The $380 billion apparel industry is a quirk. It is one of the world’s biggest consumer markets for clothing but an overwhelming 97 percent of garments retailed here comes from outside the country like China, Bangladesh and Mexico. If Trump makes his election promises a reality, it follows that the fashion industry will be the most affected.
For America, by others
US consumers now rarely buy American made garments. They prefer cheap and reasonable quality fashions made in other countries. President Elect Donald Trump has pledged to impose on China, the biggest supplier of clothes, with huge tariffs. During the second week of January, he threatened to impose a considerable border tax. This levy will punish companies which move jobs out of the country. Trump is helped by Congressional Republicans. The latter have welcomed a proposal termed border adjustment tax. This will favor the domestic garment industry.
Fashion retailers are jittery. They are dependent on imports and have doubts on whether the tariff plan will be successful. There are good reasons for this way of thinking. Overseas workers get paid much less- even less than $500 per month- to churn out joggers and pencil skirts. These then hang on the racks of a number of retailers scattered all over the US. According to Alan Auerbach of UC Berkley, removing the existing tax incentive to locate elsewhere may help. The pro-destination based tax economist said that it will result in higher wages and increased investments. He admitted, however, that this scheme may not work across all industries. This is due to cost differentiation.
Southern California is one place where the advent of imports have hurt the most. This region has the biggest apparel manufacturing plants in the US. About 46,000 workers do the cut, dye and sew jobs. Most of the existing factories are in the bustling fashion district of Los Angeles. The numbers are less than half of what was 10 years ago, and are getting smaller by the day.
Marissa Nuncio, the director of the Garment Worker Center, a workers rights group in Los Angeles. Expressed doubts about the efficacy of the Trump proposals. She said that it is a rare chance that the US garment industry will see a resurgence. The import numbers say it all: about $85 billion price of apparel was imported into the United States in 2015. The importers were big names like Forever 21, Wal-Mart and Macy’s.