Tag: trade agreement

Textile and Apparel Industry Stakeholders Comment on Trump’s “Reciprocal Tariffs”

Background: Pursuant to the America First Trade Policy Presidential Memorandum and the Presidential Memorandum on Reciprocal Trade and Tariffs, the Office of the U.S. Trade Representative (USTR) solicited public comments on the proposed “Reciprocal Tariffs” from February to March 2025. Below is a summary of comments submitted by stakeholders in the textile and apparel industry.

The United States Fashion Industry Association (USFIA), whose members include many leading U.S. fashion brands and retailers, opposes raising tariffs and argues for lowering tariffs on textile and apparel products where the U.S. imposes a higher tariff rate than its trading partners. According to USFIA, higher tariffs on apparel and textiles would disproportionately impact lower-income U.S. consumers:

  • “A true ‘reciprocal’ trade policy would lower tariffs on the products of trading partners that maintain lower tariffs than the United States.”
  • “We recommend that the most successful policy to achieve trade reciprocity would be for the United States to lower the tariff rates of products for which our trading partners apply lower tariff rates. For consumer products such as textiles and apparel, this would help combat inflation and assist consumers who struggle to afford basic necessities.”​

The American Apparel and Footwear Association (AAFA), representing U.S.-based “apparel, footwear and other sewn products companies”, opposes broad tariffs on apparel, footwear, and textiles. It is of concern to AAFA that the apparel and footwear sector already faces some of the highest tariffs in the U.S., and tariffs are a “hidden, regressive tax that falls harder on lower-income Americans.” Even worse, AAFA worries that higher tariffs would benefit “Illicit traders” and tariff threats would undermine the regional textile and apparel supply chain in the Western Hemisphere:

  • “Illicit traders are better positioned to escape paying proper duties or any duties at all. Higher tariffs end up maximizing the profit and market access they can gain at the expense of legitimate shippers.”
  • “Recent tariff threats particularly on our neighbors, Canada and Mexico, are especially concerning as the U.S.-Mexico-Canada Agreement (USMCA) review is about to begin. Canada is a key export market for U.S. made apparel and footwear while Mexico is a major source of a wide variety of apparel, including denim imports. Not only does the threat of tariffs cast uncertainty but it also undermines future investment and nearshoring opportunities.”

National Council of Textile Organizations (NCTO), representing U.S. textile mills, supports targeted tariffs against “unfair trade” but opposes penalties on Western Hemisphere trading partners:

  • “We strongly recommend that the Trump administration take a targeted approach to raise tariffs on specific countries that disrupt markets through the use of blatantly unfair and often illegal trade practices, while simultaneously operating in home markets that remain mostly closed to our products.”
  • “We must preserve and strengthen existing trade relationships with U.S. free trade agreement (FTA) countries in the Western Hemisphere that offer valuable markets for U.S.-made textiles.”
  • “We strongly believe that reciprocity should not mean a race to the bottom with lower tariffs on imports from other countries into our market. Rather, reciprocity should hold bad actors accountable for systemic unfair trade practices that have hurt domestic manufacturers.”
  • “We urge the Trump administration to take several actions immediately to make textile and apparel trade more reciprocal and to support the domestic industry…Aggressively raise tariffs on imports of textile and apparel products from China and other trade predators in Asia…Close the de minimis loophole for all countries…”

SMART (Secondary Materials and Recycled Textiles Association), representing businesses engaged in the collection, reuse, conversion, and recycling of textiles and other secondary materials, advocates for addressing trade barriers that affect U.S. secondhand clothing exports. SMART also opposes CAFTA-DR members using the “yarn-forward” rules of origin for imports of secondhand clothing (HTS 6309) from the U.S. under the agreement.

National Retail Federation (NRF), generally representing all types of U.S. retailers, opposes broad-based tariffs, arguing that they increase consumer costs, disrupt supply chains, and hurt retailers. NRF supports targeted measures against unfair trade practices but warns against policies that could lead to unnecessary retaliation from U.S. trading partners.

