The event was hosted by the Washington International Trade Association (WITA)
Key takeaways from the panel discussion:
The new punitive tariffs on Chinese steel and aluminum: The overcapacity problem in the steel industry globally could raise national security concerns. While the Biden Administration is more focused on outreach to allies and partners to address the issue collectively, the Trump Administration took a different approach with the Section 232 tariffs specifically targeting China. However, the impact of China-targeted measures could be muted due to the limited amount of US steel imported from China today. The next administration is expected to face the challenge of addressing global overcapacity in various industries. Like it or not, tariffs seem to be one of the few tools available to the US government to tackle these issues directly.
Currency debate: “Currency manipulation” refers to the deliberate actions taken by a country’s government or central bank to artificially influence the value of its currency in the foreign exchange market. When a foreign government deliberately lowers the value of its currency, it could result in more US imports from that country and hurt the price competitiveness of US exports. While currency manipulation has not been a significant concern in recent years, the recent strength of the US dollar against other currencies, such as the Japanese yen, Chinese yuan, and Vietnamese dong, may reignite debate over the issue. The Biden Administration struggles to fight high inflation using high-interest rates, making it extremely challenging to “devalue the US dollar” in a macro sense. In comparison, the second Trump administration could designate countries of concern as currency manipulators, followed by new retaliatory measures, including tariffs or other trade barriers.
Industrial policy and subsidy: The Biden administration has packaged industrial policy as a core pillar of “Bidenomics,” which has pledged more than $805 billion in new subsidies for semiconductor manufacturing and research, climate and energy investments, and infrastructure spending. In comparison, the Republicans would be more inclined to let market forces determine the outcome of these policies rather than funding them through the government. It is also likely that the second Trump administration will tighten certain rules related to foreign entities taking advantage of US tax credits. However, there could be coordinated investments and supply chain resilience efforts in Biden and Trump’s second term, such as tactical coordination to prevent global subsidy races and disruptions in supply chains.
Trade policy as a tool for other issues: Reviving the Trans-Pacific Partnership (TPP) or similar mid-2010s era trade agreements was slim during the Biden administration. Instead, the Biden administration prioritizes a climate and trade agenda, as evidenced by the launch of a new White House Climate and Trade Task Force. Biden administration will continue to prioritize investments in domestic production capacity while looking outward to use trade to support other non-trade objectives.
In comparison, the Trump administration was more aggressive in pushing back against protectionist trade measures against US products but also less optimistic about the willingness of other countries to engage in good-faith negotiations with the US. Further, Trump 2.0 will likely return to trade policies similar to his first term, including potential tariffs of up to 60% on Chinese imports and an across-the-board tariff of 10% on all imports. Further, there is bipartisan support for increasing tariffs on Chinese goods, considering the deteriorating bilateral relationship. However, a 10% global tariff on imports from countries like Switzerland and Ireland could be more controversial due to potential consumer price impacts and damage to US alliances.
Discussion questions:
- Any of the aforementioned issues could potentially impact fashion apparel companies? Why?
- In your view, is it preferable for the textile and apparel industry not to be a focus of US trade policy? Why?
- What are your top 1-2 takeaways from the panel discussion?
FASH455 Global Apparel & Textile Trade and Sourcing 
In my view, I do not think it is preferable for the US textile and apparel industry to consistently be a focus of US trade policy. Of course, when the industry is as global as textile and apparel is, there needs to be regulations to ensure both domestic and international parties are doing everything above board. However, in the past few years, the drastic change in presidents: Obama to Trump to Biden, has led to drastic changes in how policy within the textile and apparel industry is conducted. This constant back and forth is not pleasant nor stable for those who work within or closely with this industry. Its hard to come up with long-term strategy as a company when you don’t know if the president or his successor will decide to realign trade agreements and regulations once again. Our industry is often used as a bargaining chip which makes things difficult for the various players within it.
I think that it is important for the textile and apparel industry to be a focus on US trade policy but I don’t believe it needs to consecutively be at the forefront of it. I think focusing on it is important as far as regulations such as the de minimis and how countries are finding loopholes to get around paying tariffs as this has negative effects on the US economy. However, if the policy change with every new president I think this will also have harmful effects. For brands, having consistency with policies and their sourcing is vital to build relationships with their sourcing locations and if policies keep changing this can disrupt companies businesses. Overall, it does need to be focused on but should not be continuously changing.
One quick comment: the US textile industry and fashion brands and retailers have their respective preferred trade policies (e.g., NCTO: http://www.ncto.org/policy-positions/current-issues/; USFIA: https://www.usfashionindustry.com/pdf_files/2024/USFIA_2024_Advocacy_Priorities.pdf ). Each party wants policymakers to support their arguments and understand their policy needs. Therefore, engaging with policymakers is essential (for example, https://ustr.gov/about-us/policy-offices/press-office/blogs-and-op-eds/2023/heartland-our-nations-fabric). Further, as the industry evolves, the preferred policy may also change. Welcome any additional thoughts and comments.
It’s concerning how dramatic trade policy changes with each change in administration, leaving industries like textiles and apparel in a constant state of uncertainty. The Biden administration’s focus on broader issues like climate and trade might distract from specific industry concerns, while the return of Trump-era policies could bring back the instability of tariff battles. This repetitive flux makes it incredibly challenging for companies in the textile and apparel sector to plan for the long term, as they navigate through shifting trade agreements and regulations. It’s time for a more stable approach that provides predictability for businesses and ensures a level playing field internationally.
