Speaking to a host of manufacturers from key sourcing countries at Sourcing at Magic in Las Vegas this week, there was consensus on the confusion over still up in the air efforts, but manufacturers have mixed perspectives on trade in the Trump era.
Starting with China, which has been bearing the brunt of Trump’s efforts to right trade in imbalanced partnerships, Charles Deng, sales director for China manufacturer Wahyi Group said, “I don’t worry. I think it’s no problem because China’s garments are very cheap.”
For Martin Chen, a merchandiser for JinJiang City-based swimwear and activewear manufacturer HaoShou, the current trade conditions are a bit more concerning.
“I think it [border adjustment] will not be easy to enact because China and America have economic relationship and this is very important. Chinese and some Americans don’t agree. I think if Trump enacts this one, most Chinese people they won’t agree,” Chen said. “It’s not good for us. I also have other customers from other countries, so maybe it will affect some customers, especially from U.S., but other countries don’t care about this. If this kind of situation 45 percent taxes will increase, I think that I should find some other customers from other countries.”
Vietnam had set its sights on benefitting from the Trans-Pacific Partnership (TPP) in a big way, and now that it’s off the table, many manufacturers are simply reassessing.
“We wanted TPP for U.S. business,” said Yuya Matsuura of Japanese-owned, Vietnam-based accessories manufacturer General Garment Mills Vietnam. To Matsuura, Trump might mean an improvement to the U.S. economy, and for Japan, at least, the outlook may be positive if the U.S. looks to negotiate a bilateral trade deal with the country. However, he said, “For the U.S. market, it’s not good.”
As Lincoln Tran, director of sales for Vietnam’s AIM Garments, chimed in, “TPP was going to be good for Vietnam for the apparel sector, but now that the U.S. is no longer part of that, then it’s just going to continue to be business as usual as if nothing is going to change.” He added, “We were kind of waiting to see with hopes that it would be a windfall benefit for us. I know that our customers were excited about the TPP because that would have meant they would have been able to get goods from Vietnam cheaper, and from our point of view, that would have been a good thing. It would have brought in more business to the country.”
The question of how Donald Trump is going to tax countries’ imports remains, as does the question of how each trading partner will be affected. Tran said Trump may have an obviously adversarial relationship with China, but he doesn’t see why he’d handle Vietnam differently.
“It looks like anybody that wants to import into the U.S. is going to face changes, but we don’t know what those changes will look like,” Tran said. “If he does impose an increased tariff on China, Vietnam should benefit from that, but if it’s in the name of bringing jobs back to the U.S., I don’t see why Vietnam would be immune to that. Or any country for that matter.”
In Bangladesh—which has its own issues right now—Mo Bafatia of Chittagong-based Bibi Design thinks that while Trump’s policies appear positive for U.S. manufacturing at first blush, the way it looks from here, trade under Trump may be worse than before the U.S. leader took office.
“If you’re going to put a 20 percent tax on anything, as long as American companies can make those goods at less than that, then good for you. And if they can’t make it, not even Walmart can save us,” Bafatia said. “Either you put a duty on all these people and the consumer will pay more, or keep it where it is or bring the duty down more so we can buy stuff from here.”
As Aamir Madha, also representing Bibi Design, added, raising tariffs will dampen international trade, and investors will be less likely to start or keep running their businesses.
“I think in the short term, it [trade under the Trump administration] will be good for the U.S. economy domestically. I think in the long term, the consumer is going to pay more,” Madha said. “They’re going to be investing in apparel in the long run. But what are we going to do with all this product when you’re charging $15 for a T-shirt made in the U.S.? Those same people who now have jobs are not going to pay $15 for a T-shirt. However, we won’t see the effects of this until Trump’s first term is over.”
In Mauritius, manufacturers are less worried as so far the African Growth and Opportunity Act (AGOA), which affords them duty free trade with the U.S., has not been on Donald Trump’s radar.
“We don’t know exactly what is happening. We heard that he will increase the tax in China, and in Mexico too, which will be an advantage for us,” said Yannick Capiron, head of product development for Palmar Limitee, a garment manufacturer in Mauritius. “No TPP can also be an advantage for us, but things are just not clear.”
For Sidhant Kapoor, who does business development for Kapsons Worldwide a garment and footwear manufacturer in India, things are looking positive under President Trump.
“Well considering that he comes from an industrial background, things should be better,” Kapoor said. “In this world, it’s not possible for him to stop countries from trading with the U.S. In terms of industry and business I am pro Trump. And he’s good with India at least, so we are positive about having good business with the U.S. in his tenure.”
Addressing the potential duties the president has talked about, Kapoor said, “Even if he puts some import duties, that’s just increasing the amount of taxes you have to pay. It’s still going to be cheaper than producing in the U.S. Even if you make it in India and put some 20 percent, it’s still cheaper than making in the U.S. because fabric is cheaper, labor is cheaper.”
In another opinion from an accessories manufacturer in India, perspectives were also positive.
“I think things are going to improve because the economy will do better and purchasing power will grow,” Delhi-based D.R. International’s Ashish Goel said. “
At Sourcing at Magic, visits from U.S. buyers walking the show floor were up and D.R.’s sales figures for the last two weeks are also up. One long-time client of the company even increased its order quantities this year.
“This only shows that people still have confidence in him and that nothing will go wrong,” Goel said. The company has not made any moves in reaction to Trump’s potential trade changes, and regarding potential border taxes, Goel doesn’t think it will be the end of the world for foreign manufacturers. “Even if he puts that [border adjustment tax], he will come out with a way where it doesn’t affect anyone. Time will tell because he’s Trump. He has business sense.”