NEWS


Chinese Factories Set to Reopen as Lunar New Year Concludes: The Week Ahead

2020/02/10

Chinese factories will find out Monday how many of their workers will be able to return to work. Sunday marks the end of the extended holiday break in many Chinese cities, making Monday the day when factories will find out who among their workers is able to head back to work. Factories in Chinatypically close up shop for the week-long Chinese New Year holiday in late January so workers can travel home to celebrate with family before heading back to work. Many were in transit when the initial cases of coronavirus were deemed serious enough to warrant a lockdown n Wuhan and its neighboring cities. Then came more travel restrictionsin other Chinese cities. When work resumes on Monday, factories and companies will find out if they have sufficient staffing to operate at full capacity. And while factories operating closer to the outbreak’s epicenter would obviously impact manufacturing of apparel for fashion brands, other components of the supplychainlocated further out–including textiles, parts and even shipmentof goods–could be affected by travel restrictions imposed in and around parts of China to contain the outbreak. Ralph LaurenCorp. executives are waiting to see how many workers return to work before they will know what the disruption will be on their supply chain, and the same goes for Tapestry Inc. and CapriHoldings Ltd. For these firms, sourcingand production in China represent about less than 10 percent of finished goods. The good news for most fashion firms is that many have already diversified out of China and are producing elsewhere. And for those that didn’t move fast enough, the trade spat between the U.S. and China and resulting tariffs spurred them to evolve their supply chains.

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Coronavirus Takes Down Fashion Events and Turns Away Chinese Vendors

2020/02/10

Registration at American Events' Materials Show It may still be business as usual for some trade shows in the apparel and footwear space, with MAGIC, FN Platform and Project ongoing in Las Vegas this week, but other events are putting their dates off as the world works to contain the swiftly spreading coronavirus.

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Trump Claims US ‘Taxing the Hell Out of China.’ New Tariff Report Says Otherwise

2020/01/10

By Arthur Friedman,From: Sourcing Journal January 6, 2020 6:37PM ET American consumers are bearing the brunt of President Trump’s tariffs on Chinese imports,according to a new report. A working paper published in the National Bureau of Economic Research found that throughout the course of the U.S.-Chinatrade war, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply chain, reductions in availability of imported goods and complete pass-through of the tariffs into domestic prices of imported goods. In 2018, basically the first year of the tariff-fueled trade conflict, writers Mary Amiti,Stephen J. Redding, David Weinstein discovered “the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month.by the end of 2018.” By December 2018, import tariffs were costing U.S. consumers.and importing businesses $3.2 billion per month in added taxes, the authors found. “Our results imply that the tariff revenue the U.S. is now collecting is insufficient to compensate the losses being born by the consumers of imports,” they wrote. “We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war reduces real income for the global economy, as well.” “U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers,” Amiti, an economist at the Federal Reserve Bank of New York, wrote in the paper. Examining the tariff fallout in data through October, the authors found that Americans had continued paying for the duties that rose substantially over the course of 2019. “Approximately 100 percent” of import taxes fell on American buyers, the paper found. The research revealed a delayed impact from the tariffs, with the decline in some imports roughly doubling on average in the second year of the levies. That is because “it takes some time for firms to reorganize their supply chains so that they can avoid the tariffs,” the authors wrote. That was evident in apparel and footwear imports from China, which slowly eroded in 2018 and early 2019 before plummeting toward the end of the year as 15 percent tariffs were imposed on Sept. 1. The U.S. and China have reached a trade truce and are expected to sign an initial deal this month, but tariffs on $360 billion worth of Chinese goods will remain in place. The duties, which are as high as 25 percent, have forced significant shifts in sourcing. Tariffs have also changed the pricing behavior of U.S. producers by protecting them from foreign competition and enabling them to raise prices and markups, the report noted. “We estimate that the combined effect of input and output tariffs have raised the average price of U.S. manufacturing by one percentage point, which compares with an annual average rate of producer price inflation from 1990 to 2018 of just over two percentage points,” the authors wrote. “We also see evidence of large impacts of the U.S. tariffs and the foreign retaliatory tariffs on supply chains.”

