"The ongoing trade standoff between the US and China is likely to affect not only the Chinese but also the US apparel industry. The war is already taking a toll on supply chains, with apparel companies pulling their sourcing away from China and moving to other Asian countries. These issues were the highlight of discussion at this year’s American Apparel & Footwear Association’s (AAFA) Executive Summit."

The ongoing trade standoff between the US and China is likely to affect not only the Chinese but also the US apparel industry. The war is already taking a toll on supply chains, with apparel companies pulling their sourcing away from China and moving to other Asian countries. These issues were the highlight of discussion at this year’s American Apparel & Footwear Association’s (AAFA) Executive Summit.

There is concern across the board about the ongoing crisis. President Trump has twice extended the deadline for a deal with China and the industry has been collectively holding its breath. In February, he delayed tariff and increase citing “substantial progress” on issues including IP and technology transfer. US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer will now work towards a final deal with a delegation of government officials from China scheduled to come to Washington for additional talks.

Deal needs upgradation

The trade deal between Washington and Beijing needs evaluation on several fronts. It requires a breakthrough including market access for the United States into China, as well as some structural reforms. The US has also demanded provisions for protecting IP and eliminating forced transfers of US technology. Negotiations will also determine whether these provisions are enforceable. Also, there’s a lot on the line from an image perspective, with the US administration setting high expectations for outcomes.

The negotiators will have to work on multiple fronts. One of the biggest hurdles in the enforcement of this deal is ensuring China actually follows through in areas such as opening its economy and respecting IP rights and technology ownership. Negotiators will also have to deal with issues such as the unpredictable behavior of President Trump and the uncertainty it throws into the process often compromising efforts by others.

Political crises hangs over the US

The next few weeks will be crucial for both the country as it will determine which country is more desperate for the deal. In the past five months, the economies of both the countries have suffered, although China’s slowing growth can be attributed to its deleveraging process, not the trade war. In 2007, China exports amounted to 37 per cent of its GDP, today this figure has declined to just 20 per cent, making the trade deal less important for China.

However, it doesn’t mean China doesn’t want the deal. But everything points toward the fact that US needing it more, especially given the political fallout that will result from continued tariffs going into the election season.”