U.S. Textile and Apparel Industry is NOT Immune to the U.S.-China Tariff War

The full article is available HERE

This article tries to evaluate the potential impact of the U.S.-China tariff war on the U.S. textile and apparel (T&A) industry, including manufacturing and related trade activities.

The quantitative evaluation conducted is based on the Global Trade Analysis Project (GTAP) model. Data came from the latest GTAP9 database, which covers trade, employment and production in 57 sectors in 140 countries. In correspondence to the recent development of the U.S.-China tariff war, the analysis focuses on the following three scenarios:

  • Scenario 1: 10% punitive tariff + base year tariff rate in 2017 applied to products traded between the U.S. and China, except textiles and apparel
  • Scenario 2: 10% punitive tariff + base year tariff rate in 2017 applied to products traded between the U.S. and China, including textiles and apparel
  • Scenario 3: 25% punitive tariff + base year tariff rate in 2017 applied to products traded between the U.S. and China, including textiles and apparel

Three findings are of note:

First, the tariff war with China will increase the market price for T&A in the United States and consequentially incentivize more production of T&A “Made in the USA.” As shown in Figure 1, the annual U.S. T&A production will increase when the punitive tariff is imposed on textile and apparel imports from China. The most significant increase will happen in scenario 3 (textile output expands by US$8,829 million and apparel output expands by US$6,044 million) when a 25 percent punitive tariff is imposed and the market price of T&A in the U.S. also correspondingly goes up by nearly 1.5% compared with the base year level in 2017.

Second, the tariff war with China will hurt U.S. textile exports. The results show that the tariff war will increase the production cost of “Made in the USA,” and result in a decline of U.S. textile exports due to reduced price competitiveness. This is the case even in scenario 1 when the tariff war does not target T&A directly, but nevertheless, raises the price of intermediaries for producing textiles in the United States. The results further show that the annual U.S. textile exports will suffer the most significant decline in scenario 3 (down US$1,136 million), especially to China and other Asian countries where U.S. textile products are facing intense competition from local suppliers. In comparison, U.S. textile exports to the Western Hemisphere will suffer a loss as well in the tariff war, but to a much less extent due to the strong supply-chain relationship with the region.

Third, the trade diversion effect of the tariff war will bring in more apparel imports to the U.S. market from Asian suppliers other than China. As shown in the figure above, when the punitive tariff imposed on textile and apparel products, the value of U.S. apparel imports from China will decline ranging from US$4,573 million (10 percent punitive tariff imposed) to US$8,858 million (25 percent punitive tariff imposed) annually compared with the base year level in 2017. This result reflects U.S. apparel importers and retailers’ mounting concerns about sourcing cost in the setting of the tariff war. However, apparently, the tariff war will do little to help U.S. domestic apparel manufacturers reduce the competitive pressure with imports. Particularly, in scenario 3, U.S. apparel imports from suppliers other than China will increase as much as US$10,400 million, worsening the U.S. trade deficit in the apparel sector further.

by Sheng Lu

Author: Sheng Lu

Professor @ University of Delaware

35 thoughts on “U.S. Textile and Apparel Industry is NOT Immune to the U.S.-China Tariff War”

  1. I don’t think that this tariff “resolution” solves anything at all. Its purpose is to bring value and manufacturing back to the U.S. textile and apparel industry but, it look like it is hurting it more than it is helping it. The U.S. export chart explains that due to the reduced price of competitiveness, there will be a decline in U.S. exports. Wasn’t that part of the issue people were concerned with before and now the solution is making it worse? Finally, I have always questioned what a tariff on China will do to stop American fashion and apparel manufacturers from look to other countries in Asia or other developing countries with cheaper labor? This is not a solution to the problem that the T&A industry is facing and it won’t do anything to drastically change the market for the better, in my opinion.

  2. I think that the tariff war between the US and China will highly impact the US apparel and textile industry, and unfortunately, mostly in negative ways. As the article outlines, market prices will increase, US exports will decrease, and other countries will become caught in the potential chaos. I do not see any outstanding improvements that will occur for either nations soon, but perhaps the officials and negotiators have more information that is key to what is driving the tariff war.

    1. Paulina, I agree with your statement that the tariff war will most likely negatively impact the US textile and apparel industry. Textile exports will be directly hurt due to increased production cost, and other countries will look to import textiles for a more competitive price. I also agree with how you mentioned that other countries will get involved. Although this is a war between two countries, it is directly effecting global trade as a whole.

    2. I agree with you Paulina– this tariff war seems to be mostly negative for many different groups. These negotiations may cause bad blood between the US and China on political issues, will certainly cause issues within the T&A industries for both countries, and will affect consumer buying habits as prices will increase.