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BREAKING: US, China Reach Tentative Trade Deal, Reports Say

2019/12/13

The United States and China have reached a tentative trade deal, likely making new tariffs set to roll out on Sunday a no-go. President Trump is reportedly prepared to sign the phase one trade deal negotiators from both sides have been working on for weeks, The Wall Street Journal reported, citing people familiar with the matter. The president and top advisors met Thursday to review an outline of the deal, which they expect to confirm with Beijing as early as Friday.Ahead of the news, Trump tweeted, “Getting VERY close to a BIG DEAL with China. They want it, and so do we!” Earlier reports, which likely came amid negotiations, said U.S. negotiators have offered to cut existing tariffs by as much as half on $360 billion worth of China-made goods, plus cancel the List 4B tariffs scheduled to take effect on Dec. 15, the  Journal reported.The debate over a potential tariff slash has been ongoing for the past month as the U.S. and China wrestled over whether a rollback was ever on the table. Now it seems the offer stands, and in exchange, the U.S. is reportedly seeking firm commitments from Beijing with regard to buying large quantities of U.S. agricultural products, plus the intellectual property protections that set the trade war in motion. If Beijing doesn’t stick to the commitments that could finally see this phase one deal established, there’s a “snapback” clause that would take punitive tariffs back to their original elevated rates, according to the Journal. With a little more than two days left for the decision to be made before 15 percent tariffs—which would target the remaining apparel and footwear items coming into the U.S. from China—the clock had been ticking on talks. And U.S. brands and retailers are keen for some tariff relief before the holiday season takes a turn for the worse. Before news of the tentative deal surfaced Thursday, the American Apparel & Footwear Association (AAFA) sent a letter to President Trump stressing the need for a phase one deal that eliminates already in place Tranche 3 and 4A tariffs and takes the incoming Tranche 4B December duties off the table. Already, according to the letter, roughly 92 percent of apparel imports from China, 53 percent of footwear and 68 percent of home textiles made in China have been paying additional 15 percent tariffs since September. Per AAFA estimates, if the Dec. 15 tariffs do take effect, the annual cost of duties for the industry would increase by more than $1 billion for footwear, $354.6 million for apparel, and $397.7 million for home textiles. “While the punitive tariffs imposed by both the U.S. and China over the past 15 months have brought attention to issues plaguing the U.S./China trade relationship, they have also caused severe damage to U.S. companies,  the millions of U.S. workers they employ, and the hundreds of millions of U.S. consumers they service,” AAFA president and CEO Rick Helfenbein said. Manufacturers, importers, exporters, wholesalers and companies large and small have all said the costs  associated with the influx of new tariffs have created substantial problems for their business, he added. “The costs, many of which were suddenly imposed, stifle investments, impede market access…[and] the uncertainty associated with the talks only magnifies the pain by forcing companies to create and constantly revisit multiple tariff mitigation scenarios.” In the letter, AAFA implores the president to settle a phase one deal that results in the “immediate elimination” of existing and impending tariffs on textiles, apparel, footwear and other targeted fashion products. If Beijing OKs the deal Friday, the industry could see the impending tariffs officially come off the table. Updated Thursday at 5:20 p.m. to reflect news of the tentative deal.

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Pantone Names Classic Blue 2020 Color of the Year

