The United States Fashion Industry Association (USFIA) President Julie Hughes will provide an update on the key issues and developments in the U.S. trade policy for 2019 and beyond. Due to the tariffs and retail disruptions, it can be difficult for companies to stay ahead in these uncertain times. Join the United States Fashion Industry Association (USFIA) President Julia Hughes for an update on the latest actions for new tariffs and trade retaliation affecting U.S. fashion brands and retailers. Hear the latest on the current Administration’s trade policy and what’s on the horizon from a DC insider, including strategies for fashion brands, retailers, and manufacturers to mitigate the impact on your business.

1. Apparel Textile Sourcing Miami
2019 Seminar Presentations
Presented By:
Trade Policy Today and the Impact
on Sourcing
Julia K. Hughes, President
United States Fashion Industry Association (USFIA)
UNITED STATES
FASHION INDUSTRY ASSOCIATION

2. Trade Wars and Tariffs –
Update on the Washington
Political Scene
Julia K. Hughes, President
United States Fashion Industry Association (USFIA)
APPAREL TEXTILE SOURCING MIAMI
May 28, 2019

3. FASHION
MADE POSSIBLE BY
GLOBAL
TRADE

4. Our Work for the Industry
Communication
Education
Advocacy

6. Trump Administration Trade Agenda

7. Trump Administration Trade Agenda

8. Trump Administration Trade Agenda
WHERE ARE WE TODAY?
• CHINA
• TARIFFS
• USMCA
• MORE ENFORCEMENT
• NEW TRADE TALKS

9. Trump Administration Trade Agenda
2019 Trade Policy Agenda
Inheriting a deeply flawed global
trading system
Making U.S. trade policy work better
for American workers
Pursuing new trade deals and stronger
enforcement to continue rebalancing
America’s trade relationships

10. In two years, President Trump has…
• Withdrawn from the Trans-Pacific Partnership
(TPP)
• Renegotiated U.S.-Korea Free Trade Agreement
• Renegotiated NAFTA (now called USMCA)
• Imposed new 232 penalty tariffs on imports of
steel and aluminum
• Imposed new 301 penalty tariffs on imports from
China
– Targets forced technology transfers, unfair licensing
requirements, and IPR violations

11. Trump Trade Policy
As of May 15th, the U.S. collected more than
$24.5 billion in additional tariffs
• $769 million in Section 201 tariffs.
• $1,729 million in Section 232 aluminum,
and $5,495 million in Section 232 steel
tariffs; and
• $16,588 million in Section 301 tariffs on
goods from China.

12. Trump Trade Policy

13. Trump Trade Policy

14. Trump Trade Policy

15. Trump Administration Trade Agenda
TRADE ACTIONS MOVE QUICKLY
Federal Register notices and hearings remain important
But … major trade decisions are announced on Twitter

18. Impact of the Trade War
Status Today
and What Brands, Retailers and
Manufacturers Can Do

19. Section 301 Today
• Deadlines are getting closer
• 301 hearing starts on June 17. Look for many days of
hearings and testimony from almost every sector of the
economy
• No agreement means higher duties on all imports from
China

20. Section 301 Today
• What next?
• President Trump and President Xi scheduled to meet at
the end of June on sidelines of G-20 meetings in Japan
Expect lots more drama

21. U.S. Section 301 tariff measures on Chinese
products
PwC "Next Steps on China Tariffs”

22. What Fashion Products Are
Already Affected?
• Plastic Boxes and Bags, for packing of goods
• Plastic rainwear valued under $10
• Leather – Handbags and Gloves and Apparel
• Travel Bags and Handbags and Accessories
• Hats and Headgear

23. Fashion Products Not Yet Affected
• What about List 4?
• Chapter 61 – Knit Apparel
• Chapter 62 – Woven Apparel
• Chapter 63 – Home Textiles
• Chapter 64 – Footwear
• Plus wood, plastic, electronics and more

24. Legal Options to
Minimize the Impact
of the 301 Tariffs

25. Strategies for Brands and Retailers
• Sourcing Diversification
• Product Exclusions
• Technical Options
– Classification
– Valuation
– Low-Value Shipments (E-Commerce Direct to Consumer)

26. Rank Country Million SME % Share % Growth Million $ % Share % Growth
1 China 11,670.304 41.9 2.7 27,371.070 33.0 1.34
2 Vietnam 3,727.325 13.3 3.5 12,219.092 14.7 5.7
3 Bangladesh 1,934.655 6.95 4.5 5,401.044 6.5 6.6
4 Indonesia 1,173.698 4.2 -4.3 4,475.341 5.4 -1.8
5 India 1,085.562 3.9 2.0 3,805.592 4.5 3.4
6 Cambodia 1,008.232 3.6 8.5 2,408.265 2.9 12.1
7 Honduras 991.253 3.5 -3.6 2,568.892 3.1 4.3
8 Mexico 850.039 3.0 1.7 3,362.634 4.0 -5.7
2018 Top Apparel Suppliers
Sourcing Diversification