  • “We believe that high, across-the-board tariffs will undermine the economic growth signaled by the other features of the president’s agenda and have lasting negative consequences for consumers and workers. If the goal of reciprocal tariffs is to enter into negotiations to remove barriers to trade, this will unlock economic growth and reduce prices for consumers. However, if the goal is primarily to raise tariffs, then the opposite is true.”
  • “There are plenty of areas where U.S. tariffs are actually much higher than our trading partners, for example, especially when you look at U.S. tariffs on low value apparel and footwear. These regressive tariffs hurt low- and middle-income consumers the most.”
  • “The administration should also consider the potential for retaliation from our trading partners on any reciprocal tariffs that are established. We are already witnessing our trading partners respond to strong tariff actions by the administration. This will further impact our farmers and manufacturers who are looking to gain access to those foreign markets.”
  • “We need to focus on key high-priority sectors where it makes sense to return manufacturing home or areas where there is strategic competition. High tariffs on everyday household goods, which could raise consumer prices, should not be the focus of such a policy.”

Parkdale Mills, a leading producer of spun yarns based in North Carolina, expressed concerns about “unfair trade practices” from its Asian competitors. Parkadel also calls for closing the “De minimis” loophole.

  • “Each week millions of pounds of product move through our free trade agreement partner countries illegally causing significant damage to the domestic textile industry. Non qualifying goods are shipped using false HTS codes, False Certificates of Origin, and illegal inputs to circumvent the required duty for US entry.”
  • “Section 321 De Minimis (imports)…are shipped into the US each day without inspection or any type of customs enforcement causing millions in lost revenue and again, thousands of lost jobs. This loophole must be closed.”

FASH455 Video discussion: What global trade deals are really about?

Instructions: In the next few weeks of FASH455, we will learn about many technical aspects of free trade agreements related to apparel sourcing and trade, such as the preferential tariff rates, apparel-specific rules of origin, and trade agreement utilization. However, this presentation takes a different perspective on trade deals– why they are NOT solely about job creation, why trade agreements increasingly focus on “measures behind borders,” and why international institutions like the World Trade Organization (WTO) were established.

Feel free to share your thoughts on the video. You may focus on 1-2 specific points that you find interesting, intriguing, controversial, or debatable and then explain your arguments. You could also propose additional discussion questions for your classmates.

Terminologies mentioned in the video and background notes:

  • Quota: A quantity restriction on imports. Before 2005, the global textile and apparel trade was subject to 30 years+ quota restrictions. See here for the background information.
  • Tariff: A tax levied on imports only. Deemed as “import-sensitive,” US still imposes a much higher tariff rate for textile (8.0%) and apparel products (11.6%) than other manufactured goods (2.2%) on average in 2023. See the World Tariff Profile 2023.
  • Non-tariff barriers (NTB): refers to trade barriers other than tariffs, such as technical barriers of trade (TBT), Sanitary and Phytosanitary (SPS) measures, customs procedures, import licensing, and many others. See more examples here.
  • GATT and WTO: The General Agreement on Tariffs and Trade (GATT) was a temporary international treaty signed in 1947 by 23 countries (including the United States). GATT aimed to boost trade-led economic recovery after World War II. Since then, GATT members conducted nine major rounds of negotiations to gradually reduce trade barriers, ultimately establishing the World Trade Organization (WTO) in 1995 as the permanent body governing world trade.
  • Trans-Pacific Partnership (TPP): A trade agreement reached by eleven countries in the Asia-Pacific region (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) and the United States in 2016. However, the Trump Administration announced the withdrawal of the United States from TPP in January 2017. Afterward, without the US, the other 11 TPP members reached the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which officially entered into force in December 2018.

New Study: Impact of Textile Raw Material Access on CAFTA-DR Members’ Apparel Exports to the United States

The full paper is HERE. Below are the key findings:

Over the past decade, U.S. fashion brands and retailers have seen Central America as a critical emerging apparel-sourcing destination. Especially since implementing the Dominican-Republic Central America Free Trade Agreement (CAFTA-DR) in 2006, a trade deal among the United States, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic (joined in 2007), and Costa Rica (joined in 2009), apparel sourcing from the region gained consistent interest among U.S. companies.

Nevertheless, U.S. apparel sourcing from CAFTA-DR members is NOT without significant challenges. For example, CAFTA-DR countries’ market shares in the U.S. apparel import market fell from 11.8% in 2005 before the trade agreement entered into force to only 10.6% in 2022, measured by value. Trade data also indicated that U.S. apparel sourcing from CAFTA-DR members concentrated on simple and low-value items, such as T-shirts, and lacked product diversification with no improvement over the years.

