It’s 6 November and Donald Trump has been declared the winner of the US election, making him the 47th president of the country as the footwear and apparel sectors brace for change under the new leader.
Trump has surpassed the 270 electoral votes he needed to win and the time of going to press he had 279, while Harris had 223.
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In his public address, he promised to fight for the future of US citizens, adding it was “very nice” to win the popular vote.
But for the US fashion and retail industries, Trump at the helm could prove problematic.
GlobalData senior apparel analyst Louise Deglise-Favre tells Just Style exclusively: “Trump likely has the potential to exacerbate tensions with China, which could lead to supply chain disruption and cost increases for globally integrated fashion businesses. However, Trump’s overall liberalism might also help break down barriers to trading within the United States, which would benefit local players.”
In fact, Trump has floated a wide range of proposals to impose new tariffs on imports into the United States. Two specific proposals call for greater scrutiny: A) a universal tariff of 10% or even 20% on all imports into the United States from all countries, and B) an additional tariff of 60% or even 100% on all imports from China on top of existing tariffs.
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By GlobalDataEqually, he noted they did little to reduce imports from major manufacturing countries like China.
However, Trump’s proposed extension of the 2017 tax cuts, which mainly benefit corporations and higher-income individuals, would likely reduce operating costs for large apparel and footwear companies, enabling reinvestment in production and expansion, argues Rob Antoshak of Gherzi Textil Organisation.
But again he comes back to concerns over trade tariffs whose impact, specifically on the cost to consumers, may outweigh any benefits of reinvigorated US production.
“These tariffs could force apparel companies to shift production to other countries or bring manufacturing back to the US, potentially raising production costs,” Antoshak explains. “Apparel companies would need to balance these higher costs against market demand elasticity, which could lead to reduced profits or higher consumer prices.”
What Trump tariffs mean for US apparel and footwear
According to the National Retail Federation, such tariffs would significantly impact the costs of a wide range of consumer products sold in the United States.
In a research piece prepared by Trade Partnership Worldwide, the NRF says an increase in tariffs from Trump’s proposal would be “dramatic”.
Specifically to apparel, under scenario A, consumers could see prices surge by 12.5% while in footwear they would rise by 18.1%. This would result in a loss of consumer spending power of $13.9bn and $6.4bn respectively.
Under scenario B, consumers could see apparel prices increase by 20.6% and footwear prices increase by 28.8%. It would also result in a loss of consumer spending power of $24bn and $10.7bn respectively.
China has always been the target of Trump’s ire so it’s unsurprising when it comes to implementing tariffs, China is at the top of the list.
The report examines the scenario of shifting import sourcing, but even after changes in sourcing, the proposed tariffs would still have “a substantially negative impact on American consumers purchasing the targeted products.”
“In brief, we find that the additional costs associated with these proposed tariffs would be too large for US retailers to absorb and, when passed on to consumers, would result in prices higher than many consumers would be willing or able to pay. Some consumers would stop purchasing the items and demand would fall,” reads the report.
While others might continue to buy at higher prices, it would mean they’d be paying $13.9bn to $24bn more for apparel and $6.4bn to $10.7bn more for footwear.
It would come at the expense of purchases of other goods and services and represent lost household spending power.
Apparel
Trump’s proposal would add new tariffs on top of already high tariffs faced by imports from all countries. Nearly all of those apparel items currently face even higher duties under Section 301 tariffs when imported from China. Currently, US apparel tariffs average 14.7% (reflective of trade under free trade agreements as well as Section 301 tariffs on imports from China). The proposed tariffs would increase that average rate to 37.5% (Scenario A) to 56.0% (Scenario B).
Under its analysis the NRF says prices of apparel would increase by 12.5% to 20.6%, and consumers would cut back spending on apparel by 22% to 33%.
“These higher prices and loss of spending power would hit low-income families especially hard. Low-income households spend three times as much of their after-tax income on apparel as do high-income households.
The prices of infant pyjamas, currently $15, would increase to $17 to $18; a $50 woman’s cotton sweater would cost $56 to $60; an $80 pair of men’s jeans would cost $90 to $96 and a $100 coat would cost $112 to $121.
“So, while the increases in dollar terms may seem inconsequential, they are not for lower-income families already struggling to make ends meet,” reads the report.
“Notably, a recent poll found that while 62% of Americans are sympathetic to a tariff on imported blue jeans meant to boost production and employment in the domestic blue jean industry, that support evaporates if the tariffs make the jeans $10 to $25 more expensive – which our analysis suggests would be the case.”
What would it mean for US apparel manufacturers?
US apparel manufacturers stand to benefit from the tariffs but at a higher cost to families.
Apparel imports would decline, particularly from China and US production would increase. However, while US apparel manufacturers would see revenues grow by about $712m to $1.2bn, consumers would pay $20 for every additional dollar earned by US apparel producers. Even after accounting for domestic manufacturing gains and new tariff revenue, the result is a net $16bn to $18bn loss for the US economy, with the burden carried by US consumers.
Footwear
Currently, US footwear tariffs average 11.9% (reflective of trade under free trade agreements as well as Section 301 tariffs on imports from China). The proposed tariffs would increase that average rate to 44.2% (Scenario A) to 69.1% (Scenario B).
Prices of footwear would increase by 18% to 29%. If these price increases are fully passed through to retail prices, US consumers would lose spending power and be forced to reduce overall purchases by 30% to 41%.
- The price of a $90 pair of athletic shoes would jump to between $106 and $116
- A $48 pair of women’s slippers would cost between $57 and $62
- A $30 pair of girls’ “Mary Jane” shoes would cost between $35 and $39.
The impact of this extra cost to American families would range from $6bn to $11bn annually, reads the report.
What would it mean for US footwear makers?
Again, as footwear imports decline, particularly from China, US production is likely to increase.
However, while US footwear manufacturers would see revenues grow by about $203m to $329m, consumers pay $32 for every additional dollar earned by US footwear producers.
After accounting for domestic manufacturing gains and new tariff revenue, the result is a net $4bn to 8bn loss for the US economy with the burden carried by US consumers.
