Trump, trade and the future of the global textile industry

In view of Brexit, the change in the US presidency, the US withdrawal from TPP and other events, the global textile and garment industry has had its fair share of politics influencing day-to-day operations lately. This is why Kingpins, the international boutique denim sourcing show, broadcast an expert panel discussion titled "Live: Kingpins Goes to DC: Trump, Trade and the Future of the Global Textile Industry" to explore the intersection between government and the textile and fashion industries.

The first episode in a planned series of discussions on the challenges and opportunies facing the textile and apparel industries was streamed live from Washington, DC in partnership with just-style at 10 am EST on 9th February 2017 and focused on what the current political climate has in store for the global and US denim and apparel industry. Panelists were Julia K. Hughes, president of the United States Fashion Industry Association (USFIA), and Augustine Tantillo, president and chief executive of the National Council of Textile Organizations (NCTO). Robert Antoshak, managing director of Olah Inc., hosted the discussion.

While speaking about the recent changes in the US textile and fashion industry and President Donald Trump's support of manufacturing in the United States, Hughes pointed out that jobs are created by trade and that offshore manufacturing supports jobs in the US as well. Tantillo countered by stating that 60-65 billion US dollars of the industry's output are produced in the US. "It is good to have an administration that acknowledges a baseline interest in nurturing it," he said, confirming that "our commitment is here."

Yarn forward rule: boon or bane?

Asked about trade agreements like NAFTA and if updates were needed, Hughes considered updates in general a good idea but cautioned against certain points, for example taxes on goods for Mexico or changing things that work in the international supply chain. Tantillo pointed to the 'yarn forward rule of origin' (which determines that the yarn used to form the fabric must originate in a NAFTA country) as a "great success" but cautioned that its benefits should go to signatory countries and not to non-signatories like China for example.

Hughes added a different perspective: "While there are US companies that are successful because of the yarn forward rule...it also holds back the western hemisphere supply chain because it is not nimble", pointing to those products outside of Mexico and Canada that are currently not available in the supply chain, thus holding back US manufacturers.

Asked if trade relations would suffer in terms of possible re-negotiations between Mexico, Canada and the US and a potentially tough policy towards China, Hughes pointed to the fact that currently 41 percent of industry imports come from China. "China is important and it is interesting that the current administration has not taken any action against China yet", Hughes stated.

Tantillo countered by pointing to the many problems when doing business with China, from intellectual property issues to subsidies, an undervaluation of the currency and production techniques that are unacceptable in the western hemisphere in terms of workers' lives and environmental protection. "It is refreshing to have finally have someone say that China has made a tremendous impact but question if they got their fairly or if they are maintaining that market share through fair and balanced practices," he said.

Is TPP dead?

In terms of the TPP, both panelists agreed that though the TPP may not be dead yet, it "is in a very deep hibernation at this point and may not come out of it"; a "Friday-the-13th kind of existence" as Tantillo put it. He pointed out that most countries already have a bi-lateral trade agreement with the US, while TPP members like Japan, Vietnam and Malaysia do not and may not make good candidates, as on the other hand Japan and possibly Great Britain would. According to Hughes, the US needs to be engaged and be aware of so many trade agreements that are already there. "We don't want to be left behind; we need to stay a global country," she said.

Last but not least, managing editor of just-style, Leonie Barrie, submitted the question how companies in the industry should deal with the current uncertainty. "My advice right now: be calm," said Hughes. "What can we do with our sourcing strategy? Store closings are affecting us, what's the impact of e-commerce? ... We need to stay calm, don't jump on behalf of a tweet," she advised. "Be as good as you can be in terms of innovation and product quality," added Tantillo.

Photos: Kingpins Livestream, from left to right: Julia Hughes, Auggie Tantillo, Robert Antoshak