You made a good point about companies looking for long-term policy stability. Nothing can be more true than the African Growth and Opportunity Act (AGOA), a flagship trade preference program that allows many African countries to export apparel to the US duty-free. However, with the preference program set to expire in 2025, and uncertainty surrounding its renewal and potential changes to existing rules, US fashion brands and retailers are hesitant to place new sourcing orders. https://www.reuters.com/business/retail-consumer/african-apparel-industrys-future-hangs-us-thread-2023-11-01/
Thus, it appears that like it or not, the textile and apparel industry needs to constantly engage with policymakers on trade policy issues. You also mentioned climate change, which is another area where new rules are being shaped. It is essential that fashion companies continue to provide valuable input, helping policymakers understand the specific needs of our sector.
There are a number of factors when deciding whether it is better for the textile and clothing sector to remain out of the center of US trade policy. Although some might argue that increased industry flexibility and efficiency may be fostered by less government involvement in trade policy, it is important to recognize the sector’s substantial economic and social repercussions. Millions of people are employed globally by the textile and garment sector, which is also a major contributor to economic growth, especially in emerging nations. But in the absence of suitable trade policy, unfavorable consequences including job losses, market distortions, and labor exploitation in low-wage areas are possible. Therefore, for the industry’s long-term health and profitability, it is essential to maintain a balanced strategy that tackles its particular difficulties and supports fair and sustainable trading practices, even while avoiding unnecessary regulatory burdens is desired.
In your view, is it preferable for the textile and apparel industry not to be a focus of US trade policy? Why?
I do believe that the textile and apparel industry should be a focus of US trade policy. The textile and apparel industry is a massive industry that is extremely involved in trade, giving it good reason to be focused on. Another important reason that this specific industry should be a focus of the US trade policy is because of the ethical concerns that have been raised about many US clothing brand’s supply chains. While I do believe that there is good reason for the textile and apparel industry to be a focus of US trade policy. I do believe that it should be less of a focus. There must be some stability maintained in the industry, and constant change could throw the industry off balance.
One of the issues mentioned that I feel could impact fashion and apparel companies is possible currency manipulation. Currency manipulation is described as being the actions that a country’s government or central bank takes in order to promote the value of its currency in the global market. Currency manipulation could affect fashion and apparel companies in that it could affect the cost of importing as well as sourcing raw materials and clothing. Looking towards the future, a second term for Trump could also result in the designation of the countries that have had previous concern’s for currency manipulating and therefore be followed by a continued push for more stringent tariffs and trade barriers against these countries which, for fashion and apparel companies, could mean an increase in sourcing costs.
Any of the aforementioned issues could potentially impact fashion apparel companies? Why?
The currency debate could have huge potential impacts on fashion and apparel companies. The strong US dollar makes importing from other less expensive and a good competitive strategy. If we were to see another Trump administration that successfully devalued the dollar, there would be huge ramifications. On one hand, overall exports from the US would increase, however, I believe our apparel companies would only suffer. The dominant strategy includes sourcing from Asia, due to the complete textile and apparel supply chain and inexpensive labor costs. If the US dollar were to decrease in value, then sourcing from these places would suddenly become more expensive, when combined with the tariffs, companies would have greatly increased sourcing costs and customers would bear the brunt of this cost, likely resulting in decreased buying behavior from consumers. However, this could be really good for our textile sector.
I don’t think the US textile industry would experience an increase in exports, as most of the countries we interact with are already part of a complete textile and apparel supply chain (ex. EU’s textile supply chain is covered by the economic differences in its east and west and Asia’s flying geese model). However, depending on the value of the dollar, sourcing from the US could become less expensive. This could give a huge boost to our textile industry and fellow USMCA members, as sourcing from the western hemisphere would become the best strategic option.
I agree with many of my classmates in the sense that a dramatic change in trade policies when a new president and administration come in is extremely harmful. Although finding a true long term solution may be difficult, consistent turmoil and change poses more harm than good. I do think that the textile and apparel industry should be the focus of US trade policy. This is a vast industry and could help US businesses focuses on ethical problems that arise in this industry, specifically when looking at supply chains. This focus is beneficial but again consistency is definitely the major key in this scenario.
#1 The issue regarding currency manipulation would most definitely impact the textile and apparel industry and fashion companies. If, for example, China was to intentionally lower the value of their currency, then their apparel exports to the US would be all the more price competitive. Since current inflation makes it difficult to “devalue the US dollar” as the Biden administration uses high interest rates to combat inflation, this makes the strength of the US dollar against the Chinese yuan weakened. In turn, as China remains a large importer of apparel goods in the US, China’s significantly cheaper prices in addition to currency manipulation would cause even more economic harm to US fashion apparel companies. The US industry would therefore not be able to compete with Chinese imports as many consumers and companies alike look to cheap sourcing destinations such as China to remain competitive.
This was a very interesting blog post and video. I think it is interesting how trade policy shifts immensely as new presidents come into office with different sets of values. I also have never heard of currency manipulation, and it took me a while to grasp the concept of the currency debate. I think this will be an important concept coming up. I also think the two different approaches of Biden vs. Trump on currency manipulation is somewhat concerning. An aggressive approach to this issue could lead to more geopolitical issues between countries and the US. I think it is important to note the different priorities of the two presidents and wonder which is a better approach for the US economy and growth in the next few years. As Biden has climate and trade as his main priority and boosting domestic production, his predecessor has somewhat similar goals but approaching it in a different manner. I wonder what new tariffs will be put in place with each president and how it will effect new trade wars.
In my own opinion, the textile and apparel industry should not be the United State’s main focus in US trade policy. With the US mainly exporting textile goods, it is not one of their strongest sectors. The US should not focus so much on taxing imports on textile and apparel. The United state’s main sectors are oil and electronics. The US should focus more on these sectors instead