27. Ranks
• Ethiopia – up 89% 32
• Ghana – up 42% 43
• Myanmar – up 33% 27
• Egypt – up 19% 19
• Madagascar – up 17% 28
• Kenya – up 15% 20
• Thailand – up 13% 15
• Haiti – up 13% 14
Sourcing Trends for 2018
Fastest Growing Apparel Suppliers in 2018

28. Sourcing Diversification
OPPORTUNITIES FOR WESTERN HEMISPHERE
APPAREL
–DUTY-FREE
–SPEED TO MARKET
–COMPLIANCE

29. Sourcing Diversification
U.S. Apparel Imports for YE March 2019
Based on OTEXA Statistics
Value in Million U.S. Dollars
Country Total % 807/A % TPL % Duty Free % Full Duty
World 86,688.03
NAFTA Region 4,262.92 5.50 13.58 88.60 11.40
Canada 661.50 0.00 21.56 96.96 3.04
Mexico 3,601.43 6.51 3.96 87.07 12.93
CAFTA Region 8,541.53 - - 78.28 21.72
Guatemala 1,468.65 - - 77.40 22.60
El Salvador 1,896.32 - - 93.13 6.87
Honduras 2,707.09 - - 79.30 20.70
Nicaragua 1,655.06 - - 57.30 42.70
Costa Rica 29.38 - - 52.70 47.30
Dominican Republic 785.04 - - 85.69 14.31
Colombia 228.06 - - 89.96 10.04
Peru 662.08 0.01 - 96.74 3.26
Haiti 947.52 - - 96.46 3.54

30. How Execs Rate Sourcing Options
Strength
Average
Weakness
Most balanced:
Vietnam
China
Mexico
CAFTA-DR

31. Ideas to Avoid the 301 Tariffs
• Classification
Check the classification with the experts
Change the tariff classification
There may be an opportunity to redesign your product
Re-engineer with different fabrics
Re-engineer with different style
This only works so long as most apparel is not affected by the
tariffs

32. Ideas to Avoid the 301 Tariffs
• New Country of Origin
Keep sourcing and compliance and logistics experts in
your company involved in every decision to move to a
new factory
Need to guarantee that new sourcing options meet legal
requirements
Know who you are doing business with and know their
capabilities and capacity

33. Ideas to Avoid the 301 Tariffs
• Product Exclusions
• Hard to Get!
Only 3.5% of Product Exclusion approval rate for
requests exclude specific steel imports
Most successful company mounted a PR campaign

34. Ideas to Reduce 301 Tariffs
• Valuation
Talk to your customs attorney first
Ideas to reduce the value of the product:
– First Sale
– Freight Charges
– Buying Agent

35. Ideas to Reduce 301 Tariffs
• Ship direct to the consumer
• Talk to your customs attorney first
– Use Section 321, called De Minimus, that allows most e-
commerce to be free of duty and taxes.
– One shipment to one person each day
– Must be valued under $800

36. What do fashion brands and
retailers think?
USFIA’s 2018 Fashion Industry Benchmarking Study says…

37. Executives’ Top Business Concerns, Ranked
1. Protectionist trade policy agenda in the United
States
2. Market competition in the United States from e-
commerce
3. Increasing production or sourcing cost
4. Market competition in the United States from brick-
and-mortar stores or conventional peer competitors
5. Investing in and updating technology
6. Managing supply chain risks
7. Finding a new sourcing base other than China

39. What’s on the horizon?
• Major threat – 10% or 25% tariffs on ALL imports from China
• More enforcement actions by U.S. Customs and Border Protection,
including impact of new leadership and staff shifts to immigration
• Congressional consideration of the new NAFTA (USMCA)
• Worry about global trade war – auto tariffs on the agenda in addition
to steel and aluminum
• Trump Administration has started negotiations for bilateral trade
agreement with Japan and in final discussions with the European
Union. UK on hold until BREXIT. On the horizon: Africa (Kenya is top
option), Philippines, Brazil and Switzerland.

40. What’s on the horizon?
Key issues for textile and apparel companies
– Global uncertainty from tariffs to BREXIT
– Industry upheaval from corporate bankruptcies and
restructuring and store closures
– Shifts in consumer demand affecting apparel and footwear

41. How to Deal with Today’s Uncertainty?

42. Thank you!
For additional information:
Email: info@usfashionindustry.com
Twitter: @usfashion
Phone: +1-202-419-0444

43. RESOURCES
See More Seminars from the
ATS Miami 2019 Show:
ApparelTextileSourcing.com/Miami/
Sessions/
Julia K. Hughes, President
United States Fashion Industry Association
(USFIA)
www.usfashionindustry.com
UNITED STATES
FASHION INDUSTRY
ASSOCIATION

44. First Link In Your Supply Chain
Sourcing | Education | Networking
www.ApparelTextileSourcing.com