The Impact of U.S. Trade Policy on Global Sourcing & Business - - PowerPoint PPT Presentation

The Impact of U.S. Trade Policy on Global Sourcing & Business

Samantha Sault Vice President, Communications United States Fashion Industry Association (USFIA) October 2018

fashion made possible by global trade

By October 2018, President Trump has…

• Withdrawn from the Trans-Pacific Partnership (TPP)
• Renegotiated U.S.-Korea Free Trade Agreement
• Renegotiated NAFTA (now called USMCA)
• Imposed new penalty tariffs on imports from China

– Protect U.S. national security (steel/aluminum) – Punish China for forced technology transfers, unfair licensing requirements, and IPR violations

US Section 301 tariff measures on Chinese products

List 1 Products that generally fall into the technology sector and cut across the aerospace, information and communications technology, robotics, industrial machinery, and automotive industries (818 Tariff lines) July 6, 2018 25% on $34 billion annual trade value Exclusion instructions published in July. Deadline in October. List 2 Products principally identified under China’s “Made in China 2025” policy (279 Tariff lines) August 23, 2018 25% on $16 billion annual trade value Public hearing in July. Exclusion process. List 3 Many products including consumer items such as headwear, leather apparel, handbags, luggage, gloves, and furniture. (6031 Tariff lines) September 24, 2018 10% immediately and 25% on 1/1/2019 on $200 billion annual trade value Public hearing August 20-27. Exclusion process TBD.

Affected products Effective date Tariff rate Process

PwC "Next Steps on China Tariffs"

What’s on the horizon?

• More trade restrictions and penalty tariffs – autos at

big risk

• Threatening additional 10-25 % tariffs on all imports

from China

• World Trade Organization?
• Discussing possibility of bilateral trade agreements

with UK, Switzerland, Japan, Philippines, Africa

• Focus on FDI – “open for business”

What do fashion brands and retailers think?

USFIA’s 2018 Fashion Industry Benchmarking Study says…

Executives’ Top Business Concerns, Ranked

• 1. Protectionist trade policy agenda in the United

States

• 2. Market competition in the United States from e-

commerce

• 3. Increasing production or sourcing cost
• 4. Market competition in the United States from brick-

and-mortar stores or conventional peer competitors

• 5. Investing in and updating technology
• 6. Managing supply chain risks
• 7. Finding a new sourcing base other than China

Trade protectionism is the #1 concern.

• Ranked #1 for the second year in a row
• Ranked #8 to #11 in the first three years of the

study between 2014-2016

• More than 60 percent of executives rank among

their top five business challenges

• More than 1/3 of executives rank #1 or #2

“We will never be completely out of China due to their speed, ease of doing business. The only thing that could change that is a protectionist agenda.”

• American fashion brand in 2017

Cost pressure is returning this year.

The bottom line: SOURCING COST and FINDING A SOURCING BASE OTHER THAN CHINA are much more important to brands and retailers in 2018 over 2017.

What does this mean for U.S.-Turkey textile and apparel trade?

U.S. imports from Turkey, by the numbers.

Square Meter Equivalents (SME) U.S. Customs Value Country Rank YE June ‘18 YE June ‘17 % Change YE June ‘18 YE June ‘17 % Change Turkey #12 856.40 769.67 +11.27 1,653.31 1,377.66 +20.02

Total U.S. Textile & Apparel Imports in Millions Year-Ending June 2018 Up from #14 in YE December 2017

U.S. imports from Turkey, by the numbers.

Square Meter Equivalents (SME) U.S. Customs Value Country Rank YE July ‘18 YE July ‘17 % Change YE July ‘18 YE July ‘17 % Change Turkey #21 75.15 72.56 +3.57 567.60 492.57 +15.23

U.S. Apparel Imports in Millions Year-Ending July 2018

Some rapidly growing products from Turkey include…

U.S. Customs Value Product HTS YE July ‘18 YE July ‘17 % Change MMF Slacks, Women’s/Girls’ 648 18.268 11.655 +56.74 Knit Shirts, Men’s/Boys’ 338 48.412 34.030 +42.26 Wool Slacks, Women’s/Girls’ 348 75.485 53.784 +40.35 Not-Knit MMF Blouses, Women’s 641 21.362 16.737 +27.63

U.S. Apparel Imports in Million $USD Year-Ending July 2018

In United States: a strong economy BUT concerns about cost, trade policy, finding sourcing base other than China

+

In Turkey: quality, experienced, cost- effective apparel supply chain

=

a huge opportunity for Turkey!

A final note…

The industry is optimistic!

Samantha Sault Vice President of Communications ssault@usfashionindustry.com www.usfashionindustry.com @usfashion