China — to stay or to go? That’s just one question muddling the apparel and footwear supply chain, specifically those in the U.S. having strong sourcing reliance on China — a necessary advancer of global apparel production and trade.
In anticipation of this response and other questions, IDB Bank held a forum Monday night on the U.S. and China trade war, hoping to clarify the consequences of hiked tariffs targeting the apparel and footwear industry. It was moderated by Eddie Hertzman, founder and president of The Sourcing Journal, a sister publication to WWD, and held at the Roosevelt Hotel in Midtown Manhattan.
The panel included Rick Helfenbein, president and chief executive officer of American Apparel and Footwear Association, Harold M. Grunfeld, a resident at his own practice advising clients on customs and international trade law, and Paul Benjamin, chartered financial analyst and former chief investment officer at Alcoa Corp.
Tracing “promises made” from President Trump’s campaign trail and referencing The New York Times article that quoted Trump, Helfenbein believes it is simple; “the 45th president of the United States wants a 45 percent tariff on China.”
Now, the exact realization of this promise is changing but since then there was the formalization of the third tranche, intended to “fill in the holes” left by earlier mention of the $16 billion tariff, a $50 billion tariff cut down to $36 billion and finally a $200 billion tariff which impacted categories such as hats, handbags and apparel.
Helfenbein says there is reason to believe a “fourth tranche is coming” to the apparel and footwear industry.
Panic from the tranche of tariffs, Grunfeld credits partially to a misclassification of apparel and footwear goods. He advises sourcing agents and decision-makers to fully understand their business and “reduce the value of what [they] bring in.” As to whether prices would increase, Helfenbein believes “when people are scared, they leave. They leave — prices go up.”
The apparel and footwear industry retains flexibility to source labor and raw material elsewhere, but time and competition for new sourcing countries may pose a challenge.
And with China as “the number-one trading partner,” of the U.S. — the effects and China’s retaliation opportunities are still unanswered.
Benjamin cited this trade war, not as a unilateral, but a “multilateral” relationship wherein China and the U.S. are not the only countries affected.