Industry Laments ‘Potentially Crushing Burden’ of Trump’s Tariffs

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Industry Laments ‘Potentially Crushing Burden’ of Trump’s Tariffs

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The White House’s Tuesday tariff announcement was confirmation, not a revelation, but it still sent shockwaves through the markets. Now groups representing the interests of apparel, footwear, textiles and retail are grappling with the long- and short-term implications of 25 percent tariffs on goods from Mexico and Canada and a deepening of duties on China-made product. Whether their members are U.S. brands and retailers dealing in finished goods or American manufacturers trading in inputs and materials, industry advocacy groups bemoaned what they view as the skewering of a collaborative hemispheric supply chain and a strong, interconnected consumer market bolstered by free trade. You May Also Like Related Articles Government and Trade U.S. Consumers Fret Over Tariffs, Canadians to Vote With Their Wallets Government and Trade Target CEO Brian Cornell Sees an Uncertain Landscape as Tariffs Hit The unprecedented trade actions against the nation’s North American neighbors represent a significant backslide when it comes to U.S. trade policy, according to American Apparel and Footwear Association president and chief executive officer Steve Lamar. “By targeting our [U.S.-Mexico–Canada Agreement] partnership, these tariff actions place a huge stumbling block in front of our nearshoring efforts,” he told WWD’s sister publication Sourcing Journal. “Not only does this introduce high tariff costs, making the economic model unsustainable, but it undermines the investment value and certainty of free trade agreement programs, casting doubt as to whether the U.S. is a responsible partner.” While the centerpiece of Trump’s trade agenda was once punishing China (forcing American companies to further divest from the sourcing superpower), Trump 2.0 is taking on the alternative production partners that have been working to solidify trade relationships with U.S. companies in recent years. “At a time when the Trump administration is urging countries to come to the negotiating table, this action screams ‘Don’t bother,’” Lamar added. And of course, there are the impacts to both shoppers and workers. These new duties, which are “compounding rapidly” on an almost weekly basis, could snowball into a “potentially crushing burden on American businesses and hardworking American families,” the AAFA chief remarked. “Uncertainty and instability are corrosive, undermining the vitality of our consumer driven economy, and the 3.5 million American jobs created by our industry.” Lamar said he hopes that the industry’s discussions with Trump administration officials like U.S. Trade Representative Ambassador Jamieson Greer and Commerce Secretary Howard Lutnick will allow for the creation of “guardrails” that could mitigate some of the domestic impacts of the president’s trade policies. U.S. Fashion Industry Association president Julie Hughes also expressed dismay at the president’s decision to take on the industry’s major nearshore trading partners, saying that the tariffs “ignore the complex Western Hemisphere supply chains and close trade ties created by textile and apparel companies during the more than 30 years since a regional free trade agreement first went into effect.” According to Hughes, farmers, retailers and shoppers will bear the brunt of the impact of tit-for-tat trade wars. Canada on Tuesday announced its own duties on more than $100 billion in American-made goods — starting with apparel, among other categories. Mexican President Claudia Sheinbaum said her government would respond imminently with its own duties on U.S. goods. “The Western Hemisphere’s apparel and textile supply chain is deeply intertwined and retaliation will hurt Americans,” Hughes said. “The ‘Made in’ label only tells part of a garment’s story,” she added, noting that the journey of even a simple cotton T-shirt can be a winding one, incorporating inputs and labor from multiple markets. U.S. cotton growers, for example, supply about 60 percent of the raw material to support Mexico’s textile production needs. Together, Mexico and Canada supplied about $3.1 billion apparel imports to the U.S. in 2024. China still has an outsized role to play in the life of the American consumer, despite Trump’s longstanding political objectives in targeting the PRC, the USFIA lead said. “There will be a major impact on costs and inflation from the 20 percent additional tariffs on imports from China,” she added. “Apparel and textile products already face some of the highest tariff rates of any U.S. imports, reaching as high as 32 percent.” Meanwhile, Trump’s resounding reasoning for the tariffs — to stop the flow of fentanyl and inhibit illegal migration — isn’t cutting it, said David French, executive vice president of government relations for the National Retail Federation. “Tariffs are just one tool at the administration’s disposal to achieve a secure border, and we urge it to explore other options to accomplish the same goals.” Speaking specifically to the president’s decision to target Mexico and Canada, French called the action “a significant measure…that will only hurt hardworking Americans and the businesses that strive to provide customers with the products they want and need on a