  3. Very interesting Article. I think this will have a major impact on apparel for the US. In addition this “resolution” I do not believe it will solve much at all. It is said the intended purpose is to bring value in bringing back manufacturing in the US- however it is causing more damage rather than helping!

  4. I think that this tariff war between the US and China is going to help bring jobs back to the US.

  5. This article was very interesting about the US-China Tariff War. I don’t believe that the tariff “resolution” is resolved or will be resolved anytime soon. The US is not benefiting from this at all, in fact, it is being negatively effected by this in many ways. It’s interesting to look and see the scenarios that can come from this and comparing them all.

  6. The tariff-war between the US and China is doing nothing but raising tensions between the two global leaders and hurting their industries. There will be an increase the production cost of domestically produced US textiles and result in a decline of U.S. textile exports due to reduced price competitiveness. As we have seen in other readings, imposing a higher tariff on Chinese goods going into the US will only push other Asian countries to replace these goods at a lower cost.

  7. The tariffs imposed on Chinese imports will do nothing but harm to the American economy, especially in the textile & apparel industry. Manufacturing has almost left the United States completely due not only to foreign competition/cheaper labor found in developing countries, but also due to the evolving industry, technology, and more automated processes requiring fewer human employees to do factory jobs. Tariffs will not increase the production of “made in the USA” goods, as those are expensive to produce and we don’t have as strong of a labor force as other developing nations that have been making our apparel for decades for cheap. American consumers keep wanting apparel to get cheaper and cheaper, but that won’t happen if their clothes are “made in the USA.” This trade war is negatively impacting all areas of the United States and makes us look immature and ethnocentric. It has also angered China, as well as many of our allies around the world and other Asian sourcing partners. If Trump angers the Chinese government to a breaking point, China and many other Asian countries may stop exports to the United States altogether, which will be devastating to retailers across the United States, not just in the fashion industry.

  8. I think U.S-China Tariff War will case negative influence.
    According the article, A tariff war with China will increase the market price of T&A in the United States, stimulating more T&A “Made in the USA” production. Tariff war will increase the production costs of “Made in the USA” and lead to a decline in US textile exports due to falling price competitiveness. In addition, US apparel importers and retailers are concerned about procurement costs in tariff wars.

  9. I believe the tariff war will impact the United States negatively. When reading the article, it talks about how the market prices will increase for the United States, affecting it negatively and the US exports will begin to decrease as a result. These situations do not have a positive impact for the United States, and I believe this could really hurt the United states. This resolution won’t be solved in my opinion for a long time.

  10. This article was a very interesting read. I believe that apparel in the U.S. will be hugely impacted by this. However, I do not think that the resolution will be successful in solving the problem at hand. I think it will be more detrimental than helpful to the goal of bringing U.S. production and manufacturing back.

  11. In my opinion the United States/China tariff war will have a negative effect on the U.S. textile and apparel industry. Manufacturing is scarce within the United States as it is due to being unable to compete with cheaper labor in developing countries. These tariffs will not only decrease production within the U.S. even more, but it will also increase the price of clothes “made in the USA” and consumers will be negatively impacted by that.

  12. Based off of this article as well as information gathered from class, I believe it is obvious that this tariff war is an absolutely terrible idea. I find there to be little reason to create more political drama and conflict with a country such as China, especially considering how much we trade with them. It is time for the United States to recognize that sourcing from other countries is going to happen regardless, and improved globalization. By imposing these tariffs we are denying the facts- being that brands will look elsewhere across the globe for competing prices. It will not bring them back to U.S. production, as it simply isn’t economically efficient.

  13. This U.S and tariff war will really hurt America and this article helps to prove it. ” The results show that the tariff war will increase the production cost of “Made in the USA,” and result in a decline of U.S. textile exports due to reduced price competitiveness.” In scenario 3 you can see the U.S exports will decline in over $1,000 million. These tariffs will not help to create more jobs for Americans because this industry is moving towards technology and innovation. Companies are looking to invest in capital over cheap labor.

    1. I agree – it is important for each country to specialize in what they can do best and the United States is not equipped to support such a large scale factory.

  14. It is clear from reading this article that the U.S. T&A Industry is facing reprecussions from the U.S.- China tariff war. I found it interesting since the war is increasing the market price for T&A in the U.S., it will motivate more production of T&A that is made in america. The tariff war increasing the production costs of “Made in the USA” will also cause a decrease in the textile exports of the U.S. All of these effects of the U.S. -China tariff war seem to be negative and something that would want to be avoided.

