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Sourcing in an Uncertain Geopolitical Landscape

For the past year, the apparel and footwear industries have been on edge as tranche after tranche of tariffs have been placed on goods coming out of China. And while our industries had largely been spared, consumers are likely to feel the full brunt of the impact starting with Spring ’20 goods. In response to the uncertainty and hit to the bottom line, brands and retailers have been searching for production alternatives around the globe. And while many are trying out new destinations, most would agree that nowhere compares to China.

In this episode, Ron Sorini, principal at the Sorini, Samet & Associates law firm, and Jonathan Gold, vice president for supply chain and customs policy for the National Retail Federation, discuss how apparel firms are adapting to this new normal, the ways in which they could potentially mitigate the tariff impacts and whether it’s possible to create a tariff-proof sourcing strategy today.

The following are snippets from the conversation.

Gold on one of the many challenges the trade war is presenting:

“I think it’s incredibly important that folks are aware of what’s happening on rules of origin. Obviously, they’re already complex before today, but as we have this administration looking to rewrite free trade agreements, as we saw with the U.S.-Mexico-Canada Agreement, they’re changing the rules of origin and making it a little bit more complex. So companies need to be very aware of what’s happening and what the new rules of the road are going to be.”

Sorini on the sourcing opportunities that exist closer to home:

“I urge companies not to forget this hemisphere, particularly in apparel. For footwear and travel goods, it’s a little harder. [For instance,] Haiti and Dominican Republic supply chain or CAFTA-DR. Certainly there’s challenges in doing business in a country like Haiti but there are also great opportunities. So I do believe companies need to look beyond South Asia and Southeast Asia.”

Listen to the episode, which is sponsored by Texworld USA, to learn about tariff engineering, the threat to de minimis and the renewed interest in first sale.