How the US-China Trade War Trickles Down to Fashion
On July 6th, President Trump acted on his promise to end China’s “longtime abuse of the broken international system and unfair practices” and waged a trade war imposing 25% border tax on $34 billion worth of Chinese imports. China, in retaliation, imposed a tariff of equal measure on US goods. History has taught us all that when two superpowers are in conflict, it affects us all— the way we live, work — and dress.
According to Medium, almost 50% of apparel and textile imported to the US is from China, and around a fifth of jobs in the industry are dependent on these Chinese goods those in the manufacturing sector who use these cheap Chinese raw materials to make the clothes that we all wear and love. The number of jobs supported by this industry has been steadily on the rise in the US in the past 3 years, but this could be significantly stifled by unending taxations that would make Chinese imports too expensive and the American jobs they support too redundant. So in a way, this tariff that is meant to be protectionist, might just slow our country down even more— and the fashion industry plays a large role in that turnaround.
For producers and consumers, the picture is not good either. Most clothing lines are facing pressures for higher costs of these Chinese raw materials, which their production has run on for decades past. Costs are further increased due to higher lead times of picking up the latest trends and producing clothes so that they are ready for sale when those trends are still relevant. Major brands like Gap, Levi Strauss, VF Corporation, Steve Madden and Michael Kors have signed a petition to urge President Trump to discontinue this trade war. All these companies source a majority of their materials from China, and if that is no longer economical, an entire re-routing of their supply chain would be in order. Obviously, that is a costly and time-consuming task, pushing their profits and valuations further down.
The only markets that could possibly benefit from this trade war are those that fashion companies will now look to for their raw materials— India, Vietnam, Thailand and Bangladesh. The tariff also poses an opportunity for luxury brand, who can try to leverage their position in China’s domestic fashion market— a large chunk of which is upscale, and in line with American trends. In line with his book Bling Dynasty: Why the Reign of Chinese Luxury Shoppers Has Only Just Begun, author Erwan Rambourg recently stated in an interview that American luxury retail brands should widen their presence in China— as a “hunting ground of ‘Crazy Rich Asians’— the rising profits and double-digit growth of companies such as Ralph Lauren, PVH Corp, Gucci and Louis Vuitton within the Chinese market point to this movement. Additionally,the Council of Fashion Designers in America and the Vogue Fashion Fund co-hosted an autumn/winter fashion show at the Great Wall of China for Proenza Schouler, Rag & Bone and Marchesa. Of course, the permeation of these brands into the gigantic fabric of Chinese clothing is a gradual process, and in the meantime, fashion designers will just have to deal with the high pressures placed by this never-ending trade war.
On the consumer end, the price of almost everything we wear will increase— from jeans and t-shirts to bags and shoes. The price of Chinese cotton is expected to increase two-fold, and considering that it is one of the raw materials that the American fashion industry runs on, the effect is bound to be transformative. According to Apparel Magazine, a family of four could be stripped $500/week because of the tariff imposed on clothes, shoes, fashion accessories, and textiles imported from China.
The effects on American clothing lines will inadvertently trickle down to the consumer, and possibly with a multiplied effect— this trade war is therefore a hidden tax for us all— and it could end up fueling unemployment and negative growth— not just in fashion, but in the long list of industries that these tariff are directed towards. On the other hand, if these taxations do disincentivize China from its historical unfair pricing tactics, as elucidated by PBS, that would be a boon for us all and eventually stimulate the growth of the American fashion industry too. So within the next few months, consumers should watch the prices of their clothes and designers the costs of their productions - returns will hopefully come with time.