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HOW DOES DONALD TRUMP'S RE-ELECTION AS U.S. PRESIDENT IMPACT THE FASHION INDUSTRY?
HEIDI TRUONG
- Fashion Blogger -
The U.S. presidential election on November 5 confirmed Donald Trump's Republican victory over Democratic candidate Kamala Harris. His return as the 47th President carries significant implications for the global fashion industry, especially for smaller garment-exporting nations and the broader supply chain.
The U.S. presidential election on November 5 confirmed Donald Trump's Republican victory over Democratic candidate Kamala Harris. His return as the 47th President carries significant implications for the global fashion industry, especially for smaller garment-exporting nations and the broader supply chain.
Donald Trump has successfully been re-elected, preparing for a new term as President of the United States from 2025 to 2029. Before his return to the White House on January 20, 2025, companies are already gearing up with strategies to address the potential increase in import tariffs that the new President is expected to propose. His policies are anticipated to significantly impact Vietnamese companies exporting to the North American market.
PRESIDENT-ELECT DONALD TRUMP IS EXPECTED TO IMPOSE TARIFFS ON ALL IMPORTED GOODS INTO THE UNITED STATES FOLLOWING HIS RE-ELECTION
Import tariffs have been a cornerstone of government policies for centuries, serving dual purposes: boosting government revenue and acting as a protective shield for key industries against foreign competition. Over time, tariffs have evolved into a strategic lever, shaping economies and influencing global trade dynamics.
Donald Trump's Take on Tariffs
Former President Donald Trump is a staunch advocate of tariffs, viewing them as a tool to rebuild American jobs and industries. During his first term (2017–2021), Trump imposed tariffs of up to 25% on a range of Chinese imports, including washing machines, solar panels, steel, and aluminum. These policies aimed to reduce dependency on foreign manufacturing and encourage domestic production. Notably, the Biden administration retained many of these measures, highlighting their significance in U.S. trade policy.
The Next Chapter: Wider Tariff Proposals
As part of his re-election campaign, Trump has taken a bold stance on expanding tariffs. He proposed import duties ranging from 10% to 20% on all goods entering the U.S., with a staggering minimum of 60% on products originating from China. This approach signals a significant escalation in trade protectionism, aiming to further bolster American industries while challenging global supply chains.
If implemented, these sweeping changes could redefine global trade relationships, particularly affecting countries reliant on exporting to the U.S. For industries like fashion, electronics, and raw materials, the potential implications are immense, underscoring the need for businesses to adapt swiftly to a changing economic landscape.
It is still unclear whether Donald Trump will implement the proposed policy mentioned above. If he does, the Trump administration would still need nearly a year to finalize the new legislation, giving companies time to prepare.
HOW WILL TARIFFS IMPACT VIETNAM’S FASHION EXPORTS?
Every policy brings both positive and negative effects.
On the positive side, many companies may establish additional manufacturing facilities in Vietnam or increase orders from Vietnamese factories, creating more jobs for local workers.
Currently, Vietnam ranks third among the leading countries in global textile and garment production, accounting for approximately 6.4% of the world’s total output. Vietnamese workers are renowned for their craftsmanship and diligence, excelling in producing intricate products requiring skill, such as embroidery, embellishments, and complex tailoring.
If the Trump administration imposes heavy tariffs on Chinese apparel, it could create an opportunity for "Made in Vietnam" products to expand their export market share in the United States.
On the negative side, many economists predict that increasing tariffs will drive up prices on goods, leading U.S. consumers to cut back on spending, particularly in the apparel sector. Nearly 98% of all clothing products in the U.S. are imported. As a result, any disruption to the supply chain can easily cause costs to surge.
Jonathan Gold, Vice President for Supply Chain and Customs Policy at the National Retail Federation (NRF), stated, “Tariffs will lead to higher costs for consumers.” According to NRF projections, if the Trump administration enacts the proposed tariffs, fashion items in the U.S. could see price increases ranging from 12.5% to 20.6%.
The Impact of Tariffs on Global Trade and Fashion Economics
The re-election of Donald Trump and his proposed tariff policies have left global businesses, particularly in the fashion sector, bracing for significant challenges. Companies, economists, and policymakers are all weighing the potential ripple effects of these measures.
Tariffs and Consumer Pricing
Autozone CEO Philip Daniele has already indicated the inevitability of passing tariff costs directly onto consumers. "If tariffs are imposed, we will shift the cost into product prices," he stated, highlighting the preemptive nature of price adjustments based on anticipated tariff levels. This strategy underscores a larger industry trend where companies, from retail to manufacturing, prepare to insulate themselves from financial burdens by transferring them to consumers.
For the fashion industry, where nearly 98% of clothing in the U.S. is imported, this approach could lead to price surges. The National Retail Federation (NRF) predicts that tariffs under the proposed Trump policies could increase fashion prices by 12.5% to 20.6%, creating a significant impact on consumer spending habits. Higher prices might deter shoppers, forcing them to reconsider their purchases, especially in an economy already grappling with inflationary pressures.
THE THREAT OF INFLATION AND SUPPLY CHAIN STRAIN
Treasury Secretary Janet Yellen has warned that such broad tariff measures could reignite inflation, destabilizing an economy that has only recently begun to recover from previous disruptions. Rising costs could lead to reduced export volumes as demand wanes, and concerns about declining quality have surfaced.
U.S. retailers, facing higher costs, might squeeze international manufacturers by demanding lower prices. This pressure could force production facilities in exporting countries to implement cost-cutting measures, such as:
- Layoffs: Reducing workforce numbers to manage operational costs.
- Wage Reductions: Cutting salaries or freezing raises to offset financial burdens.
- Quality Compromises: Using cheaper materials or scaling back craftsmanship to meet reduced budgets.
Such changes would not only affect product quality but also create a domino effect, impacting workers’ livelihoods and the economic stability of exporting nations.
Fashion Industry on Edge
For the global fashion industry, these developments are particularly concerning. Companies that rely heavily on U.S. markets are closely watching Trump’s next moves. Many fear that tariffs will disrupt established supply chains and force businesses to reevaluate their sourcing strategies. Exporting countries like Vietnam, Bangladesh, and others heavily reliant on garment production could face significant challenges, from losing contracts to dealing with domestic workforce impacts.
At the same time, some fashion companies are exploring alternatives to mitigate these risks. Diversifying production locations, renegotiating trade terms, and investing in domestic manufacturing are potential strategies under consideration. However, these adjustments take time and resources, leaving the industry in a precarious position as it awaits clarity on policy implementation.
Conclusion
The proposed tariffs under Trump’s administration stand to reshape global trade dynamics. While some businesses may find opportunities to adapt, the overall uncertainty has created a climate of caution and anxiety, particularly in industries like fashion that are deeply intertwined with international trade. As the world watches Trump’s next steps, the future of global supply chains and the fashion economy hangs in the balance.
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