The ongoing trade dispute between the US and China could accelerate the trend for American apparel brands to shift their sourcing away from Chinese suppliers – but any such moves will pose challenges.

Indeed, US fashion industry representatives were warned at a conference last week that they need to prepare to establish new trading relationships in case Sino-American trading gets tougher still.

“I think that there is pretty much agreement across the [political] aisle that we have a problem with our bilateral trade with China,” said Bill Jackson, assistant US Trade Representative for Textiles, from the federal government’s US Trade Representative (USTR) office.

He was speaking at the 30th Apparel Importers Trade & Transportation Conference organised in New York by the American Import Shippers Association (ASIA) and the United States Fashion Industry Association (USFIA) one day after the US mid-term elections.

From his vantage point within the Trump Administration, Jackson was understandably reluctant to make predictions to an audience concerned about the possible impact of tariff wars.

However, he nonetheless hinted at the possibility of a greater hit to the apparel industry as Trump trade actions – particularly the imposition of some US$250bn in tariffs – disrupt this bilateral trade.

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By GlobalData

“I think it’s fair to say that we have gotten the attention of the Chinese with this,” he said of the imposition of Section 301 tariffs, which have so far not directly impacted apparel. “We’re happy that we have been able to keep a significant portion of your business out of the mix so far.”

While Jackson claimed he was “not privy to what’s going on with the negotiations with China” to resolve the current dispute, he cautioned against assuming there may be a quick fix, adding: “It could be a very busy next few years.”

President Trump, when announcing the most recent round of 10% Section 301 tariffs against Chinese products in September, said that these charges could hit 25% in January and potentially be expanded in scope to include Chinese imports not yet sanctioned.

Shifting sourcing

In the meantime, there is some anecdotal evidence indicating that even if US apparel sourcers manage to avoid a direct 301 hit, they encounter non-tariff difficulties doing business in China, such as slow-moving approvals for export-import deals.

According to Erin Ennis, senior vice president at the US-China Business Council, this trade uncertainty has indeed hastened the existing cost-driven migration of US apparel sourcing from China to Vietnam and other cheaper rivals, such as Bangladesh.

“We all in the sourcing world have been trying to get out of China for years. It’s just more imminent now,” said Aparna Tewari, VP of sourcing at Stamford, Connecticut-based Vineyard Vines. “Too much dependence on one country is a risk.”

But shifting sourcing is of course easier said than done. US apparel companies will face additional challenges ensuring that new sourcing relationships meet the audit and informational requirements of ethical and sustainable sourcing initiatives.

“As anybody involved in producing product or delivering items knows, you can’t be just calling around,” said Bamboo Rose CEO Sue Welch. “You need to leverage networks that you can access and bring into your environment: not just to look at the information but have the ability to say this is the information I need.”

“Part of that answer is to be active in your [industry] association and help get out best practices,” interjected Julia Hughes, president of the USFIA.

Also pitching her services was Mary Jo Muoio, senior vice president of supply chain management company Geodis USA. “Your customs broker is really a good brain to pick.

“We’re getting a lot of questions from our customers right now about 301 avoidance and mitigation strategies,” she observed.

“Most of us are in China now, not because it’s the cheapest but because of volume,” said Avedis Seferian, president of Worldwide Responsible Accredited Production (WRAP). Many companies, he added, would have to engage “two or more factories to replace the one that they’re using in China.”

And as China, not to mention runners-up like Vietnam and Bangladesh, plays out in favour of sourcing newcomers like Myanmar, companies “run the risk of having to engage facilities without information,” warned Seferian. “You’re still up against hard deadlines.”

In some cases, brands might “look at a situation in a new location and do a quick ‘there’s no kids there and the workers aren’t being abused, so let’s just ship the product as long as there’s nothing really bad there,'” he suggested.

The potential impact of the US mid-term elections result was also discussed by speakers at the event: Mid-term power shift unlikely to end US-China trade war