With few specifics coming out of President Trump’s lengthy State of the Union address, retail and fashion industry groups remain hopeful but unsure about the administration’s ability to address things like infrastructure and immigration.
The annual address is most often used as a platform for presidents to introduce and outline new policy initiatives for the coming year, but Trump used the prime time television spot — which drew 19.8 million viewers across NBC, ABC, CBS and Fox, according to preliminary Nielsen data, down 17 percent from last year’s unofficial address — to emphasize events and talking points of the past year.
There was credit taken for a “record-breaking” stock market, which has been increasing steadily since 2011; for increasing employment numbers, which have also been growing since 2011, although at a lower rate during 2017 than in 2015 and 2014; for companies “roaring back” to the U.S. from operations abroad, which remains to be seen. Lip service was also paid to “unity,” despite the President’s penchant for divisive commentary and tweets.
“All of us, together, as one team, one people, and one American family, can do anything,” Trump said early in his speech. “We all share the same home, the same heart, the same destiny, and the same great American flag.”
As for Trump’s attempt to strike an uplifting tone, Rick Helfenbein, president and chief executive officer of the American Apparel and Footwear Association, said he found it “encouraging.”
“The President’s call to improve job-training opportunities, provide infrastructure investment, and to protect intellectual property was particularly heartening,” he said. “We were also happy to hear that the President is still open to developing new trading relationships that will reduce costs and open new markets to American products.”
But Helfenbein alluded to the possibility of the U.S. leaving “current trading agreements,” and said “we think it is counterintuitive to threaten our current partners with U.S. withdrawal from agreements.”
Brian Dodge, an executive with the Retail Industry Leaders Association, pointed to Trump’s brief mentions of trade, as well as infrastructure and paid family leave, as policy areas that retailers are focused on and that RILA is hoping to work with the administration on this year. But he admitted none got “very detailed” treatment during the address.
“There wasn’t a lot of new ground being broken and there was a lot of reemphasis, which you can take [as good or bad],” Dodge said. “But in terms of where we are in Washington, D.C., any consistency and clarity on the administration’s objectives is helpful.”
Dodge added that he expects a more detailed infrastructure plan to come from the White House “soon” and as far as improving infrastructure and enacting a federal paid family leave policy is concerned, said RILA is “largely aligned with the administration.” There may be some friction soon, however, if continued speculation that Trump intends to pull out of the North American Free Trade Agreement in the coming weeks proves to be true.
“We are very closely engaged in [ongoing NAFTA negotiations]; we would like the good story of trade and NAFTA to be told more often — trade has been a boon for the American consumer,” Dodge said. “There are thousands of jobs that rely on trade. But we’ll continue to talk with the administration about the value of NAFTA.”
Retail groups like RILA and National Retail Federation, representing some of the nation’s biggest importers, have since last year been pushing hard for a “modernization” of NAFTA that leaves the deal, which allows for trilateral duty-free trade between the U.S., Canada and Mexico, fully intact.
Trump said in his address that “the era of economic surrender is totally over” and that he expects “trading relationships to be fair” and “reciprocal.” But he made no mention of how negotiations are going or the national trade deficit, which increased nearly 12 percent to $50.6 billion during 2017, according to federal data.
The President’s tax reform bill, lauded by corporations that will be receiving one of the lowest corporate tax rates in history, is set to add $1.51 trillion to the current $666 billion federal deficit, with about $1 trillion stemming from business tax cuts, according to the Committee for a Responsible Budget, a nonpartisan group. The tax cuts, too, (especially for individuals as they are only temporary), are expected to be largely offset by the elimination or reduction of previous write-offs, like mortgage costs and state tax amounts.
Nevertheless, David French, a government relations executive with the NRF, characterized the bill as “a major victory, which is already beginning to increase the pace of retail sector investment in workforce, technology and stores.”
“We’ve seen countless businesses, including many retailers, announce wage increases, bonuses and expanded benefits, and soon, middle-class families will start to see greater take-home pay in their paychecks thanks to changes in federal withholding. In his speech last night, President Trump set the stage for how we can build on this momentum in 2018, starting by rebuilding our crumbling infrastructure,” French said.
About 16 companies have revealed wage increases so far this year, but Walmart Stores Inc. is the only retailer with apparel yet to do so, attributing the move to expected tax savings, despite having raised wages incrementally over the last few years. Target Corp. last year raised hourly wages as part of its plan to set its base hourly wage at $15 by 2020.
French also mentioned the need for Trump to “avoid unforced errors on trade,” which he said “would derail the economy,” and said America needs to “finally fix a broken immigration system in a practical way, while welcoming those willing to work hard and contribute” to the U.S. economy.
Trump called on Congress to “close deadly loopholes” regarding immigration policy, even though Republicans and Democrats in Congress remain deadlocked in their negotiations over how to do that, with each side blaming the other for the failure to develop a plan.
Kenya Wiley, founder and ceo of the Fashion Innovation Alliance, an industry consultant focused on public policy, said “immigration reform continues to be an important issue for fashion and retail.”
“The fashion industry was built by immigrant entrepreneurs and they continue to fuel its innovation and creativity,” she added.
While Wiley said the FIA supports young immigrants having a path to citizenship, she’s also hopeful that the International Entrepreneur Rule will make its way into possible immigration changes, but it’s still unclear where the issue stands.
“We had been hoping to hear more details last night,” Wiley said of Trump’s State of the Union address.
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