While predicting trade policy has long been the job of economists, lawyers and foreign policy experts who can lean on their love of process and rules, it’s lately become the province of game theorists and gamblers.
The art of U.S. President Donald Trump’s trade dealmaking has become something of a chaos machine for fashion supply chains.
That’s because while Trump has threatened massive tariffs, put them into effect and then paused them within days or weeks, supply chains operate in months. And brands and retailers are left unsure how much their orders will actually cost when they arrive.
The stress of it all was ultra high in the spring and moderated some as certain players — like the European Union — cut trade deals. But there are still plenty of unknowns for the second half of this year. Among them:
- Will the costs of tariffs start to filter out to consumers?
- If so, how will they react?
- Will Trump make more unorthodox deals, like the one he struck with Nvidia, which gives the U.S. government a 15 percent cut of the sales of advanced computer chips in China? Or Intel, in which the U.S. government plans to take a 10 percent stake?
- How much will it cost to bring in apparel from China, where new duties are paused until Nov. 10 pending negotiations?
China accounts for 22 percent of textile and apparel imports to the U.S. and had been the production market of choice for many firms.
The decision to spend more time in talks with Beijing was welcomed by importers, but all the back and forth on how big the tariffs would be and when they would be applied has not been helpful.
Steve Lamar, president and chief executive officer of the American Apparel & Footwear Association, said the pause on higher tariffs would “help to avert devastating consequences like product elimination and business closures.”
“However, the constant cycle of deadline delays and vague deal terms has kept American companies and consumers stuck in the same holding pattern since April 1,” he continued. “This pattern has and continues to stifle innovation, strategic decision-making and long-term growth. As talks with China progress, we urge the administration to include a non-stacking provision, similar to agreements with Japan and the EU.
“Even with the pause on the worst-case rate, a 30 percent tariff on our largest trading partner is still untenably high. We can’t forget that these tariffs are being added on top of existing ones, including the nearly century-old Smoot-Hawley MFN tariffs and the Section 301 tariffs. When stacked on top of these already steep tariffs, it amounts to double taxation on hardworking American families for everyday essentials like clothing and footwear.”
