Fashion companies weren’t happy when US President Donald Trump started his trade war with China. the additional rates on garments from China increased the costs of items entering the United States, accelerating further diversification of production to other parts of Asia and beyond.
But if businesses think Joe Biden’s victory as president in November will reverse the situation, they are wrong, experts said at a virtual conference on Oct. 14 by fashion store Sourcing Journal. Both sides see tariffs as a way to put pressure on China, and that pressure increases as the United States examines China’s crackdown on its Uyghur minority.
Democrats will continue to view tariffs as policy, said Stephen Lamar, CEO of the American Apparel & Footwear Association, a trade group representing more than 1,000 brands. The big difference between them and Republicans going forward, whether it’s Congress or if we see a change in administration, is how they justify using the [tariffs]. He said Democrats could use them differently, working with allies for example, or use them to deal with different issues, such as environmental or human rights issues.
It’s more or less the same for a while, said Vincent Iacopella, who handles business matters as executive vice president of large freight services firm Alba Wheels Up. He does not expect Biden to immediately cancel Trump tariffs if he wins and noted Democrats also oppose China’s behavior in cases such as intellectual property theft, the issue Trump identified as the reason. of its rates. Based on her discussions, Iacopella believes officials could consider a process for companies to request exclusions, but even that would take time.
The White House announced a 25% tariff on around 1,300 products as of April 2018, then expanding the list and adding a 10% rate on more items. Along the way, China retaliated with its own rights to American products. In December 2019, both sides reached a Phase 1 agreement it saw the United States lowering some tariffs and keeping others, while China agreed to buy more American goods and services. Although progress has stalled, both sides say the agreement advances.
While many top Democrats initially opposed the tariffs, they also called for a hard position on China. Lamar and Ron Sorini, head of Sorini, Samet & Associates and director of its business development, advisory and lobbying practices, Democrats see tariffs as a way to show they’re tough. Sorini believes Democrats could even escalate the trade war over China’s treatment of Uyghurs.
The country has embarked on a campaign increasingly equated with genocide against the predominantly Muslim ethnic minority in the Xinjiang region, claiming it is cracking down on extremism. Uyghurs are subjected to forced labor, including in the region’s cotton fields, which produce around 80% of Chinese cotton. Concerns over clothing and cotton-containing products made by forced labor entering the United States prompted the Democratic-controlled House of Representatives to pass a bill demand that companies prove that products imported from Xinjiang are not made with forced labor.
If adopted, it would create complications for clothing companies. It is difficult to accurately assess conditions in Xinjiang, where auditors generally cannot work independently from Chinese authorities’ surveillance or interference. Several audit firms have recently stopped working there, while companies were invited to completely stop supplying in Xinjiang.
China’s unrivaled infrastructure will make it a major supplier of clothing to the United States for some time, especially as it grows as a market. But companies were already shifting their production to countries like Vietnam and Bangladesh. These problems and the disruption of the pandemic are only accelerating the trend. In the first half of 2020, the United States imported just as many clothes from Vietnam like China. In a May survey of fashion sourcing executives, McKinsey found many plan to reduce their share of manufacturing in China this year.