Given the high stakes of improving the status quo, this study quantitatively evaluated the impact of textile raw material access on CAFTA-DR’s apparel exports to the United States. Specifically, this study assumed that CAFTA-DR members cut their textile import tariff rates to improve garment producers’ textile raw material access (i.e., to reduce the cost of sourcing textiles from anywhere in the world and beyond the U.S. supply). The computable general equilibrium (CGE) model estimation based on the GTAP9 database shows mixed results:

On the one hand, cutting CAFTA-DR members’ textile import tariffs to improve their garment producers’ textile raw material access would significantly improve CAFTA-DR members’ price competitiveness of their apparel exports to the United States and increase the export volume.

However, cutting CAFTA-DR members’ textile import tariffs to improve their garment producers’ textile raw material access would significantly expand their textile imports from non-U.S. sources. This means that CAFTA-DR members’ dependence on the U.S. textile raw material supply may decline further.

Overall, the study’s findings remind us that the debate on expanding U.S. apparel sourcing from CAFTA-DR members should go beyond CAFTA-DR members’ garment production. Instead, more efforts could be made to enhance CAFTA-DR garment producers’ textile raw material access as an effective way to expand the region’s apparel exports to the United States.

Meanwhile, several leading CAFTA-DR apparel exporting countries, including Honduras and Nicaragua, have been engaged in negotiations for free trade agreements with China, Taiwan, and other Asian economies. As the study’s findings indicate, these new trade deals could incentivize CAFTA-DR apparel manufacturers to increase their textile sourcing from Asia. In other words, inaction on the U.S. side and maintaining the status quo still could have significant implications for the future stability of the Western Hemisphere textile and apparel supply chain.

by Sheng Lu

2022 USFIA Fashion Industry Benchmarking Study Released

[The 2023 USFIA Benchmarking Study is now available]

Report release webinar (July 18, 2022)

The full report is available HERE

Key findings of this year’s report:

U.S. fashion companies report significant challenges coming from the macro-economy in 2022, particularly inflation and rising cost pressures. However, most respondents still feel optimistic about the next five years.

  • Respondents rated “increasing production or sourcing costs” and “inflation and outlook of the U.S. economy” as their 1st and 3rd top business challenges in 2022.
  • As a new record, 100 percent of respondents expect their sourcing costs to increase in 2022, including nearly 40 percent expecting a substantial cost increase from a year ago. Further, almost everything has become more expensive this year, from textile raw materials, shipping, and labor to the costs associated with compliance with trade regulations.
  • Over 90 percent of respondents expect their sourcing value or volume to grow in 2022, but more modest than last year.
  • Despite the short-term challenges, most respondents (77 percent) feel optimistic or somewhat optimistic about the next five years. Reflecting companies’ confidence in their businesses, nearly ALL respondents (97 percent) plan to increase hiring over the next five years.

U.S. fashion companies adopt a more diverse sourcing base in response to supply chain disruptions and the need to mitigate growing sourcing risks.

  • Asia remains the dominant sourcing base for U.S. fashion companies—eight of the top ten most utilized sourcing destinations are Asia-based, led by China, Vietnam, Bangladesh, and India.
  • More than half of respondents (53 percent) report sourcing apparel from over ten countries in 2022, compared with only 37 percent in 2021.
  • Reducing “China exposure” is one crucial driver of U.S. fashion companies’ sourcing diversification strategy. One-third of respondents report sourcing less than 10% of their apparel products from China this year. In addition, a new record of 50 percent of respondents sources MORE from Vietnam than China in 2022.
  • Nearly 40 percent of respondents plan to “source from more countries and work with more suppliers” over the next two years, up from only 17 percent last year.

Managing the risk of forced labor in the supply chain is a top priority for U.S. fashion companies in 2022, especially with the new implementation of the Uyghur Forced Labor Prevention Act (UFLPA).

  • Over 95 percent of respondents expect UFLPA’s implementation to affect their company’s sourcing. Notably, more than 85 percent of respondents plan to cut their cotton-apparel imports from China, and another 45 percent to further reduce non-cotton apparel imports from the country.
  • Most respondents (over 92 percent) do NOT plan to reduce apparel sourcing from Asian countries other than China. However, nearly 60 percent of respondents also would “explore new sourcing destinations outside Asia” in response to UFLPA.
  • Mapping and understanding the supply chain is a critical strategy adopted by U.S. fashion companies to address the forced labor risks in the supply chain. Almost all respondents currently track Tier 1 and 2 suppliers. With the help of new traceability technologies, 53 percent of respondents have started tracking Tier 3 suppliers this year (i.e., those manufacturing yarn, threads, and trimmings), a substantial increase from 25-36 percent in the past.

