Trade Protectionism and E-Commerce Are Top Concerns for Chief U.S. Fashion Industry Executives

With a new president in the White House, U.S. fashion manufacturers and retailers said their biggest concerns this year are about new trade barriers going up that would restrict apparel imports.

In a recent study conducted by the U.S. Fashion Industry Association, a Washington, D.C., group that works to eliminate tariffs and non-tariff barriers, nearly 70 percent of executives surveyed rated protectionist trade policies as their top concern, up from No. 10 last year. “Notably, since we began conducting the benchmarking study in 2014, trade protectionism in the United States has consistently been a medium-ranked business challenge [ranking between No. 8 and 11],” the study said. “This year’s ‘abnormal’ result reflects concerns about the unprecedented direction of U.S. trade policy in the Trump administration. These concerns are understandable—from pulling out of the Trans-Pacific Partnership to threatening to levy punitive tariffs on imports from major U.S. trading partners.”

In the study, which surveyed 34 executives with substantially large companies, China was still the big sourcing arena, followed by Vietnam, which was the second go-to sourcing spot. Some 91 percent of respondents sourced from China, down slightly from the past surveys where 100 percent of respondents were using Chinese apparel and textile factories.

While Vietnam is still a popular sourcing destination, only 36 percent of those surveyed said they planned to increase their sourcing in that country over the next two years, much lower than the 53 percent who last year said they would be interested in increasing production in that Asian country. Part of that is because Vietnam was a signatory of the Trans-Pacific Partnership and was in line to receive duty-free status on clothing exported to the United States and 11 other TPP countries.

Bangladesh has been a popular sourcing destination because of its low-cost labor, but those surveyed said the country’s factories have a higher risk in complying with labor standards. Only 32 percent of U.S. fashion industry executives surveyed expected to increase their sourcing there.

While duty-free imports are critical for keeping costs down, most of the 19 free-trade agreements the United States has with other countries are underutilized, the survey said. Only the North American Free Trade Agreement is used by more than 50 percent of the survey’s respondents.

Not surprisingly, 100 percent of those surveyed said they opposed the U.S. border adjustment tax that would tax imports and subsidize exports.

Second on the list of concerns is competition from e-commerce sites that are cutting into bricks-and-mortar store sales. Some 57 percent of respondents said they are worried about the growth of companies such as and new entrants to online sales. But they felt bricks-and-mortar stores were still an important source for shoppers.

Taking a look five years down the road, only 71 percent of U.S. fashion industry executives surveyed felt optimistic about the future, down from 92.3 percent surveyed last year. That is a record low since the survey started in 2014.