WASHINGTON — It’s the beginning of a new political era in the nation’s capital and trade enforcement and tax reform are expected to be atop the agenda as President-elect Donald Trump takes office and Congressional Republicans open a new session in control of the House and the Senate.
There appears to be common ground between Trump and Congress in many areas that could yield opportunities for fashion executives, ranging from lower corporate tax rates to a rollback of more burdensome Obama administration regulations.
But a slowdown in market-opening trade agreements and the potential repeal of climate and environmental rules and commitments has many concerned. The judicial branch will also come into play early this year as the Supreme Court deliberates and issues a decision in an apparel copyright protection case that has implications for the fashion industry. The High Court will be further in the spotlight since one of Trump’s early moves is expected to be the nomination of a justice to fill the seat left empty following the death of Antonin Scalia.
Expectations are high for more trade enforcement actions against countries identified as using unfair trade practices that put U.S. companies at a competitive disadvantage, especially China. But there is less certainty over trade liberalization.
Trump has tapped billionaire Wilbur Ross as his Commerce Secretary, a trade skeptic who is also seen as a pragmatic businessman with past ties to the textile industry who could serve as a counterweight to Trump’s more protectionist trade proposals. Trump has indicated that Ross will take the leading role in shaping his trade agenda. Ross will face Senate confirmations hearings early this year.
But Trump has not yet announced his choice for U.S. Trade Representative, who traditionally takes the lead in trade negotiations and helps shape the administration’s enforcement actions at the World Trade Organization. Among the top contenders for USTR are Jovita Carranza, founder and chief executive officer of the business consulting firm JCR Group and a former Small Business Administration executive, and Dan DiMicco, former ceo of Nucor Steel, who is leading Trump’s “landing team” at the USTR office and has been a critic of free-trade policies in the U.S.
Trump is also establishing a new White House National Trade Council to help advise him on global trade and U.S. manufacturing and has tapped Peter Navarro, a Harvard-trained economist and professor at the University of California, Irvine to head it. Navarro is a vocal critic of China and the author of “Death by China” and “The Coming China Wars.”
Trump has already vowed to pull the U.S. out of the 12-nation Trans-Pacific Partnership deal on the first day of his administration and he has also pledged to renegotiate the North American Free Trade Agreement, label China a currency manipulator and impose a 35 percent tariff on imports of U.S. companies that manufacture offshore.
“I do think trade enforcement is something the administration will look at and it is something that Congress has talked about in the past,” said Jennifer Safavian, executive vice president of government affairs at the Retail Industry Leaders Association.
Safavian said there is the potential for smaller, bilateral trade deals down the road, but stressed that the Trump administration will be focused on enforcing existing trade laws out of the gate.
Congressional Republicans, particularly in the House, are eager to advance tax reform legislation, which could align with Trump’s own tax plan. At the center of both proposals is an attempt to create more incentives for U.S. corporations to stay at home by lowering the corporate tax rate from the current 35 percent. Trump’s plan calls for lowering it to 15 percent while House Republicans call for cutting it to 20 percent.
“There is an issue [a proposed border adjustability tax on the full value of imports ] that needs to be resolved but overall tax reform is an overdue step and something that would be constructive to grow the U.S. economy and, if it is done right, would be a big win for retailer as well,” said David French, senior vice president for government relations at the National Retail Federation.
Copyright protection for designs is pending at the Supreme Court early next year. The justices are expected to issue a ruling in Star Athletica LLC vs. Varsity Brands Inc.,which could have far-reaching implications for the fashion world seeking clarity on design copyright rules.Cheerleader uniforms are at the center of the case but fashion legal experts said the issue is about so much more than the uniforms.
“This case challenges copyrights issued for five color-blocked patterns on cheerleader uniforms, and by extension, potentially calls into question the copyrightability of any other surface pattern that a judge might deem ‘functional,’” said Susan Scafidi, director of Fordham University’s Fashion Law Institute, who led a group of fashion designers in filing an amicus curiae brief in support of Varsity brands, fighting for design protection. “The fashion industry has been cheering from the sidelines, aware that this case could roll back the limited amount of protection available.”
The fashion industry already lost one important design battle at the High Court in December. The court ruled in favor of Samsung Electronics Co. over Apple Inc. in a ruling that could weaken patent protection for fashion designs.
“In light of the recent decision in Samsung v. Apple, in which the Supreme Court used a 19th-century dictionary to dramatically reduce the value of design patents, fashion — like other creative design-based industries — has reason to be concerned,” Scafidi warned.
While apparel and textile companies have made strong commitments to sustainability through more environmentally friendly strategies, Trump’s picks for Energy Secretary and Environmental Protection Agency administrator portend a potential rollback of gains made.
Rhea Suh, president of the Natural Resources Defense Council, opposed Trump’s choices for Energy Secretary — former Texas Gov. Rick Perry — and EPA administrator, naming Oklahoma Attorney General Scott Pruitt – both of whom she said are unqualified and diametrically opposed to the agencies they will run if confirmed by the Senate.
“The American people didn’t vote to return to the dirty old days when smog choked our cities, and we didn’t vote to turn a blind eye to the dangers of climate change,” she said.
The NRDC said Trump’s potential environmental policy threatens gains made in America’s transition to a clean energy economy. A December report said the U.S. has made deep pollution reductions, with coal use at record lows but renewable energy higher than ever. One sign of how far things have advanced: more than one-fifth of the U.S. population lives in a state with a goal of at least 50 percent renewable energy.
However, the same day that PVH Corp, signed two environmental initiatives – the U.N. Global Compact and CEO Water Mandate – chairman and ceo Emanuel Chirico said, “There’s enough going forward in initiatives that are built into business strategies that I don’t see a rollback.”