There is considerable new excitement about increasing apparel sourcing from members of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). Respondents also call for more textile raw sourcing flexibility to encourage apparel sourcing from the CAFTA-DR region.

  • CAFTA-DR plays a more significant role as a sourcing base. About 20 percent of respondents place more than 10% of their sourcing orders from the region, doubling from 2021. 
  • Over the next two years, more than 60 percent of respondents plan to increase apparel sourcing from CAFTA-DR members as part of their sourcing diversification strategy.
  • CAFTA-DR is critical in promoting U.S. apparel sourcing from the region. Around 80 percent of respondents took advantage of the agreement’s duty-free benefits when sourcing apparel from the region this year, up from 50—60 percent in the past.
  • Respondents say the exceptions to the “yarn-forward” rules of origin, such as the “short supply” and “cumulation” mechanisms, provide essential flexibility that encourages more apparel sourcing from CAFTA-DR members.
  • Respondents say improving textile raw material supply is critical to encouraging more U.S. apparel sourcing from CAFTA-DR members. Particularly, “allowing more flexibility in souring fabrics from outside CAFTA-DR” and “improving yarn production capacity and variety within CAFTA-DR” are the top two priorities.

U.S. fashion companies strongly support another ten-year renewal of the African Growth and Opportunity Act (AGOA). Meanwhile, Ethiopia’s loss of AGOA eligibility discourages U.S. apparel sourcing from the ENTIRE AGOA region.

  • As much as 75 percent of respondents say another ten-year AGOA renewal will encourage more apparel sourcing from the region and making investment commitments.
  • However, despite the tariff benefits and the liberal rules of origin, respondents express explicit concerns about the region’s lack of competitiveness in speed to market, political instability, and having an integrated regional supply chain.
  • Ethiopia’s loss of AGOA benefits had a notable negative impact on sourcing from the country AND the entire AGOA region. Notably, no respondent plans to move sourcing orders from Ethiopia to other AGOA beneficiaries.

USTR Fiscal Year 2023 Goals and Objectives—Textile and Apparel

In April 2022, the Office of the United States Trade Representative (USTR) released its 2023 Fiscal Year Budget report, outlining five goals and objectives for 2023. Notably, textile and apparel is a key sector USTR plans to focus on in the coming year:  

 Goal 1: Open Foreign Markets and Combat Unfair Trade

  • Provide policy guidance and support for international negotiations or initiatives affecting the textile and apparel sector to ensure that the interests of U.S. industry and workers are taken into account and, where possible, to provide new or enhanced export opportunities for U.S. industry.
  • Conduct reviews of commercial availability petitions regarding textile and apparel products and negotiate corresponding FTA rules of origin changes, where appropriate, in a manner that takes into account market conditions while preserving export opportunities for U.S. producers and employment opportunities for U.S. workers.
  • Engage relevant trade partners to address regulatory issues potentially affecting the U.S. textile and apparel industry’s market access opportunities.
  • Continue to engage under CAFTA-DR working groups and committees to optimize inclusive economic opportunities; strengthen the agreement and address non-tariff trade impediments; provide capacity building in textile and apparel trade-related regulation and practice on customs, border and market access issues, including agriculture and sanitary and phytosanitary regulation, to avoid barriers to trade.
  • Continue to engage CAFTA-DR partners and stakeholders to identify and develop means to increase two-way trade in textiles and apparel and strengthen the North American supply chain to enhance formal job creation.

Goal 2: Fully Enforce U.S. Trade Laws, Monitor Compliance with Agreements, and Use All Available Tools to Hold Other Countries Accountable

  • Closely collaborate with industry and other offices and Departments to monitor trade actions taken by partner countries on textiles and apparel to ensure that such actions are consistent with trade agreement obligations and do not impede U.S. export opportunities.
  • Research and monitor policy support measures for the textile sector, in particular in China, India, and other large textile producing and exporting countries, to ensure compliance with international agreements.
  • Continue to work with the U.S. textile and apparel industry to promote exports and other opportunities under our free trade agreements and preference programs, by actively engaging with stakeholders and industry associations and participating, as appropriate, in industry trade shows.

Goal 4: Develop Equitable Trade Policy Through Inclusive Processes

Take the lead in providing policy advice and assistance in support of any Congressional initiatives to reform or re-examine preference programs that have an impact on the textile and apparel sector.

