“America has spoken,” as said by Steve Lamar, president and chief executive officer of the American Apparel and Footwear Association (AAFA). Donald Trump is to return to the White House to serve as the 47th US president, while his Republican party has also won control of the Senate. With dozens of races still to be called, meaning power over the US House of Representatives is yet to be determined, the world and the fashion industry are already questioning what is to come under another Trump presidency.

Following the inauguration on January 20, there is no guarantee that many of the promises Trump made during his campaign will see the light of day. Yet the incoming president has been very vocal about what he intends to achieve from the moment he steps into power–including, but not limited to, carrying out the “largest deportation programme [of migrants] in American history”; terminating the Green New Deal; and to “drill, drill, drill”. Here is what the fashion industry needs to know about other policies anticipated under Trump.

Foreign tariffs

During his campaign, one of Trump’s core policies was to address tariffs on foreign imports. In this regard, Trump plans to impose universal tariffs between 10 to 20 percent on all US imports, while China-made goods could end up with a 60 percent tariff. Some experts suggest such a move could make fashion and textile imports from overseas less competitive for American-made goods, yet for others, there are other more concerning outcomes. This includes a potential increase in imported raw materials for US manufacturers, as well as an increase in the cost of foreign goods for US consumers, a factor Goldman Sachs said could be offset by flexible exchange rates.

AAFA’s Lamar recognised that this tariff policy would “indeed be a challenge” and could “trigger new inflationary cycles if campaign proposals are fully enacted, making it more expensive for Americans to get dressed every day”. He added: “Tariffs are taxes paid by US-based businesses and American consumers, not on China or other supplier countries. These tariffs disproportionately harm lower income American consumers and female consumers with higher tariffs on lower priced products and on women’s clothes and shoes.”

According to a study by the National Retail Federation, and prepared by Trade Partnership Worldwide, the proposed tariffs could further reduce American consumers’ spending power by 46 billion dollars to 78 billion dollars every year after the implementation. The organisation said the tariffs “would have a detrimental impact on the costs of a wide range of consumer products sold in the US” and could be “too large for US retailers to absorb”, meaning higher prices for consumers to pay. Costs for consumers could go up by about 10.7 billion dollars for footwear and 24 billion dollars for apparel, which could see a resulting 22 to 33 percent cut back on spending.

Tariffs could also cause a “more disruptive risk for the container shipping market based on past performance”, a recent analysis from Drewry stated, with an uptick in consumer-imposed costs “inevitably dampening overall demand for containerised imports”, the company’s senior manager of container research, Simon Heaney said.

‘Made in USA’ incentives

An offset of these tariff hikes is that of a ‘Made in USA’ mindset shift which has already been championed by Trump, who has promised a revitalisation of domestic production. The incoming president has been clear on his intentions to make the American economy less dependent on imports, as was already seen in the introduction of a number of incentives in his prior term, including a 20 percent tax credit for new US investments. Such incentives are expected to be extended under his second term, and could, among other factors, see the complete erasure of taxes on profits from investments in US manufacturing.

From the perspective of analysts, this push for foreign tariffs may increase tensions between the US and its trading partners. Speaking to Just Style, GlobalData senior apparel analyst, Louise Deglise-Favre, said: “Trump likely has the potential to exacerbate tensions with China, which could lead to supply chain disruption and cost increases for globally integrated fashion businesses. However, Trump’s overall liberalism might also help break down barriers to trading within the US, which would benefit local players.”

AAFA president Lamar hopes that instead the new administration will renew expired and expiring programmes to support international affairs, such as the African Growth and Opportunity Act, which provides certain African countries with duty-free access to the US market. Lamar stated: “Immediate and long-term renewal of these measures, combined with a revived trade agreement programme, will create predictable opportunities for our industry to diversify and invest, creating American jobs and supporting the provision of affordable and sustainable fashion for American families.”

A reform of the “de minimis” rule had already been in the sights of the current Biden administration, however, Trump has also promised to further address a loophole in the system that has allowed the likes of Shein to avoid taxes. In its current structure, the rule allows products valued under 800 dollars to enter the US duty-free. Under Trump, however, more restrictions are expected to come into place.

Corporate tax

Akin to his first term as president, Trump plans to carry out more corporate tax cuts, including the permanent extension of the 1.7 trillion dollars in cuts for corporations and individuals. Certain eligible companies, the requirements for which are yet to be determined, could also see their tax rate lowered to 15 percent. According to Goldman Sachs’ research paper, this could “prove supportive for US equities, with small-caps and cyclical industries likely outperforming”. However, it has been suggested that these cuts are most likely to benefit high earners, large corporations and their investors.

Sustainability

One of Trump’s most poignant and somewhat controversial stances is that of his view on sustainability. His perspective was essentially summed up in a speech in New York during September, in which he said: “To further defeat inflation, my plan will terminate the Green New Deal, which I call the Green New Scam. Greatest scam in history, probably.”

Introduced in 2006, the Green New Deal set out to achieve 100 percent clean, renewable energy by 2030, while ensuring that millions of jobs were being supplied through the development of infrastructure dedicated to this mission. Among other orders Trump plans to carry out on “Day 1” are that of his mission to halt offshore wind energy projects and to “drill, baby, drill”, a motto he has used to refer to his intention to rely on oil and gas for economic growth. For fashion, Trump’s stance could mean fewer regulations on products, and less emphasis on implementing sustainable materials into a company’s processes.