The US Hide, Skin and Leather Association (USHSLA) and Leather Industries of America (LIA) filed joint comments today with the Office of the US Trade Representative (USTR) urging the Trump administration against moving forward with proposed retaliation on EU leather handbag imports to the US, citing the significant, adverse consequences for the US hides, skins and leather industry from taking such an action. The US, in April, proposed a list of EU products, including certain EU leather handbags, on which to levy tariffs as retaliation for European aircraft subsidies.

“Robust, unrestricted trade is critical to the US hides, skins and leather industry, which exports annually more than 95% of its total domestic production to key markets, including the EU,” the comments state. “Implementing the proposed retaliation against EU leather handbag imports, which use substantial U.S. inputs, would detrimentally affect U.S. hides, skins and leather companies, their employees and ancillary industries.”

EU leather producers rely on high-quality US hides and wet blue exports to produce fine finished leather goods, much of which is then exported back to the US for purchase by American consumers. Raw materials, including cattle hides and wet blues, typically account for approximately 60% of the value of a finished leather good. The U.S. industry has worked diligently over many decades to position itself as the preferred supplier of raw materials to the EU manufacturers of these products.

“To place tariffs on this supply chain now, in particular, would effectively unravel decades of market development work by the US hides, skins and leather industry, and would further strain the industry at a time when it faces significant challenges, including declining prices, retaliatory tariffs in other key markets and reduced overall global leather demand.”

In fact, the EU, and Italy in particular, remains the largest, most significant destination for exports of semi-processed US wet blue cattle hide leather. In 2018, US wet blue exports to the EU totaled more than $180 million, with Italy alone accounting for $178 million in export value. Moreover, since 2014, the EU has remained a top five value and top six volume market for US bovine fresh/wet salted hides exports. According to USDA data, the EU leather handbag imports under consideration for retaliatory measures were valued at $917 million in 2018, with US raw material exports likely accounting for nearly one quarter of the total value of those imports.

“American businesses, workers and consumers will ultimately bear the brunt of the costs stemming from retaliatory actions applied to foreign imports produced using US-based materials. While we stand ready to work with the Administration and other stakeholders to find effective long-term solutions that meaningfully address commercial issues with the EU, we urge the Administration against imposition of the proposed tariffs on EU leather handbags, considering the resulting negative domestic and trade impacts,” the comments conclude.