[This blog post is not open for comment]

Regional Comprehensive Economic Partnership (RCEP): What Does it Mean for US Apparel Sourcing from Asia?

This event is part of the 2021 Winter Texworld USA Educational Program

Panelists

  • Dr. Deborah Elms – Founder and Executive Director, Asian Trade Center
  • Beth Hughes – Vice President, Trade & Customs Policy, American Apparel and Footwear Association
  • Dr. Sheng Lu (Moderator), Associate Professor, Department of Fashion & Apparel Studies, University of Delaware

About the session

The Regional Comprehensive Economic Partnership (RCEP), signed in November 2020, is the world’s largest free trade agreement. Nearly half of the world’s textile and apparel exports currently come from the fifteen RCEP members. How will the new “rules of the game” in RCEP shape the future landscape of the textile and apparel supply chain in Asia? Who are the winners and losers of the agreement? Why US fashion brands and retailers also need to care about RCEP? The panel will interpret the key textile and apparel provisions in RCEP and share insights about the agreement’s broad implications on the textile and apparel sector.

Evolving Patterns and Social Economic Impacts of World Textiles and Apparel Trade: Discussions Questions from FASH455

 

Patterns of world textile and apparel trade

#1 Based on the readings, why or why not do you think Africa is on the right track to become the next hub for apparel sourcing for western fashion brands?

#2 Based on the readings, do you think that any of the countries/regions discussed can become the “next China?” If so, what are the challenges faced by these exporters that have been gaining market shares (such as Vietnam and Bangladesh)?

#3 Why is Asian companies investing the most into the apparel industry in Sub Saharan Africa (SSA) rather than U.S. or EU investors? Notably, the African Growth and Opportunity Act (AGOA) is a trade preference program between the U.S. and SSA countries.

#4 If the punitive tariffs on Chinese goods are removed next year, why or why do you think U.S. retailers will increase apparel sourcing from China again?

#5 To which extent do you think the comparative advantage theory can explain the evolving world textile and apparel trade patterns?

#6 What policies or strategies could the US government use to convince companies to invest in the Sub-Saharan African region instead of countries like China and Vietnam?

Debate on used clothing trade

#7 Did you feel that the United States really explored every and any possible solution before deciding to suspend Rwanda’s eligibility under the AGOA? If not, what more could they have done or done differently?

#8 The US-EAC trade dispute on used clothing import ban is a very multilayered matter, which can be broken down with the help of trade preference programs. How can we improve the effectiveness of these trade preference programs and revolutionize them to become more significant in today’s economy?

#9 EAC countries are having a difficult time developing their local textile and apparel industry due to the large amounts of used clothing being imported and even proposed a high tariff to lower the amount of clothing being imported. Do you believe the ban on used clothing is the only option they have left for economic growth? If not, what are some ideas of ways they can grow their economy?

#10 The EAC countries have shown their unwillingness to used clothing trade. However, the US has presented that they are indifferent to regulate the used clothing trade as they are one of the biggest used clothing exporters. Are there any solutions to achieve the win-win situation on used clothing trade?

#11 The used clothing ban is put in place in order to develop the apparel and textile industry, but there needs to be more education for countries on sustainability. There is a big stigma about used clothing that needs to be abolished as well. An alternative to this ban is allowing used clothing, but also creating new clothing more sustainably so apparel and textile companies can profit. What are some other sustainable alternatives that benefit both sides?

#12 Given the debate on used clothing trade and its impact on East African nations, will you continue to donate used clothing? Why or why not?

[For FASH455: 1) Please mention the question number in your comments; 2) Please address at least TWO questions in your comments]

Trade Policy and the Textile and Apparel Industry: Discussion Questions

Global Partners

#1 Why or why not the textile and apparel industry should get involved in policy advocacy?

#2 Do you think the current U.S. trade policy reflects the interests of the U.S. textile and apparel industry? Please provide detailed examples.

#3 It is said that “trade is a way for countries to strengthen partnerships and alliances, promote peace and trust between the cooperating nations, and help other countries in need.” Do you think this principle still holds today?

#4 President Trump proposes an “America First Trade Policy,” which intends to encourage more “buy America” and reduce the U.S. trade deficit. How should President Trump respond if other countries adopt a similar approach by proposing initiatives such as “EU first trade policy,” “China first trade policy” and “Mexico first trade policy”?

#5 What do you take away from Case Study 2 regarding the making of U.S. trade policy?

Please mention the question # in your comment.