US Fashion Industry to Diversify Sourcing

Us President Trump is clear about his position on the TPP issue and his intention to boost the manufacturing industry of the country to create domestic jobs. Because of this, one of the most affected industry will be the Fashion Industry. Currently, around 97% of the materials used in the fashion industry are sourced from other countries, and only the remaining three percent is left for the US workforce to harvest from. This is the most vulnerable target of the new administration in the new policies that will be implemented to support the generation of American Jobs. As it is, Americans are not benefiting so much from the manufacturing activities of fashion companies.

As a solution, the current administration expressed their plans on pushing US companies to bring back jobs to the Americans by choosing to a source at home or suffer the consequence of increased import tariffs. Though such threat has been made, no further actions have been performed. This caused US Fashion Companies to both be wary, skeptical, and cautious with their plans to further expand their businesses. To take the ever-famous Louis Vuitton as an example, it already has a manufacturing facility located in San Dimas California. In addition, it also plans to establish another plant in the South. However, the expansion was caused more by the substantial local demand as opposed to the potential change in policies. Though already warned and made cautious, US Apparel Companies await the final act from the US government. At this point, they can only prepare their responses to what may be decided by the lawmakers.

Currently, China accounts for the most US apparel imports compared to all other countries US companies source from. In addition to these, the fashion market in China is also very significant. Building manufacturing facilities in China may also be reasonable in order to cater to the Chinese demand for fashion products especially high-end brands. The willingness to spend more for fashion remains evident for the Chinese community. Hence, there has been a great value perceived by US Apparel Companies towards investing in China. The strength of Chinese Production ignites the political tension between the US and China, as Trump decides to push the companies back home. This is in addition to the existing political issues dealt with such as the US stand on the South China Sea conflict as well as Nanking Massacre, which are mostly brought by US several allies and their respective interests.

Some fear that if imports to the US are indeed charged a higher tariff, that it will fuel the business war with China, and will cause other exports from the US to suffer the consequences in the Chinese Market. Obviously, there is already a power rivalry between the two countries and doing this may just aggravate the state of their political relationship. On the other hand, even without the implementation of new tariffs and convincing US companies to join the Made in America campaign, they may naturally decide to move production outside of China. This shall not be seen as a political movement but rather a rational decision by the US companies, as China’s production costs increase. The Chinese workers are now experiencing increased in wages which is obviously a disadvantage. In terms of wages, Bangladesh has the lowest wages for clothing makers. This makes it a good candidate for sourcing. Furthermore, India is also gaining competitiveness in terms of textile manufacturing at the cheapest cost compared to China, making it also another good candidate for sourcing. There are different options for US Apparel Companies to expand, this includes Taiwan, Indonesia, Vietnam, Sri Lanka and several others. Exploring these options will not limit them manufacturing dependence on China.

 

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