2019/12/10

The year ahead will be colored by chatter and Pantone wants to counter that with a hue that skews more serene. Announcing its Color of the Year for 2020 Wednesday, Pantone Color Institute gave the title to Classic Blue (Pantone 19-4052) for its sense of peace.“Instilling calm, confidence and connection, this enduring blue highlights our desire for a dependable and stable foundation on which to build as we cross the threshold into a new era,” the color institute said. Classic Blue is simple, reassuring, thought-provoking and reminiscent of a dusk sky, according to Pantone—all necessary elements as the fashion industry enters into a period of impeachment proceedings announced Thursday, new tariffs on more countries, plus an election year that could fuel the collective uncertainty. “We are living in a time that requires trust and faith. It is this kind of constancy and confidence that is expressed by Pantone 19-4052 Classic Blue, a solid and dependable blue hue we can always rely on,” Pantone executive director Leatrice Eiseman said. “Imbued with a deep resonance, Classic Blue provides an anchoring foundation… Classic Blue encourages us to look beyond the obvious to expand our thinking; challenging us to think more deeply, increase our perspective and open the flow of communication.” For the first time, Pantone opted to convey the Color of the Year through a multisensory approach, which prompts a deeper sense of the hue’s essence.To bring Classic Blue to life, Pantone partnered with Audio UX to convey the sound of the color as one of nostalgia and comfort. To describe the texture of the color, Pantone partnered with furniture firm The Inside, which says Classic Blue translates to a “soft, velvety texture, further emphasizing the calming quality.” The taste of 2020’s Color of the Year, honed in on through a partnership with fragrance and flavor company Firmenich, “explores the idea of maturing through ripening,” while the scent, which has “notes of sea salt lifted by airy sky” elicits “contemplation and a feeling of optimism for the future.” “As we all head into a new era, we wanted to challenge ourselves to find inspiration from new sources that not only evolve our Color of the Year platform, but also help our global audiences achieve richer and more rewarding color experiences,” Laurie Pressman, vice president of the Pantone Color Institute said in a statement. “This desire, combined with the emotional properties of PANTONE 19-4052 Classic Blue, motivated us to expand beyond the visual, to bring the 2020 Pantone Color of the Year to life through a multi-sensory experience.” After tracking all search data related to blue, global fashion search platform Lyst said Thursday that searches for ‘royal blue’ are currently up 87 percent month over month, and up 17 percent quarter over quarter. Consumers seem most keen for blue dresses, with searches in the category up 61 percent over last month, followed by coats, with searches up 37 percent over the same period.

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Contrary to Popular Belief, the American Textile Supply Chain is Growing

2019/04/28

Made in America is ramping up where textiles and apparel are concerned. The value of U.S. textile and apparel manufacturing increased 12 percent in 2018 to an estimated $76.8 billion compared to output of $73 billion the previous year, the National Council of Textile Organizations (NCTO) said in its annual state of the industry report. U.S. exports of fiber, textiles and apparel were $30.1 billion in 2018, a 5.4 percent gain from $28.6 billion 2017, NCTO reported. Capital expenditures for textile and apparel production totaled $2 billion in 2017, the last year for which data is available. Investment in fiber, yarn, fabric and other non-apparel textile product manufacturing was up 79 percent to $1.7 billion in 2018 from $960 million in 2009, when industry production began a slow turnaround. “Thanks to its productivity, flexibility and innovation, the U.S. textile industry has cemented its position in the global market,”NCTO chairman Marty Moran said. “The United States is especially well-positioned globally in fiber, yarn, fabric and non-apparel sewn products markets–it is the second largest individual country exporter of these products in 2018.” Moran, who is also is CEO of Buhler Quality Yarns, Corp., a fine-count yarn supplier headquartered in Jefferson, Ga., noted that shipments to the countries of the North American Free Trade Agreement (NAFTA) and Central American Free Trade Agreement accounted for 47.5 percent of textile supply chain exports. Cotton and wool exports hit $6.7 billion last year, yarn shipments were $4.4 billion, and $9.1 billion worth of fabrics were exported. The U.S. textile industry’s commitment to capital re-investment and a continued emphasis in quality and innovation make it well-positioned to adapt to market changes and take advantage of opportunities as 2019 moves along,” NCTO said. Moran said NAFTA has been an important pact for the U.S. textile sector and NCTO supported the effort to modernize it, which resulted in the U.S.-Mexico-Canada Agreement (USMCA). As Moran noted, NCTO advocated for such areas included in the pending pact such as maintaining the yarn forward rule, a reduction of minimum tariff preference levels and strengthening customs enforcement. “The USMCA represents a demonstrative improvement for U.S. manufacturers of component parts such as thread, pocketing,narrow elastics and coated fabrics,” Moran said. “These items will have stronger origin requirements under the new agreement that will certainly boost sales to North American customers.” On the U.S. Section 301 trade case against China’s intellectual abuses, Moran said while NCTO generally supports “finally tackling China’s illegal trade practices, some products selected have negatively impacted our membership.” He cited dyes and chemicals used in the textile manufacturing process, which have resulted in higher costs, as one example. “Overall, the vast majority of products identified for penalty tariffs in our sector have been inputs and we think a major opportunity is being missed by this approach,” Moran said. “Selecting finished goods, which generally contain 100 percent Chinese fiber, yarn and fabric components, would create benefits throughout the U.S. supply chain.” The NCTO has called for government investment in improving automation in apparel manufacturing, which Moran said, “shows promising potential to reshore U.S. textile and apparel production jobs.” Employment in the textile and apparel supply chain rose to $594,147 workers in 2018 compared to 550,500 the prior year. This came even though factories have become more automated, and many jobs have been converting to technology-oriented positions sometimes not even classified as textile or apparel jobs from more hands-on spots like sewing machine operators.

