Blog: Leonie BarrieUS-China trade war takes a turn for the worse

Leonie Barrie | 13 May 2019

Just as it seemed the ongoing US-China trade war was heading into the final round of talks, US President Donald Trump last week escalated the dispute by hiking tariffs on $200bn worth of Chinese exports – and threatening to extend the tariffs to cover all US imports from China. Tariffs on the targeted exports increased from 10% to 25% on Friday 10 May.

What does this mean for US textile and apparel manufacturing and related trade activities? We’ve crunched some numbers on several different scenarios – including the potential addition of punitive tariffs on textiles and apparel traded with China.

How do companies prepare when trade policy can apparently change with one presidential tweet? Diversify sourcing to mitigate such risks and related costs – and maybe turn uncertainty into an opportunity to make supply chains stronger, US industry experts say.

Other advice suggests that while shifting sourcing away from China to alternative production hubs in South East Asia may be key to offsetting the uncertainty of the ongoing trade war with the US, such a move may also expose firms to a new range of risks.

Ethiopia is a case in point. High worker turnover in Ethiopian garment factories means brands often end up paying more to source from the country than other low cost locations, according to a new report – which is calling on global brands and retailers to take steps to align their business practices with realities.

And garment suppliers in Bangladesh must move away from focusing on volume production and instead look to meet demand for value-added products, according to experts at an event in Dhaka.

Is it also time for the US textile industry to consider a new strategy? Instead of relying on free-trade partners for exports, a move away from garment related fabrics, a focus on high-tech materials, and replacing the yarn forward rule with fibre-only could be the key to reinvention.

A new initiative has been launched to collect and analyse wage data around the world in a bid to drive fair compensation for workers in the garment sector. It will incorporate different living wage benchmarks to establish where workers are and aren't earning fair wages.

A new report suggests larger fashion brands are struggling to scale up their environmental and social initiatives – which, in turn, is slowing down sustainability progress in the industry.

And German sporting goods giant Adidas is increasing its use of air freight and looking for additional capacity from suppliers to try to mitigate the impact of supply chain shortages that weighed on its business in the first quarter.

Meanwhile, in other news, Moroccan garment manufacturer Vita Couture is setting up two new production facilities; all Supima cotton growing regions have been mapped in a bid to tackle fraud in the global cotton supply chain; and global brands including Nike, Gap Inc, Levi Strauss and Under Armour are again urging the Cambodian government to address criticism of its human rights record.

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