Extracted from Law360
On Feb. 4, a bipartisan bill was introduced in the U.S. House of Representatives that, if passed, would significantly shift U.S. trade policy and environmental regulation by eliminating the preferential 7% tariff rate for apparel treated with per- and polyfluoroalkyl substances under the Harmonized Tariff Schedule of the U.S., or HTSUS.[1]
This legislation — H.R. 960, titled the Protect Our Clothes From PFAS Act — aims to ease domestic retailers' efforts to adopt water-repellent alternatives to PFAS and level the playing field for PFAS-free products.
H.R. 960 is currently under review by the House Ways and Means Committee, and in light of the increasing trend of state and federal restrictions on PFAS, it may pass. Businesses should begin preparing for this potential change in the international trade space, by reviewing supply chains and contract language, and considering regulatory and enforcement risks.
PFAS: Background
PFAS are a group of nearly 15,000 synthetic chemicals extensively utilized for their waterproof, grease-resistant, heat-resistant, stain-resistant and nonstick properties. PFAS degrade slowly over time, and are found in low concentrations in various commercial, industrial and consumer products, as well as in the environment.
Commercial applications of PFAS span many sectors of the economy, including aerospace, apparel, automotive, construction, pharmaceuticals, medical devices, paints, electronics, semiconductors, energy, oil and gas exploration, first responder safety, firefighting foams, and healthcare.
The widespread presence and low concentrations of PFAS make it challenging to study and assess their potential health and environmental impacts.
H.R. 960
H.R. 960 is notably brief, consisting of just two sections, each with a single sentence. Despite its brevity, the implications of the act are significant.
The bill amends Chapter 62 of the HTSUS, specifically removing a requirement in Additional U.S. Note 2 that limits the definition of "water resistant" garments to those treated with an application of rubber or plastics — a category that frequently includes PFAS-based coatings.[2]
Under the current tariff classification, garments qualify as "water resistant" if they withstand 600 mm of water pressure for two minutes, allowing no more than 1 gram of water penetration under the American Association of Textile Chemists and Colorists Test Method 35.
AATCC Test Method 35, also known as "Water Resistance: Rain Test," measures the resistance of textile fabrics to water penetration by impact, simulating rainfall. The test method is applicable to any textile fabric, regardless of whether it has a water-resistant or water-repellent finish.
Additionally, the water resistance "must be the result of a rubber or plastics application to the outer shell, lining or inner lining," which often contains PFAS.
By removing the requirement for a rubber or plastics application, H.R. 960 would eliminate the automatic 7% tariff advantage for PFAS-treated clothing. This change would allow PFAS-free alternatives, which currently face a significantly higher 27% tariff rate, to qualify for the same lower tariff rate.
Implications for Regulated Businesses
With H.R. 960 still under consideration, it is crucial that businesses begin preparing for its potential enactment by evaluating their current operations, preparing compliance strategies and considering the broader implications for their business models. Some of these critical steps and considerations are discussed below.
Supply Chain Adjustments and Product Testing
With PFAS restrictions tightening across states, businesses must identify which of their products contain PFAS and assess their exposure under H.R. 960. Product testing through accredited laboratories would be crucial to determine whether garments currently classified as water-resistant under HTSUS tariff provisions will continue to qualify for preferential duty treatment upon passage of H.R. 960.
Beyond internal testing, companies may have to consider initiating conversations with suppliers to verify whether alternative PFAS-free waterproofing technologies can be adopted without compromising product quality and durability.
Contractual Review and Liability Risks
Businesses should review their supply chain agreements to ensure they include appropriate indemnification provisions protecting them from liability in case of noncompliance.
Retailers and importers relying on suppliers for certification of PFAS-free claims would need to secure written guarantees and warranties to mitigate risks.
At the same time, downstream buyers may consider requesting formal documentation from manufacturers to confirm compliance.
Trade and Competitive Pricing Considerations
The tariff adjustments proposed under H.R. 960 have direct cost implications for businesses importing water-resistant garments. Under the current HTSUS structure, PFAS-treated garments benefit from a 7% tariff rate, while PFAS-free alternatives face a significantly higher 27% tariff rate.
However, by eliminating the rubber or plastics coating requirement, H.R. 960 would level the playing field for PFAS-free alternatives, ensuring that environmentally safer options do not face unfair cost disadvantages. Companies that proactively transition to PFAS-free waterproofing technologies could gain both cost advantages and market positioning benefits.
Regulatory and Enforcement Risks
H.R. 960's potential impact on customs enforcement would be substantial. If the measure is enacted, businesses will need to comply with new tariff classifications.
Failure to do so could result in financial penalties or import seizures. In the long term, importers may also be required to certify the absence of PFAS in garments to continue benefiting from lower tariff rates.
Further, considering the growing efforts to restrict PFAS in consumer products, companies can expect additional enforcement measures to be implemented. This underscores the urgency for businesses to adapt promptly.
Next Steps
H.R. 960 signals a major regulatory and economic shift for the apparel industry by proposing to remove the tariff advantage of PFAS-treated clothing.
As PFAS-free alternatives become the new industry standard, businesses must act quickly to adapt supply chains, mitigate liability and position themselves competitively in a rapidly changing market.
Companies involved in the manufacturing, importing or retailing of water-resistant garments should prepare to take proactive steps, while continuing to monitor the progress of H.R. 960.
[1] https://www.congress.gov/119/bills/hr960/BILLS-119hr960ih.pdf.
[2] https://hts.usitc.gov/reststop/file?release=currentRelease&filename=Chapter%2062.