Matt Priest did not hesitate: “We are 100% against the implementation of duties on US imports, for footwear and for everything else. We know these are just taxes, which will be passed on to the American consumers".
The timing couldn’t be worse according to the President and CEO of the FDRA: “We currently have a hypersensitive environment for inflation, as massive amounts of money are being dumped into our economy and given to consumers; on top of that, you have a massive increase in supply chain costs and queues of ships waiting to unload at our West Coast ports. The US-China trade war has already resulted in an increase in duties the US footwear industry is paying. Adding even more duties on top of our industry during these unprecedented times would add much unneeded pressure.”