daily basis.” Retail Industry Leaders Association senior executive vice president Michael Hanson agreed, saying that in a moment where Americans are looking to the White House to alleviate the strain on their finances and fuel economic growth, “tariffs on Canada and Mexico put those goals in serious jeopardy and risk destabilizing the North American economy.” “Stacking tariffs on household goods will also raise costs on American families, millions of whom have struggled through the worst bout of inflation in 40 years,” he added. Providing a more complex outlook on America’s trade relationships and the role that duties and sanctions have to play in bolstering U.S. industry, National Council of Textile Organizations president and CEO Kim Glas condemned the administration’s actions against Canada and Mexico while commending the stacking of duties on China-made goods. Glas said NCTO, which represents the country’s textile mills, trims suppliers and raw materials producers, believes there’s got to be “another way that achieves critical objectives that grow U.S. jobs, stabilizes the Western Hemisphere and closes dangerous tariff loopholes that are hurting us all.” The newly imposed tariffs on imports from Mexico and Canada “threaten a crucial textile and apparel coproduction chain with our two valued trade partners — one that sustains nearly 500,000 American jobs and a total of 1.6 million jobs across North America,” she said. As it stands, the U.S. textile industry ships $12.3 billion — around 53 percent — of its total global exports to Mexico and Canada, and those materials and inputs often make their way back to the U.S. market duty-free under USMCA. That intermingled production ecosystem represents $20 billion in trade, and the interest in shortening supply chains that has taken hold in recent years has spurred consistent investment across the region.  “Equally as important, it serves as an alternative and counterweight to the China-led, Asia-based production platform that competes based on illegal tactics, such as the use of forced labor, subsidies and counterfeits, and has largely come to dominate global trade,” Glas said. She believes penalty tariffs on North American nations will only serve to benefit the Asian trade bloc in the long run, undermining nearshoring efforts and putting the ball back in China’s court. For that reason, Glas said the group welcomes Trump’s new 10 percent penalty tariffs on China, which will double up on the 10 percent announced earlier in February. In fact, she’d like to see that number jacked up further for finished apparel and textile products. Drawing a deep line in the sand, Footwear Distributors and Retailers of America president and CEO Matt Priest lambasted the president’s new duties — across all trade partners, friends or foe — for what he sees as inevitable impacts to U.S. shoppers already reeling from the effects of inflation. “It’s a totally avoidable, unfortunate economic disaster in the making,” he said. “It’s like there’s a hurricane off the coast and it’s just starting to make landfall, and you’re starting to see the effects of what that wind and rain can do.” The U.S. consumer goods industry is already being swept up in the maelstrom, he said, referencing recent reports about consumer confidence in freefall. Meanwhile, FDRA members, which include footwear firms and retailers large and small, reported that shoe sales also took a plunge last month; for the week ending Feb. 22, sales fell 26.2 percent from the same period the year prior. “The consumer has clammed up, and we’re seeing it in real time,” Priest said. That on-the-ground viewpoint, provided by 3,000 stores across the country, will only become more pronounced as the months wear on, he believes. In the face of steep new duties — especially on China — footwear brands will also be forced to raise prices. About 64 percent of FDRA members said price hikes were on the table on Tuesday, up from 22 percent who said the same when asked three weeks ago. Those increases will cause cash-strapped shoppers to pull back even more, Priest believes. “I think the administration’s on super thin ice on its ability to reverse the narrative that seems to be setting in with American consumers, with the business community and with the market,” he said — namely, that tariffs will hit them all where it hurts. Well, maybe all except for the actual target of the trade action. “I talk to our members all the time, including those that have been sourcing footwear for generations, and they sit across the table from their Chinese counterparts and negotiate these deals, and never have they had the Chinese partner take on all the added increase in tariffs, not once,” the FDRA lead said. Meanwhile, the administration’s “unhealthy obsession” with addressing America’s trade deficits with other nations has led to a “pie in the sky notion” that erecting walls against trade will prop up domestic production. That’s not the reality, according to Priest. “If less shoes are being purchased, our companies will have less opportunity to grow. If you drive up costs across the board…you’re going to really hamper the ability for the consumer to get ahead, for the dollar to go further and for American companies to continue to flourish. “Love it or hate it, we import stuff, and we have millions of jobs that rely on that in this country,” he added.

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