Looking back at 2019, there are two words to sum up the roller coaster ride: disruption and uncertainty.
Sourcing strategies are under constant review, production and sourcing costs are increasing, and supply chain executives continue to feel the impact of the U.S.-China trade war. The announcement of a phase one U.S.-China trade deal marks a step in the right direction as we get ready to celebrate the holidays. The Section 301 tariffs on products imported from China are having a direct impact on American fashion brands and retailers, and also on customers.
The United States Fashion Industry Association (USFIA) welcomes the announcement of a phase one deal, however, uncertainty still looms and we continue to urge the Trump Administration to end the trade war with China.
While some felt the initial trade deal news meant that the tariff war was over, it’s really far from it–it continues to hurt brands, retailers, logistics providers and companies throughout the supply chain. The suspension of higher tariffs scheduled for Dec. 15 may come as a welcome relief, but duties remain in effect for many consumer products and inputs.
The industry is still in the middle of a crisis.
The latest data available from Tariffs Hurt the Heartland, a nationwide campaign against tariffs that damage American families and communities, shows American consumers and businesses have paid an additional $42 billion since the trade war began in February 2018 through October 2019. In October alone, Americans paid $7.2 billion in tariffs, more than any amount in U.S. history. And that’s $1 billion higher than in October 2018.
The analysis also demonstrates the impact of retaliatory tariffs on U.S. exports. Chinese tariffs on American exports totaled $12 billion since the start of the trade war and topped $1.3 billion in October alone as China further raised tariffs in retaliation for U.S. List 4A tariffs that rolled out in September.
Companies like Columbia Sportswear are still considering whether the best play would be to move manufacturing out of China, raise prices for consumers or make adjustments to products.
“You can try to engineer some products different,” Columbia vice president Peter Bragdon told the Washington Post, “but you can’t engineer your way around chaos.”
The U.S and China reaching a phase one trade deal is only the first step toward a long-term solution.
American companies and businesses continue to work to shift supply chains and continue to feel the pressure of the negotiations when policy can change with a tweet. The focus now should be on conveying to Congress and the Trump Administration the damage this tariff battle is doing to the industry.
The best New Year’s resolution is a solution to the trade war and a recognition by the Trump Administration that uncertainty and unpredictability in trade policy hurt American companies, employees and customers.
Julia K. Hughes is the president of the United States Fashion Industry Association (USFIA). USFIA is dedicated to fashion made possible by global trade. USFIA represents brands, retailers, importers and wholesalers based in the United States and doing business globally.