Last year, the US government hiked the tariffs of imported goods (apparel, footwear and home textile products) from China. What will be the major impact of this decision on US sourcing of these items? Can Vietnam become the next China?
Over the past decade or so, companies have been looking to diversify their supply chains from China. The US/China trade war accelerated this movement, and the coronavirus (COVID-19) pandemic has reinforced the notion that it is important to have diverse, vertical supply chains. And that production is moving, with China exports of apparel, footwear, and travel goods to the US all decreasing in 2019. That said, there is no one replacement for China, as it is impossible to move that quantity of production to one country. Rather, sourcing will most likely be relocated to a vast array of countries, likely servicing nearby retail markets. In addition to other countries in Asia that have already seen a spike in production, many companies are looking closely at Central and South America, as well as Africa.
What are the major trends you see in the US apparel and footwear industry? How much are these sectors set to grow in future?
Two unmistakeable trends – greater focus on sustainability and ecommerce – will continue to grow. As we celebrate the 50th anniversary of the original Earth Day this month, the question our consumers are asking is not whether the industry’s marketing is authentic, but whether sustainability is part of our DNA. Increasingly, companies are finding that answer to be yes as investments they have made in the past, and commitments they are making for the future, result in more sustainable business practices that are coordinated in a pre-competitive manner. In fact, this was a major topic at our March Executive Summit this year.
Ecommerce, which was on track for explosive growth already, will become even more important as the world recovers from the COVID-19 lockdowns and learns lessons from them. While we fully expect consumers to crave returning to the store to once again enjoy in-person shopping experiences, there is no question that they have grown more reliant on systems that deliver quality and affordable fashion directly to their homes.
What was the main agenda for the annual AFFA Executive Summit held in March this year?
Our Summit this past March brought together approximately 200 C-Suite executives to discuss trade, sustainability, and the impact of COVID-19 on supply chains.
The second-hand apparel market is expected to grow to $32 billion in 2020, says a research. What will be US’s contribution to the same?
It’s hard to say as efforts to repurpose and close the loop, as they gain more traction, will inevitably affect the second-hand market. Moreover, a soft retail sector – if the US economy enters a prolonged economic downturn – could lead more consumer to hold on to their clothes longer.
What are the current issues you are voicing your opinion for related to the apparel/footwear industry to the government? Any trade policy issues we should keep a watch on?
Part of our role in Washington is to be in constant communication with the government, whether that be through the administration or on Capitol Hill. This communication covers a range of topics, from trade policy to preventing forced labour to protecting consumers from counterfeits.
AAFA is working to elevate the voice and impact of its membership. As an industry that literally touches every American, and which contributes more than 400 billion in US retail sales and employs 4 million Americans, our voice matters. One example of this is in the area of trade. We paid more than $20 billion in tariffs in 2019 – a dramatic increase of just a few years before – but many of these tariffs are legacy policies that date back almost a hundred years. It is clear that newly assessed tariffs have hobbled our country’s ability to respond to the COVID-19 health and business crises. It is time we update our trade policy so that the tariffs we charge represent the industry that exists today. (PC)