The volleyball game between the U.S. and China, where tariffs are the ball and businesses are the spectators, is continuing to play out.
As the Office of the United States Trade Representative (USTR) accepts public comments on the U.S.-ordered Section 301 tariffs imposed on China for its errant intellectual property practices, at least one organization has suggested apparel and textiles be added to the list of targeted tariff lines.
The National Council of Textile Organizations (NCTO) said Friday that it will take steps intended to add textile and apparel products to the current 301 retaliation list and remove the textile machinery items that already appear on the list.
In March the U.S. announced $50 billion worth of tariffs aimed at China—which would see 1,300 products face tariffs as high as 25 percent. The tariffs came as part of a Section 301 trade action, in which President Trump can impose the tariffs without approval from Congress on grounds that China’s “unfair” policies on forced technology transfer and intellectual property for U.S. companies doing business there, has burdened or restricted U.S. commerce.
On the list of 1,300 currently targeted tariff lines, is much of the machinery used to make apparel and textiles, like spinning machines, knitting machines and sewing machines to name just a few. Now, however, the NCTO is looking to see textile machinery lifted from the list and replaced, instead, with textiles and apparel.
The idea is that if U.S. companies are forced to pay new tariffs on apparel imports from China, they might think twice about doing so.
Amid what’s seemed like a unified fight to protect textiles and apparel from the tariffs, the move may give some pause—but according to NCTO president and CEO Auggie Tantillo, it’s critical to sustaining U.S. manufacturing.
Explaining the NCTO’s position, Tantillo said U.S. producers of fiber, yarn and fabric generally partner with cut and sew operators within the Western Hemisphere, which means when those finished products come back to the United States for consumption, they could be made out of U.S. yarns and apparel, which means a boon for the domestic sector.
With China, however, which has been a direct competitor for Western clothing and home furnishings, its domestic product rarely or “almost never,” according to Tantillo, contains any U.S. fiber or fabric.
“An apparel manufacturer in Honduras is likely making a garment out of fabric made in North or South Carolina. They are then shipping that finished product to the U.S. market but they are having to compete directly with a Chinese garment made of Chinese yarn and fabric,” Tantillo offered by way of example. “So if China dominates the U.S. market, and if they’re cheating to dominate the market, they not only hurt the Honduran company but they hurt the U.S. fiber and fabric manufacturer that’s supplying the Honduran manufacturer with textile inputs.”
That, according to Tantillo, is what’s been putting the U.S. apparel industry at a disadvantage and helping to fuel China’s rise to the most dominant global supplier of textiles and apparel.
“So it’s long overdue for a mechanism, or a set of mechanisms, to rebalance the book a little bit here,” Tantillo said. “By putting them on this retaliation list, it does force sourcing agents to look to other suppliers. Some of those suppliers may be elsewhere in Asia, some may be in North America or Central America.”
If some of that production comes back to the U.S., it will likely be made using U.S. inputs.
“We would like for the entities that have driven China’s massive growth in the global marketplace to have to think twice now about whether the free ride of artificially priced goods coming out of China is over,” Tantillo said.
Other U.S. apparel organizations, like the American Apparel and Footwear Association (AAFA), remain staunchly against new tariffs on apparel and textiles.
Reiterating its position to Sourcing Journal Friday, a spokesperson for the AAFA said, “We strongly oppose any efforts to impose tariffs on textiles, apparel, or other consumer goods. Tariffs are a hidden tax on U.S. consumers and are highly inflationary. A 25 percent tariff on our products would cost the average American family of four as much as $500 more per year. That said, we were pleased that the Trump Administration chose not to include textiles and apparel on its original list of products marked for tariffs, and strongly encourage them to refrain from adding tariffs in the future—either to the initial list or on any subsequent lists.”
For Tantillo, the polarity between the two positions has to do with the makeup of each organization’s members. Those largely built by brands that have been buying products from China to support their business will be far less keen to see tariffs on apparel and textile goods from China.
“They are the entities that have worked with China to source that product and get it into the United States for three decades,” Tantillo said.
The NCTO will make a formal submission to the USTR during the public comment period on the Section 301 intellectual property rights case, which will be open for submissions through May 11, with a public hearing to follow on May 15.