Most Likely Environment 2025-2028
• Initial Tariff Implementation: The Trump administration is likely to follow through on some of their campaign promises to impose tariffs, but the scale may be more moderate than initially suggested. Political and economic pressures will likely temper the more aggressive rhetoric seen during the campaign. China will most likely receive new additional tariffs as well as Mexico (due to illegal immigration/fentanyl). These tariffs will most likely be in the 10-25% range.
• Impact on China: Apparel sourced from China will likely be a primary focus of any tariff impositions due to its trade imbalance with the U.S. Tariffs on Chinese apparel could be enacted, but these would likely be limited in scope to avoid major disruption in U.S.-China relations and prevent significant backlash from American businesses relying on these imports.
• Global Trade Adjustments: The administration may diversify tariffs or restrictions across multiple countries to avoid singling out China and provoking intense trade wars. This could mean that other apparel-exporting nations face smaller or selective tariffs to create a perception of broad policy rather than an exclusive focus on China.
• Economic Considerations: The U.S. apparel industry and consumers may experience price increases due to tariffs on imported goods. The administration will likely need to balance protective measures for U.S. manufacturing with the economic impact on prices for consumers and potential inflationary effects.
• Industry Lobbying and Resistance: Major apparel importers and industry groups in the U.S. are expected to lobby against aggressive tariff measures. This resistance may result in the administration scaling back or delaying tariff measures to avoid pushback from influential stakeholders.
• Shift in Supply Chains: Companies importing apparel may begin diversifying their supply chains, moving production to countries not targeted by tariffs or focusing on domestic production where feasible. This shift could help mitigate long-term costs but may not occur immediately due to logistical and financial challenges.
• Potential Retaliation: Countries affected by the tariffs, including China, could respond with their own measures against U.S. exports, creating additional complexities. The administration may try to preempt or negotiate to avoid this outcome, resulting in softened or revised tariff policies.
• Consumer Impact: Any tariffs that are implemented on apparel will likely lead to higher retail prices in the U.S., impacting lower and middle-income consumers the most. This could lead to public discontent and pressure on the administration to reconsider or adjust their approach.
• Negotiations and Trade Deals: Over time, the Trump administration may pivot to use tariff threats as leverage for new trade deals or negotiations, suggesting that the initial imposition may evolve into a tool for broader policy discussions aimed at revising trade terms rather than maintaining high tariffs indefinitely.
Articles of Interest
https://www.nytimes.com/2024/11/08/us/politics/trump-tariffs-china.html
https://www.cnn.com/2024/11/08/economy/steve-madden-china-trump-tariffs/index.html
https://www.cnbc.com/2024/11/12/trump-tariffs-companies-scramble-lobbyist-loopholes.html
https://www.yahoo.com/news/trump-ups-ante-tariffs-vowing-001501760.html