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Manufacturers Prepared to Raise Prices, Lose Clients Amid Tariff Threats

Donald Trump’s trade war has driven a wedge between the United States and China, strained relations with Canada and Mexico and left much of the global manufacturing industry ill at ease.

The uncertainty was apparent at Texworld USA in New York City this week, where exhibitors across the spectrum are poised to react accordingly based on what each new day brings for trade.

Though Hangzhou Realever Textiles Co., an elite exhibitor from China, ships most of its fabric within Asia, there’s still cause for concern when it comes to the back-and-forth tariff battle between the U.S. and China.

“We think definitely there will be a big influence from this trade war, even if our fabric is not exported to America directly,” Hangzhou Realever’s Hunter Wang said. Thirty percent of the company’s textiles are made for domestic consumption and the remaining 70 percent gets shipped to garment manufacturers in other Asian nations, which then make garments for the U.S. “In the future, if there’s tariffs on the garments there will be a huge problem because there will be less orders.”

For Shaoxing Zhenyong Textile Co., the trade war strain could be more immediately apparent.

Though the textile mill doesn’t do big business directly with the U.S. either, the 10 percent of its product that is U.S. bound, is still enough to do some damage.

“Ten percent is a lot,” company president Davy Ye said. “Because our margin is less than 10 percent.”

If the U.S and China can’t settle on an arrangement for trade before more tariffs take effect, Ye is prepared to raise his prices—even on goods that have already been ordered with a price locked in. The price hike, he said, would likely be just 10 percent, in keeping with the tariff.

“When we take an order we just have to discuss with [the buyer] that the order we confirmed with them was before the trade war, now you have to pay,” he said. “If the customer doesn’t agree, we don’t take the order.”

In Canada, the situation may seem slightly less strained, though no less uncertain.

Elgo Textiles sells printed textiles to garment manufacturers in Montreal, who then sell those garments to companies in the U.S.

“If they all of a sudden get hit with an extra 20 percent tariff on garments into the U.S., it will make their garments more expensive and less desirable by the U.S. retailer and, in turn, they’ll sell less garments,” said Ronnie Fox, who operates Elgo Textiles.

And if those manufacturers are selling fewer garments, they won’t need as much fabric from Elgo.

“I can’t reduce my price by 20 percent,” Fox said. “The reason I’m at this show is hopefully to get more U.S. customers, so that’s one way to go around it, to have more U.S. customers and less Canadian customers.”

Stateside, the situation is more of a bright spot for the few left standing in the apparel and trim manufacturing sector here.

“The hope is that any pressure that might come from tariffs might induce more people to come back to the United States,” said David Finklestein, national sales manager for AGH Trimsource, which has been supplying trims for the sector since 1897, wheeling a pushcart around Manhattan. “The biggest problem is the supply chain because much of the supply chain has shifted overseas. You’re going to have to import your fabric and some of your trims because there’s a lack of manufacturing in the United States.”

So, incentive or not, Trump’s tariff plan may not pan out quite as desired, at least where the apparel industry is concerned, as the existing supply chain can’t accommodate a sudden ramp up of Made in USA clothing.

“The only way it’s going to come back is if the supply chain comes back,” Finklestein said. “We’re cautiously optimistic. It’s not an easy industry.”

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