Trump’s New Tariffs May Benefit China’s Luxury Counterfeiters

The next wave of U.S. tariffs targeting another 200 billion of Chinese goods is likely to create an unexpected winner: the country’s lucrative billion-dollar counterfeit industry. Beginning September 24, the Trump Administration will impose new tariffs on goods from China that includes bags, hats, and accessories, as well as leather and fur materials. Tariffs are set to start at 10 percent and will rise to 25 percent in January next year. The Washington Post released an investigative report on September 19, stating that “it’s a good time to work in the fake-handbag business [in China],” because knock-offs of American fashion products from China don’t need to go through the same official import channels to the United States that real luxury goods—often manufactured in China—do. Thus, counterfeiters can avoid Trump’s proposed new duties and create an even higher price difference between replicas and real goods. Lulu, a Beijing-based counterfeit-goods seller who was interviewed by The Post said she believed more people would come to purchase her fake bags. The optimism shown by Chinese counterfeiters like Lulu sets an alarm for American luxury and fashion brands -- Kate Spade, Michael Kors, Coach, and many others -- that manufacture a sizable amount of items at Chinese factories each year. Even though the Chinese government has stepped up efforts to clamp down on the counterfeiting businesses in recent years, the country has a long way to go to establish an effective legal system to protect the foreign intellectual property and innovation. Upon the announcement of new tariffs, the American Apparel & Footwear Association released a statement to condemn the decision, saying “These tariffs on imports of textiles, apparel, and accessories do little to punish China for its intellectual property and technology transfer practices, but do a lot to harm American fashion brands and retailers as well as consumers of their products.”

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Trump’s New Tariffs May Benefit China’s Luxury Counterfeiters