New York may be the fashion capital of the U.S., but lately D.C. has been driving many of the changes in the apparel and footwear industries.
Since the current administration took office, brands and retailers have had to navigate around new proposed taxes and tariffs. It’s been a major distraction, changing apparel and footwear advocacy from proactive to reactive, according to Rick Helfenbein, president and CEO of the American Apparel & Footwear Association.
But even in the face of these challenges, some things remain true, he said. The industry needs to stand together and support associations that represent a united front in order to create positive change.
Sourcing Journal: During the “offensive” days, what did you advise brands and retailers to do to help advocate for the industry?
Rick Helfenbein: When our team is on the “offensive” for any issue, we develop a strategy on approach and tactics. Credible information is an acute positive, and then we seek out partners to help market the issue on Capitol Hill, to our members and to the public at large. We encourage members to get involved at each step along the way, and also to reach out to their representatives in Congress for every location where they do business within the United States.
SJ: What types of change has the industry been able to bring about when it was able to set the agenda?
RH: As an industry, we have been able to help create laws, amend laws and set policy. The methodology is all about pulling together and staying on topic. For example, in terms of new items, we clearly led the way to amend the 1974 GSP laws that banned travel goods from the program. Having overturned that initial GSP ruling, travel goods (including handbags and backpacks) are now duty-free from GSP-eligible countries. We were also instrumental in helping Haiti (both pre- and post-earthquake) with legislation that included the Haiti HELP and HOPE Acts.
SJ: How much of a distraction have the tariff and tax issues caused?
RH: The tariffs are a total distraction. We spend enormous amounts of time fighting them, educating the public as to the issues at hand and helping our members find locations outside of China to source their products. Unfortunately, tariffs have also distracted the D.C. community as well, delaying and creating obstacles for other important legislation, such as ratification of the USMCA.
We should be focusing more of our resources on educating Congress about the global value chains that support our industry and the millions of American jobs they support—a fact that is essential when renewing and updating trade programs and free trade agreements. At the same time, a greater focus on aligning and modernizing rules and regulations for compliance, customs and product safety is essential. On the business side, members should be looking at how to make investments in people, equipment, innovation and supply chains, rather than pulling back due to the uncertainty of an endless trade war.
SJ: How has fighting against tariffs differed from something like battling the Border Adjustment Tax (BAT)? What did the AAFA and the industry learn from that experience?
RH: With the BAT, the concept originated in the House of Representatives, and they had a slow roll-out plan. At the same time, the administration wasn’t quick or eager to get behind it. We came out swinging, and collaborated with like-minded organizations to get so far in front of the issue that by the time they started to push it, it was already dead.
The fight against tariffs is different in so many ways. First of all, it is led by the administration (often by tweet) and they maintain an element of surprise. It is also a political issue, and when people pick sides, the fight becomes even more difficult.
It is worth noting, however, that the industry’s experience with the BAT helped get them mobilized—for advocacy or internal business planning purposes—so they have been better prepared for the tariff fight.
SJ: How can companies stay agile so they’re prepared to handle the unexpected?
RH: The key to survival in this environment is to be informed. It’s important to be well-read and also to establish a connection to a trade group that specializes in collecting, analyzing and disseminating critical current information. And beyond that, companies should now expect and plan for the unexpected.
The unforeseen happens every day. What you expect to happen rarely unfolds with the exact outcome that is predicted. With that in mind, be well-read, stay calm and try to always be three steps in front of where you want to be.
This interview was one of several in The New Fundamentals, an examination of how the industry is writing a new rule book. Click to read the full report.