US brands shift sourcing from China amid trade-war

brett mathews | 25th February 2019

WASHINGTON – US apparel brands are shifting sourcing away from China amid fears that the two countries will remain locked in a trade-war which will continue indefinitely, and may even become the new norm. Rick Helfenbein, president and CEO of the American Apparel & Footwear Association, told Apparel Insider many US apparel brands and retailers are now actively diversifying their supply chains to other hubs, such as Vietnam, Bangladesh, Cambodia, and even East Africa. Our own research suggests a greater proportion of apparel production in China is now servicing the burgeoning domestic market.

So far, the US has imposed three rounds of tariffs on Chinese goods, totalling more than US$250bn. The duties range from 10 to 25 per cent and cover a broad cross-section of industrial and consumer items, ranging from handbags to railway equipment. Beijing has in turn retaliated with tariffs on US$110bn of US goods, and claimed that the US has started “the largest trade war in economic history.”

Helfenbein told us: “This is a difficult situation for our members as China is such an essential part of the apparel, footwear, and travel goods supply chain. Our members are concerned about their businesses, so they are looking for and moving to alternative sourcing locations. This will be seen in the import numbers. Of course, with China accounting for such a large amount of what is sold in the US, it is difficult and costly to find and certify new factories.

“That said, many are actively diversifying their supply chains to other hubs, such as Vietnam, Bangladesh, Cambodia, and even East Africa. Still there are other concerns beyond the current tariffs. If an agreement with China is made, will the punitive tariffs be dropped? Mexico and Canada agreed to the USMCA, yet we are still paying tariffs on imports of steel and aluminium. What if the Administration targets another sourcing hub after China? All these questions point to the necessity to diversify for the foreseeable future.”