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What the Tariff-Fueled Exodus from China Means for Apparel

2018/12/29

The apparel industry got a little breathing room in early December, when the Administration announced it had reached a truce in the trade war with China. While not out of the woods yet, it at least gives brands and retailers more time to plan should President Trump decide to put tariffs on the remaining goods coming out

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Understanding NAFTA and the USMCA

2018/10/15

The North American Free Trade Agreement was the overlying agreement for commerce between the United States Canada and Mexico from 1994 to 2018. Backed by then-presidential candidate Ronald Reagan in the late ’70s and signed by President Bill Clinton in 1994, NAFTA became a standard for open trade around the globe and created one of the world’s largest free trade zones.

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India Doubles Import Duties on Array of Apparel and Textiles

2018/08/24

Looking to support and promote domestic manufacturing as part of its Make in India initiative, the Indian government has doubled import duties to 20 percent on a wide range of apparel and textile products. Under the auspices of the Central Board of Indirect Taxes and Customs (CBIC), which posted a notice on its website last week, customs duties were hiked on apparel categories such as innerwear, pajamas, track suits and swimwear, along with textiles that include wool, silk and synthetic fibers, carpeting, and other textile floorings. The notification said it seeks to “increase customs duty on 328 tariff lines of textile products from the existing rate of 10 percent to 20 percent” under Section 159 of the Customs Act of 1962. This followed a similar move last month on another 50 textile products, including jackets and suits. The moves are meant to offer relief to the domestic textile industry which has been hurt by cheaper imports, mainly from China. India’s textile imports increased 16 percent to a record $7 billion in the last 12 months, with about $3 billion worth of goods from China, according to the country’s Ministry of Textiles. Last year, India cut its duty drawback rates–the refund of certain duties, internal revenue taxes and certain fees collected on imported goods that are then used for export–also to encourage more domestic production. This was much to the chagrin of exporters, which had relied on the funding to keep prices at bay and maintain competitiveness with Asian manufacturing neighbors. For the first six months of this year, the U.S. exported $2.85 billion worth of apparel and textiles to India, a 6.71% increase over the same period last year.  Textile mill products used in home textile products such as carpets made up the bulk of the shipments.

