If you think U.S. companies’ anxiety over tariffs has faded into the background with the coronavirus pandemic raging, it hasn’t. The outdoor recreation industry says the economic blows dealt by the worldwide health crisis make it all the more important to ease the tariff burden on goods from China.
The Boulder-based Outdoor Industry Association is rallying its members nationwide to urge their elected representatives to support deferring tariff payments for at least 90 days. Rich Harper, OIA’s manager of international trade, said Friday that the deferral would be consistent with the three-month delay in filing and paying income taxes.
The income tax extension was approved because of all the uncertainty around the coronavirus.
“A delay (in payments) would help businesses with cash flow issues and would give them much needed liquidity,” Harper said. “Just to give them some breathing space would be a huge boost.”
Before the coronavirus outbreak ground a lot of business to a halt, the outdoor recreation industry was struggling with escalating rounds of tariffs the U.S. first imposed in 2018. The Trump administration was targeting trade practices by China that have been assailed by U.S. industries and previous administrations, but the move spurred retaliatory tariffs.
While agriculture has been a prime object of China’s counter punches, the outdoor recreation industry paid high tariffs on a number of goods before the trade war ignited. Levies on outdoor products, including clothes, backpacks and tents, averaged about 14% with some nearly 40%, according to the OIA. Then the industry saw those tariffs jump by 10% and 25% on a wide range of goods.
Outdoor businesses have tried to shift production to other countries, including the U.S. Tariffs on some goods were cut in January from 15% to 7.5% under a deal between the U.S and China. The Trump administration has suspended a new round of proposed round of tariffs for now,
However, Harper said negotiations to end the trade battle “are nonexistent.”
Deferral of tariff payments by the outdoor recreation industry and other businesses has gained bipartisan support in Congress. The New York Times reported Wednesday that the administration is considering deferring payments on some imports, but so far has rejected pleas to roll back tariffs.
The outdoor recreation industry has also urged an end to the higher tariffs.
Trump has insisted that China pays the tariffs, but Harper said the companies that import the products and work through U.S. Customs pay the tariffs. The higher costs get passed onto companies, manufacturers and, usually, onto consumers.
According to data from OIA, outdoor recreation companies paid $7.7 billion on the affected goods from China from January to November 2019. That was up from $5.2 billion for the same period in 2018 and $4.6 billion in 2017.
Lise Aangeenbrug, OIA executive director, said the trade organization is surveying its members to find out how the coronavirus crisis is affecting them. She said the Colorado Outdoor Recreation Industry Office is conducting a state-specific survey.
“We know anecdotally it’s (having an impact) all throughout the system,” Aangeenbrug said.
Products from China were held up when that country shut down factories during the outbreak there. Small retail stores and even big ones, including REI, are closed, Aangeenbrug said. Some have big inventories they can’t sell. Employees have been furloughed.
And outdoor recreation has been constricted with the closure of ski resorts and national parks.
Nationally, the outdoor recreation industry generates $887 billion in spending annually and supports 7.6 direct million jobs, according to figures from the OIA. A 2018 state report said outdoor recreation, including hunting and fishing, produced $62.5 billion in economic benefits in 2017.
The OIA supported the decision to cancel the Outdoor Retailer Summer Market because of concerns about the coronavirus. It was scheduled June 23-25 at the Colorado Convention Center.
“Obviously it has an impact on our bottom line,” Aangeenbrug said.
The show, considered the country’s premier outdoor industry trade gathering, is also valuable for the conversations people have, job opportunities and the work by businesses on conservation, climate change and reaching out to diverse communities, she added.
“We’re going to have to figure out how do we keep ourselves together virtually,” Aangeenbrug said.
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