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US textile industry in limbo as China tariffs linger

US textile industry in limbo as China tariffs linger

The American textile and apparel industry is facing continued uncertainty as the Biden administration maintains tariffs imposed on Chinese imports during the Trump era since 2018. These tariffs, originally intended to pressure China on trade practices, are having a ripple effect across the US industry, raising concerns for both businesses and consumers.

Tariffs here to stay

The tariffs, implemented in stages throughout 2018 and 2019, added an additional 10 per cent duty on billions of dollars worth of Chinese goods, including textiles and apparel. While a ‘Phase One’ trade deal in 2020 saw some tariff reductions on specific categories, many textiles remain subject to the increased duties. “The continued tariffs are a major concern for US apparel companies,” says Rick Helfenbein, President and CEO of the American Apparel & Footwear Association. "These additional taxes make it difficult for American companies to compete with China on price, ultimately hurting US consumers."

Retailers are caught between rising costs due to tariffs and pressure to maintain competitive prices for consumers.  “We’re seeing margins shrink as we absorb some of the tariff costs, but we can’t raise prices excessively or risk losing customers,” said Susan Allen, spokesperson for the National Retail Federation.

Industry divided

The impact of the tariffs is a source of division within the industry. Some domestic manufacturers see the tariffs as a positive step, leveling the playing field against cheaper Chinese imports. “The tariffs have created an opportunity for American apparel companies to win back market share,” explains Olivia Jones, spokesperson for the National Textile Producers Association. "We've seen a resurgence in domestic manufacturing in recent years, and the tariffs are helping to accelerate that trend."

While some companies have begun sourcing materials from other countries like Vietnam, the transition is slow and disrupts existing supply chains.  “Moving production is a complex process,” explained John Lee, CEO of Evergreen Apparel. “It takes time to find reliable partners and ensure quality. In the meantime, these tariffs are a burden on our business.”

However, many larger retailers and apparel brands rely heavily on Chinese suppliers due to their lower production costs. These companies argue that the tariffs are driving up their costs, which they are forced to pass on to consumers in the form of higher prices. The cost of these tariffs is ultimately passed down to consumers in the form of higher prices for clothing and other textile goods. A recent study by the Peterson Institute for International Economics predicts an average price increase of 4 per cent for American consumers.

Experts predict that the continued tariffs will likely lead to a combination of higher prices for American consumers and a shift in sourcing for apparel companies. Some companies may look to diversify their supply chains, seeking out manufacturers in Vietnam, Bangladesh, or other countries. However, this process can be slow and complex.

“In the short term, consumers should expect to see clothing prices continue to rise,” said David Jones, a retail analyst at Georgetown University. "The long-term impact is less clear, but it's possible that we could see a return to a more diversified apparel manufacturing landscape in the US."

The Biden administration is currently reviewing the tariffs, but no decision on their future has been announced. The issue remains a point of contention, with both the potential benefits of a stronger domestic industry and the drawbacks of higher consumer prices to consider.

 

 
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