  15. The United States and China trade war over tariffs will definitely have a negative impact on the U.S. textile and apparel industry. When looking at the climate of the U.S. textile and apparel industry it’s already apparent that we are behind in terms of manufacturing and are unable to compete with developing nations who specialize in affordable production. The tariffs will not improve this situation and will only raise the praise of clothing in the United States.

  16. In the article, the U.S. export chart explains that due to the reduced price of competitiveness, there will be a decline in U.S. exports. I think this is the biggest issue that lies in the trade war with China. What many organizations and people don’t realize is that by eliminating these low cost products and labor that is offered by China, it really just hurts American companies or American people. While it seems like it will bring jobs back to the U.S. that probably won’t happen because companies are always racing to the bottom line, and trying to make things in the most cost effective manner. Companies will not come back to the U.S. for manufacturing and in turn things are just going to become more expensive for consumers in the U.S. so it is a lose, lose situation for everyone. Not to mention how important China is the overall U.S. economy. There is so much trade between our countries that creating a trade war will have lasting impacts on the country as a whole.

  17. This article is very relevant considering they just announced the new tariff beginning this June. The U.S. wanted to add tariffs to make money but frankly, it is quite stupid. Adding these tariffs not only harms the relationships with the countries that we constantly source from but also harms the U.S. and the apparel companies here. With the added tariffs China will charge more to produce and in return, the companies will have to charge customers more to keep the same level of profit. This will make consumers buy less which in turn will make the companies have to produce less.

  18. After reading the blog above, I feel that the tariff war between China and the United States will negatively impact the US textile and apparel industry. It was said that as market prices begin increasing, exports from the United States will decrease, leaving the other countries confused and basically on their own during this hectic time. In my opinion, I do not believe there will any improvements in the near future for any country involved, but maybe more information on the tariff war will unfold for everyone from higher authorities.

  19. After reading this article about how the U.S. Textile and Apparel Industry is not Immune to the U.S.-China Tariff War I believe the textile industry is going to be impacted unless they begin to have a balance in tariffs and quotas or else risk the textile and apparel industry fall apart.

  20. Based on the post above, it can be concluded that the United States and China trade war has a lot more negative drawbacks than positive aspects. The United States is attempting to promote more products to be manufactured domestically rather than importing from China, but China supplies an extremely large portion of the U.S. apparel industry. Although a lot of fast fashion and cheap clothing is being imported from China, there are also many higher quality garments and products that a lot of business within the United States rely on importing. The United States cannot support the scale of production and factory employees that China has to offer. It would not be beneficial for the U.S. to continue in this trade war with China and ruin the strong relationship we have build with them over many years.

  21. Love this article. After read this article, I realized a tariff war with China would hurt American textile exports. While this looks like it will create jobs in the U.S., it probably won’t happen because companies are always competing for profits and trying to produce in the most cost-effective way.

  22. The tariff war between China and the US is a pressing issue. This article draws attention to the fact that these tariffs will hurt the US and not fix these issues. Brands and retailers want to use the lowest possible costing manufacturing and even if tariffs were in place with China, that would not stop them from using other developing countries instead of factories within the US. This in the end shows that the US would be impacted negatively because business would not be increased within the US which is what the tariffs are supposed to fix.

    1. I agree with what you said here, U.S brands and retailers are going to suffer greatly from the trade issues between U.S. and China. Not only will the tariff cost affect them, but it will drive prices up for customers which may lead to less sales…causing even more of a loss on the retailer’s side.

  23. I believe that the tariff war between China and the US is not good for the US. This war will continue to be relevant in the future before it is resolved. The US is being negatively effected by this trade war and keeping up with the news everyday to see if there are any updates between China and the US.

  24. I honestly do not understand how the tariff war will benefit the US. I feel the economy will go into a huge recession because our country is so dependent on China. US companies will have to scramble to find new manufacuters and even then the prices might not be as low as Chinas prices.

    1. Tariff, in general, is a tax levied on imports. Tariff will make imported products more expensive and less price-competitive. In other words, tariff could make domestic-made products more price-competitive when competing with imported ones. On the other hand, to avoid paying tariffs, companies in the importing countries may choose to move production back—which could create more jobs locally. Additionally, for years, the U.S. has tried to push China to stop its “unfair” trade practices, such as forcing foreign companies to transfer their technologies, setting market access barriers, and providing subsidy to domestic Chinese companies. However, some argue that despite rounds and rounds of “talks” between the two countries over the past decade, China has changed little of its practices. The punitive tariff is believed to be an effective tactic that “force” China to come to the table and “seriously” engage in negotiation. If interested, you can have a try of this simulation game—let us know what results you get: https://beyondthebrinkgame.csis.org/

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