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Ivanka’s Brand: What Went Wrong

2018/07/27

Brand Trump took another hit Tuesday with the shuttering of the Ivanka Trump business, underscoring that fashion and politics don’t mix — and that brands linked strongly to personalities are fraught with risk. Eleven years after fine jewelry carrying the Ivanka Trump label hit the market, the New York-based brand saidit was closing amid rapidly dwindling retail and consumer support. Even though Trump officially stepped away from her company in January 2017, many continued to associate her with the brand she founded. Political rancor toward her family, a dwindling base of retail accounts, a widelyvocal consumer boycott and a highly competitive apparel market all contributed to the brand’s demise. Events unfolded quickly on Tuesday. The day prior, new buy-now accessories were being touted on the brand’s site. In a statement issued by the company, Ivanka Trump said, “When we first started this brand, no one couldhave predicted the success that we would achieve. After 17 months in Washington, I do not know when or if Iwill ever return to the business, but I do know that my focus for the foreseeable future will be the work I am doing here in Washington, so making this decision now is the only fair outcome for my team and partners.” She added, “I am beyond grateful for the work of our incredible team who has inspired so many women, each other and myself included. While we will not continue our mission together, I know that each of them will thrive in their next chapter. Abigail Klem, president of the company, who took on the leadership role after Trump relocated to the Beltway last year, relayed a similar sentiment in a statement.

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Trump Says Canadians “Smuggle” US Shoes Because of High Tariffs, Footwear Industry Responds

2018/07/03

In his relentless pursuit of more equitable trade for the United States, President Trump has given Canada another reason to pause amid already deteriorating relations. Within 24 hours of proposing another $200 billion in potential tariffs on China, where a trade war has reached beyond brewing, Trump accused Canada of smuggling shoes from the U.S. back into their country. Speaking at the National Federation of Business in Washington Tuesday, Trump said, people living in Canada are “coming into the United States and smuggling things back into Canada because the tariffs are so massive. The tariffs to get common items back into Canada are so high that they have to smuggle ‘em in. They buy shoes and they wear ‘em, they scuff ‘em up, they make ‘em sound old, or look old.” Pointing to what he’s said on different occasions is Canada’s 270 percent or 275 percent tariff on dairy, the president said it’s “a barrier without saying it’s a barrier.” We can no longer be the stupid country. We want to be the smart country,” Trump said. Tuesday’s comments have sparked a strong response from the U.S. footwear industry. In a statement following Trump’s, Matt Priest, president and CEO of the Footwear Distributors and Retailers of America (FDRA) said, “On behalf of the American footwear industry, we welcome anyone from anywhere to come and purchase shoes in America. It helps both our brands and retailers grow. Period. We don’t care where they wear them, and if they get scuffed up all the better so we can sell them more.” The president, according to Priest, appears to be misinformed about footwear trade. “Consumers buying shoes in America already pay a very high tariff, upwards of 37.5% and 67.5%. NAFTA is not treating footwear consumers in America unfairly, the American government itself has not lowered footwear duties in a meaningful way in over 80 years,” Priest said. On the North American Free Trade Agreement, which is hanging by thin threads these days as Trump stands firm on a five-year sunset clause and alludes to tearing up the deal and turning it into two bilaterals, Trump said Tuesday, “We’re trying to equalize it. It’s not easy but we’re getting there…We’ll see whether or not we can make a reasonable deal.” That deal, whether it comes to fruition, may still not positively impact footwear duties as other U.S. trade deals may have. “If the president is concerned about treating American footwear companies and consumers fairly, then he should have signed the TPP to lower footwear costs in America,” Priest said. “Canada signed the TPP and will eventually get duty free shoes from Vietnam, a major sourcing hub, where American brands will ship directly into Canada duty free. Canadians have no real reason to ‘smuggle’ their shoesbecause their government is already helping lower their costs through proper trade deals.” Trump’s shoe-smuggling comments come after recent Twitter attacks against Canadian prime minister Justin Trudeau for his firm stance on Canada responding to U.S. tariffs with equivalent measures of its own. Trump called Trudeau “meek” and “weak” for addressing the tariffs in a news conference rather than during the recent G7 meetings in Canada.

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US Textile Factories Are Getting More Funding and More Attention

2018/05/28

There’s been a flurry of activity in the U.S. textile industry of late–an indication that interest in U.S.-made materials and manufacturing continues to grow.According to the National Council of Textile Organizations, the value of U.S. man-made fiber and filament, textile and apparel shipments reached an estimated $74.4 billion in 2016, an increase of 11 percent since 2009.

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