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Stephen Lamar on why the AAFA is asking the Biden Administration to 'very quickly remove' tariffs

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Stephen Lamar, American Apparel and Footwear Association CEO, joined Yahoo Finance Live to discuss President Biden's nominee for U.S. trade representative Katherine Tai and his outlook for trade relations under Biden.

Video Transcript

SEANA SMITH: President Biden's pick for trade, Katherine Tai, she was testifying in her confirmation hearings last week, talking about how she's going to approach the relationship with some of our allies. Also signaled a tough stance when it comes to China, saying in that confirmation hearing that she will not hesitate to ensure compliance when it comes to China. Here to talk a little bit more about this, we want to bring in Stephen Lamar. He's the CEO of American Apparel and Footwear Association.

Stephen, it's great to speak with you again. I understand that you sent a letter to President Biden last week, just talking about China and some of the impacts that tariffs could have on your industry. I'm curious first, though, just to get your take on the comments that we heard from Katherine Tai last week during those confirmation hearings.

STEPHEN LAMAR: Yeah, well, thank you for having me on, Seana. Look, trade is really important for our industry, for the apparel and footwear industry. We are-- we need access to global customers. We need access to global suppliers. We think US trade representative is one of the most important agencies and are thrilled that somebody of Katherine Tai's temperament has been nominated and hopefully will very soon be confirmed.

She's thoughtful, she's smart. She knows her way around the trade policy community. She knows her way around trade enforcement, which is very, very important, especially when it comes to China. So we're very excited about seeing someone like Katherine Tai become USTR, and then really rolling up our sleeves and working with us and working with other stakeholders to get our trade agenda back on track.

ADAM SHAPIRO: Stephen, good to see you again. Where do we stand on the trade agenda? Because-- correct me-- I don't think the Biden administration has reversed any of the tariffs, which have been really detrimental to your membership.

STEPHEN LAMAR: That's right. Those tariffs are very detrimental. And one of the things we're asking the Biden administration to do is to very quickly remove the tariffs. You know, incredibly as it seems, we still have tariffs on items of personal protective equipment that come into the United States. In fact, in 30 days, the tariffs that were not being charged on things like masks and gowns, those actually will take effect again. They will increase on March 31st, so right in the height of the pandemic.

We're still asking the Biden administration to make sure that those tariffs don't take effect and that they can quickly revisit the other tariffs that they've imposed on our industry and other industries to make sure that they can quickly be removed.

Look, during a pandemic is the worst time to be charging tariffs. It's a cost. It means that we're paying these taxes to the US government, that prices get inflated. It denies us the ability to hire more workers to pass along those savings to consumers. This is the wrong time to be adding tariffs. So we're hoping they'll be able to turn their attention to that as quickly as they possibly can.

SEANA SMITH: Stephen, what have you heard from some of your members when it does come to some of those things that you just raised, when it comes to hiring, when it comes to prices and maybe higher prices being passed along to consumers? Has that already started to take effect, at least when we take into effect some of the tariffs that have gone into effect over the last several months and a couple of years?

STEPHEN LAMAR: Yeah, so when you look at tariffs, tariffs have a way of kind of building themselves into the prices. Of course, individual companies will do individual things. You know, that's their own decision. But over time, that tariff becomes part of the base price, part of the base cost. And it does get passed along to consumers.

Conversely, if you're able to remove the tariffs-- and this is one of the things-- one of the reasons why we're always asking for this-- then, you will be able to lower those prices over time or build in other savings, either through innovation, investments in innovation, or able to hire more workers, which is something that we're all trying to do. You know, at a time right now during the pandemic, companies are really trying to preserve as much cash as possible because you know, there's so much uncertainty that's still out there.

I mean, look, we think there's really a good opportunity going forward to make sure that we can get out of the pandemic. But there's so many questions that have to be solved. You know, how well will the vaccine be distributed? Are Americans going to be wearing masks and practicing social distancing more? Will we see the COVID relief packages come through Congress and continue until the economy can sustain itself?

Once all those questions get answered, then we might have a lot more certainty so we can plan to go forward. But right now, you know, cash is king. People are trying to save on to those revenues. And if you have to pay those tariffs, those are revenues that you can't afford to give up.

ADAM SHAPIRO: I want to turn the focus into the United States. I'm glad you brought up cash, $1.6 trillion in savings. So, I'm imagining your members, when we get everyone vaccinated-- hopefully there's a spending binge that comes that helps your members. But there's also the organization binge. I mean, the workers in Amazon in Alabama are trying to organize labor unions. Has AAFA commented on this phenomenon and what it might mean going forward for Amazon or for retailers in general?

STEPHEN LAMAR: We haven't commented on that. But we are actively looking at what we're seeing is this possible spending binge to get people back out into the stores. Look, there's been a lot of activity where people have been shopping online. They've been shopping in the stores. There's been an increasing effort to integrate those, the online and the brick and mortar experience. We think there's this incredible pent-up demand that is going to begin to materialize again when the economy begins to-- when people feel safer that they can get back out there.

There's a closet fatigue. People want to freshen up their wardrobe right now. And once that can happen in a more safe way, again, when the vaccines are out there in larger age groups and there is more vaccines available, you know, the Johnson & Johnson vaccine now, which is only a one-shot vaccine, that should relieve some of the pressure. As all that stuff begins to happen, we think more and more people will be going out and shopping. And that that pent-up demand will begin to unleash some real economic forces across the economy.

SEANA SMITH: You know, Stephen, when you're talking with your members, you mentioned the fact that, hopefully, this $1.9 trillion stimulus bill, hopefully that will lead people to spend a little bit more, especially when we get those direct stimulus payments. But what do your members specifically need from Congress? Do they need additional help at this point, considering that we're a year into the pandemic, and like you were laying out, there are still so many uncertainties ahead.

STEPHEN LAMAR: You're right. Well, one of the ones we've been pushing forward is credit insurance. You know, when you have uncertainty, you have incomplete financial information, you can't extend credit the way you could under normal times.

And we've been asking the federal government to stand up a backstop, like they've done in a lot of the European countries, to help make sure those credit markets can function properly. There's back to work credits and credits involved, tax credits involved for a safe reopening and to keep stores safely open. So, make sure you can keep people employed, make sure you can keep people employed in a safe environment, and make sure you can offer that safe environment for the consumers.

These are all the kinds of things that we're asking to be included in COVID packages. Some of them are in this one. There were some in the last one. We imagine they'll probably be another COVID package that will come along. And to the extent that things aren't included now, we'll ask for them to be included in the next ones coming up.

SEANA SMITH: Stephen Lamar, great to speak with you, CEO of American Apparel and Footwear Association. We look forward to having you back once again as soon.