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US fashion sector concerned over Trump tariff proposals

  • President Trump has said he would slap a 25% tariff on steel and 10% on aluminium imports from all countries.

  • There are concerns the apparel industry might be affected, and that NAFTA may not be successfully renegotiated.

Representatives of the US fashion and apparel industries, along with most of the country's business community and Congressional leadership, are voicing concern about President Donald Trump's 1 March announcement that he intends to impose additional tariffs on all imports of steel and aluminium.

Julia Hughes, president of the US Fashion Industry Association (USFIA), warned that the move - which would slap 25% on steel and 10% on aluminium imports from all countries - could hurt her members. It would impact the broader US economy, decreasing demand, an assessment apparently echoed by the financial markets, which saw stocks tank following the Trump announcement.

"Obviously, we're concerned about the impact on the economy," she said, citing a 5 March study by the Trade Partnership, a non-partisan pro-trade group, that predicted a net loss of 146,000 jobs (after factoring in the 33,000 jobs gain for metals companies) as a direct result of the tariffs.

While few of the job hits cited in the report were in the apparel and textile sectors, Hughes said she is more concerned about the impact of the trade wars widely predicted to ensue following any official promulgation of the new measures. Trading partners such as the European Union (EU) and China have already threatened retaliatory measures against iconic items such as Levi's jeans, (as well as Harley Davidson motorcycles, Bourbon whisky and peanut butter). "Some of these could directly impact our members," she said.

As yet, industry representatives – the USFIA included - have held off on issuing official statements in the wake of the announcement. "Truthfully, we discussed this and decided to wait on this," she said. "There may be a change of position. Every day in this [Trump] administration is something new."

Jonathan Fee, partner at Alston & Bird, a Washington DC law firm, expressed concern that the tariffs, which would hit hard at Canada, the largest exporter of steel to the US, would further hinder prospects for a US renegotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

If the NAFTA talks collapse and Trump pulls out of the agreement, "this is mostly a concern for importers from Mexico," he said. According to the World Bank, US companies imported more than US$5.2bn worth of apparel and textiles from Mexico in 2016, putting the country in fifth place behind China, Vietnam, India and Bangladesh.

"One of the ironies of this is that this will benefit Central America, since Trump has yet to denounce the Central American Free Trade Agreement (CAFTA)," he noted.

Fee is also more broadly concerned that, with the resignation of top Trump economic advisor Gary Cohn in the wake of the announcement, and the likely promotion of Peter Navarro who has been pushing the tariffs, the protectionist faction of the administration has gained ascendancy. "I'm marginally less confident because of these developments that NAFTA will be successfully renegotiated."

Above all, it may be the uncertainties generated by the tariff announcement that are causing the biggest concerns in the business community. "It's very, very hard to plan your sourcing and plan for your company in this environment," Hughes said.

#NAFTA #Imports

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