President Trump’s “forced labor” retail tariffs are troubling on several levels.
First, it elevates the fact that Congress has been removed from a process that they are supposed to oversee. Article 1 Section 8 of the U.S. Constitution grants Congress the full right to lay and collect taxes, duties, and imposts.
Second, Americans are starting to realize that the Trump Administration has found a creative way to raise consumer taxes (while not calling them taxes).
Third, the President’s “forced labor” tariffs could be considered duplicitous, not fully researched, and probably will be challenged in court.
Policy wonks believe that the Trump Administration has little (or no) business calling out sixty countries for “forced labor,” then hosting a legitimate protest/discovery period, and ultimately deciding that all sixty countries to have some degree of guilt. At the same time, they conveniently forgot to look in our own made-in-America closet which, in the world of U.S. manufacturing, is called UNICOR.
For sure, The Office of the President of the United States is granted special powers like IEEPA or Sections 122 & 301 of the Trade Act of 1974 – but these are designed for special circumstances. President Trump believes (and has proven) that he often does what he wants, while Congress is seemingly asleep at the switch – leaving it to the judicial branch to intervene or pass judgement.
What is so exasperating about the latest “forced labor” tariffs is that sixty countries were charged under Section 301 of the Trade Act of 1974 – and all sixty were found to have a degree of violation! This federal action has now created new tariffs for twenty-two countries at 10% and thirty-eight countries at 12.5%. Included on the extensive list were The Bahamas, Australia, and Norway – which are not generally considered prominent on the radar screen as trade violators!
In the meantime, it took eleven months for the Supreme Court to unravel the IEEPA tariffs so, if the courts choose to intervene with this action, in the interim, one can expect that consumer costs will rise, additional inflation will spark and, at the end of the day – the USA will probably not solve any of the world’s “forced labor” issues.
Eleven years ago, candidate Donald Trump embarked on his famous escalator ride and some who study consumer spending – consider that to be the date the “War on Retail” began. Funny as it may seem, old-time retailers speculate that – whenever a fashionable couple is seen coming down an escalator – with no shopping bags in their hands – it is a foreboding sign for future of retail.
Mr. & Mrs. Trump were (in fact) bagless during that escalator ride in June of 2015. Candidate Trump stepped off the escalator, delivered a blistering speech, and the “War on Retail” was on.
Macy’s fired the first return salvo, by announcing that Trump apparel products would be taken out of their stores. Macy’s did it because candidate Trump made disparaging characterizations about Mexicans, Mexican Americans, and Latinos in that first speech. Nordstrom eventually followed suit by eliminating Ivanka Trump’s fashion lines.
Trump’s reaction to the criticism was to rail against both retail companies. On July 11, 2015, Mr. Trump took to Twitter and said: “that people who believed in border security, halting illegal immigration, and better trade deals should boycott Macy’s.” On February 8, 2017 – Mr. Trump again took to Twitter and said that “his daughter had been treated unfairly by Nordstrom.”
However, those memories are history, and everyone in retail knows the extent of the damage that President Trump’s tariffs have inflicted on the fashion retail trades. Simply put, prices have gone up, companies have gone out of business, and retail fashion has had challenging times for the past eleven years. Is it over? Probably not.
What is coming next – probably EVEN MORE CONSUMER TAXES labeled as TARIFFS!
Look at the facts, if the United States is protecting American jobs by creating tariff actions, then why, during the past 11 years has U.S. manufacturing jobs only increased by 2.4%?
Since the Trump Administration is now using “forced labor” to raise revenue, let’s pull the curtain back a bit and look in our own labor closet.
The United States Department of Justice (DOJ) operates the Federal Bureau of Prisons (BOP).
The BOP has oversight of an independent government corporation called UNICOR (FPI) – which promotes itself as a company that sells market-priced services and quality goods made by federal inmates. The purpose of this enterprise is to teach job skills and prevent prisoner recidivism – all of which is admirable.
However, loosely translated, this means that the government allows federal prisoners to assemble items behind prison walls – which, of course, includes apparel uniforms worn by the armed services.
While the minimum wage in America is set at $7.25 an hour, inmates often have a starting wage of about $.23 an hour and many could question as to whether or not this is a fair wage. This form of labor within the America’s federal prison system is allowed because of the “exception clause” contained in the 13th Amendment to the U.S. Constitution. Safe to say, without passing judgement, every country applies their own rules and regulations as to what is legal or not within their own borders and what is forced or not.
Forced labor in the world of retail is simply not acceptable. Responsible brands and retailers will not allow it in their supply chains.
President Trump complains about being “treated unfairly,” but it is reasonable to ask the question: Are the sixty foreign countries that are named in this “forced labor” accusation being “treated fairly?
The real question: Is the gander being treated worse than the goose?
Will Rogers, the social commentator, put this type of situation in proper perspective:
“The problem in America isn’t so much what people don’t know; the problem is what people think they know – that just ain’t so.”
