How Will Ongoing Trade Wars Affect the Global Apparel Industries?

January 23, 2019 11:41 pm Published by Leave your thoughts

The United States is currently engaged in ongoing trade wars with China that have affected a wide variety of industries, including the textiles and apparel industries. It began in July 2018, when President Donald Trump imposed a 25 percent border tax on about $34 billion worth of goods being imported from China. China retaliated soon thereafter, implementing a 25 percent tariff of its own on $34 billion worth of American products, such as cotton linters, soybeans, lobsters, automobiles and uncombed cotton.

The federal government’s reasoning for implementing the initial tax on Chinese products was to punish the nation for trade policies that have been deemed controversial by federal officials. The U.S. accused China of forcing various foreign companies to give their intellectual property and technological capabilities to Chinese companies to be able to get access to the Chinese market, and also of using cyber theft to acquire various trade secrets.

The tax makes Chinese products more expensive for American customers, which would likely lead to them looking elsewhere for their products. But it has obviously not been well received by China, who has accused the United States of beginning the largest trade war in the history of the global economy.

So what are some of the impacts of this trade war looking like already, and what can we expect to happen in the future? Below is some information from a longtime provider of cotton mill components in Lubbock, TX.

Consequences of global trade warfare on the apparel industry

At M.B. McKee Company, Inc., we’re particularly interested in the effects this trade war is going to have on the apparel industry. Consider this: about 41 percent of all apparel in the United States, including 72 percent of footwear and 84 percent of travel goods, are made in China. That is a massive amount of these everyday products that are currently classified as being “highly vulnerable” to the effects of this trade war.

In recent years, the United States had been relying even more on Chinese imports in the apparel industry. About 48.9 percent of all textiles and apparel imported by the U.S. came from China in 2017. Compare this to China’s importing of American textiles, which only accounts for about 17 percent of that nation’s imports.

With China and the United States both imposing tariffs on cotton, this is what is likely to have the biggest effect on the apparel industry, especially as domestic demands for Cotton continue to rise in China. If Chinese consumers feel as though they have to spend too much to get American cotton, they will likely begin to look elsewhere, and in a period of rapid growth in demand for cotton in China, that means major missed opportunities for American exporters to get in early and scale up their exporting.

And of course, with Chinese apparel becoming more expensive to import and sell here in America, that affects a massive portion of the United States’ retail clothing industry, as prices will be going up on as many as half of the items of clothing some stores are selling.

For more information about the effects of the trade war, contact the experts in cotton mill components in Lubbock, TX at M.B. McKee Company, Inc. today.

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