As president of the Accessories Council, the New York nonprofit that champions the interests of the bags, baubles, belts, and barrettes industry, Karen Giberson is a firm believer that products should be manufactured in America when it’s feasible.
Yet despite Giberson’s strong USA-made stance, she — and members of 65 other trade organizations, including the National Retail Federation — are gearing up to throw a monkey wrench into the Trump administration’s proposed trade tariffs on goods made in China.
On behalf of the council’s roughly 300 members, including such brands as Kate Spade and Tory Burch, Giberson filed a request Friday to testify at a public hearing in opposition to $200 billion in retaliatory duties that President Trump proposed this month on a range of Chinese exports, from fish to chemicals to textiles. Included on the list are handbags, other small leather goods, items fashioned from fur — faux and real — a ton of hat types (but not all hats), and plastic apparel like ponchos.
If Giberson is granted her request, she will appear next month before a panel of United States trade representatives in Washington. Based on oral and written testimony from her and others, the panel will determine whether this 10 percent increase on the foreign purchase price of the affected goods will be enforced.
“You can’t raise tariffs 10 percent and not think it won’t hurt American businesses,” said Giberson, who lives in Media.
>> READ MORE: What is a tariff, anyway?
This $200 billion in proposed tariffs is in addition to $34 billion already levied this month on Chinese goods, mostly industrial imports. What makes this round different, said customs and international trade attorney Peter W. Klestadt, who is representing the council, is that it’s the first on consumer goods like seafood and fashion items, and even some cosmetics.
The proposed tariffs could take effect as early as September, and if they do, Giberson said, consumers can expect to spend anywhere from a few additional dollars to upwards of $30 extra on their favorite tote, cross-body bag, or clutch as designer brands pass along the added importing costs to shoppers.
In an already depressed brick-and-mortar shopping environment, that could be catastrophic — especially as we approach retailers’ make-or-break holiday season.
“Many of our members didn’t factor in these new costs, and they will have to eat them,” Giberson said.
I don’t imagine this is why Ivanka Trump shuttered her clothing line last week. She said she was stepping down to focus on politics, and the proposed tariffs don’t include most clothing. But there were a bevy of handbags and wallets under the Ivanka Trump umbrella, and her brand did outsource manufacturing to China, among other countries, according to a Washington Post report. (I actually salivated over a few items, dropping them like hot potatoes when I saw the label at T.J. Maxx.)
And since we don’t know when and if the trade wars will let up, who knows when the pussy bow blouse might come attack?
Giberson feels for industry giants like Michael Kors, but she’s most concerned about the smaller businesses that account for more than half the council’s membership. These companies — many with women and minorities at their helms — are in greatest danger of folding if they can’t offset the unexpected higher cost of doing business, she says.
Take the Philadelphia handbag line MinkeeBlue.
Started in 2014 by Philadelphia Fashion Incubator designer-in-residence graduate Sherrill Mosee, MinkeeBlue is a collection of totes for professional women to carry everything from lunch to laptops. Initially, Mosee wanted to both source and make her handbag line in the States. But after calculating it would cost her $2,000 for each sample and more than $100 per bag for labor, she started to look overseas.
Mosee found a Chinese factory that charges her between $45 and $65 per handbag. And this, she says, includes an existing 17 percent tariff. (If the Trump proposal goes through, her tariff will go up to 27 percent per bag.)
She retails the bags online for $140, and after business expenses that include marketing, warehousing, and insurance, the profit margin on each one is slim.
“A 10 percent increase in tariffs would be devastating to my business,” Mosee said. “I’m not in a position to absorb the costs. That leaves me two choices: pass the costs on to the consumer or close my business.”
Giberson, who has been a part of the accessories industry for 30 years — first as an assistant jewelry buyer at Macy’s and then in QVC’s marketing department — knows manufacturing. So she does understand where the Trump administration is coming from, she says, especially with its concerns about China stealing U.S. intellectual property.
Still, Klestadt says, those trade secrets mostly concern technology. And most accessories — especially handbags — have essentially been made the same way for a hundred years.
“One of the questions that’s asked for purposes of the hearing is, will the imposition of this tariff on these particular products result in pressuring China to change behavior in respect to intellectual properties?” Klestadt said. “Of course the answer to handbags is no.”
The day after the latest round of tariffs was proposed, Giberson reached out to lawyers, took conference calls from the National Retail Federation, and called on partners on the Council of Fashion Design. She spent two weeks gathering information, including a survey asking her members to describe the impact of the tariffs on their businesses.
‘This action is detrimental’
Like Mosee at MinkeeBlue, co-owner Deepa Gandhi of the Dagne Dover handbag line — a graduate of Penn’s Wharton School — did not budget for additional tariffs. She’s already placed her holiday orders. And, to make matters worse, if she wanted to pull manufacturing from China, it would take 18 months to get things up and running at a new factory.
“We understand the importance of protecting American businesses,” Gandhi said. “But this action is detrimental to our supply chain and can prove detrimental to American business.”
It’s for these reasons, Giberson said, that she needs to step up.
“The way it’s being done, it’s going to hurt businesses more than it will help them,” Giberson said. “And it will hurt us for a long time.”