California Apparel News

This has been a year of uncertainty for the trade world.

First, the North American Free Trade Agreement was under fire, and then a trade dispute erupted between the United States and China.

Both trade issues have kept manufacturers in all fields—from apparel and accessories to cars and washing machines—reading the tea leaves to try to figure out what the future will bring.

And people are still wondering. President Trump and the heads of state of Mexico and Canada recently signed the renegotiated NAFTA free-trade agreement among the three countries.

The trade pact, which took more than a year to renegotiate, is now called the U.S.-Mexico-Canada Agreement, or USMCA. Even though it was signed on Nov. 30, it is still in a precarious situation with President Trump threatening to pull out of the accord in six months to put pressure on Congress to approve the trade deal next year.

Fortunately for apparel makers, little has changed under the new trade pact. Many of the old regulations were carried over with a yarn-forward provision still in force, which is a boon to U.S. cotton producers, who export a good deal of their cotton to Mexico to make fabric.

But trade-preference levels allowing for the use of non-regional fabric will be more restrictive.

Also, there were a number of upgrades to environmental and labor regulations regarding Mexico, and additional intellectual-property protections were put in place.

On the Chinese trade front, the Trump administration this year slapped additional 10 percent tariffs on $200 billion of goods being imported from China into the United States. Those tariffs included taxes on textiles and handbags, but apparel was excluded.

However, the Trump administration threatened to raise those 10 percent tariffs to 25 percent on Jan. 1 and add another $267 billion in Chinese products to the tariff list. That would mean just about everything being imported from China would see a hefty price increase.

At the recent G20 summit in Argentina, members from 19 countries and the European Union met to discuss the economy and international issues. President Trump dined with Chinese President Xi Jinping, and the two agreed to a 90-day truce on the trade war and a delay in the U.S. raising tariffs. But Trump’s interpretation of the dinner turned out to be a lot of hype, and it is unclear if China is willing to make any concessions on trade.