Trump told the world during his inauguration speech on 20 January: “The Golden Age of America begins right now.”
He added: “During every single day of the Trump Administration I will very simply put America first. Our sovereignty will be reclaimed and our safety will be restored.”
Trump inauguration speech confirms impact for apparel sector
Ahead of Trump’s inauguration members of the US apparel, textile and footwear sectors predicted Trump’s most likely proposals and how they would potentially impact the wider apparel industry.
The predictions included tariffs, tax breaks and policies that would have a wider effect on the economic and geopolitical landscape.
Trump’s speech suggests these predictions were correct.
He spoke about directing members of his cabinet to defeat “what was record inflation and rapidly bring down costs and prices”.
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By GlobalDataHe claimed the inflation crisis was caused by massive overspending and escalating energy prices and that is why he is declaring “a national energy emergency”.
Trump also vowed to make “America a manufacturing nation once again” and said he will “immediately begin the overhaul of our trade system to protect American workers and families. Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.”
For this endeavour, he plans to establish the “External Revenue Service,” which will collect all tariffs, duties and revenues.
He stated: “It will be massive amounts of money pouring into our treasury coming from foreign sources. The American Dream will soon be back and thriving like never before.”
The Panama Canal also received a mention following his statements prior to his inauguration about its high fees and potentially using military force to retake its control.
He suggested the Panama Canal had “foolishly” been given to the country of Panama and reiterated his previous comments that “American ships are being severely overcharged and not treated fairly in any way, shape or form”.
He continued: “And that includes the United States Navy and above all, China is operating the Panama Canal and we didn’t give it to China, we gave it to Panama and we’re taking it back.”
Trump’s America First executive order and what it means for apparel
Trump vowed to sign a “series of historic executive orders” on his first day and said: “With these actions, we will begin the complete restoration of America and the revolution of common sense.” He explained his first task would be to declare a “national emergency” at the southern border.
One of his initial executive orders was the America First Trade Policy.
It states that in 2017 his administration pursued trade and economic policies that put America first and suggested it led to “stable supply chains, massive economic growth, historically low inflation…” and a “path toward eliminating destructive trade deficits”.
As part of this order, the Secretary of the Treasury, in consultation with the Secretary of Commerce and the Secretary of Homeland Security, will investigate the feasibility of establishing an External Revenue Service (ERS). This service will focus on designing, constructing, and implementing a system to collect tariffs, duties, and other revenues related to foreign trade.
Bob Antoshak, partner at Gherzi Textil says making America a manufacturing nation again “is a top-tier soundbite.”
“Many Americans wouldn’t have a problem agreeing with his sentiment, although how that could be accomplished and defining the benefits are not spelled out. Does domestic manufacturing simply happen because high tariffs are imposed?”
He wonders the same for many of Trump’s promises; that is, how they are realistically achievable.
“Trump’s speech failed to reach the oratorical highs of many other presidents in part because it sounded more like one of his campaign speeches — long on grievances and soundbites but short on vision. Because of this, many of his pronouncements should continue to be taken with a grain of salt. For instance, taking back the Panama Canal provides him with a soundbite and fueling a media debate, but it’s unclear how he would do it. Negotiation? A police action? Send in the 101st Airborne Division to take it by force? To speculate is non-productive at this point.
“Establishing an External Revenue Service (ERS) is more of the same. Customs already collects duties. An ERS is a soundbite, nothing more, until identifying that its mission is somehow different from Customs. Moreover, it could require an act of Congress to establish as it would be a revenue collector for the government, which falls under the purview of Congress.”
Delay on US Trump apparel tariffs until 1 April 2025
GlobalData retail analyst Neil Saunders tells Just Style there is a “clear sense that his administration wants a much tighter trade policy that prioritises buying from US manufacturers.”
He suggests apparel retailers and brands will need to work around the disruption of tariffs, although he adds: “It seems these will not be put in place immediately”.
Dr Sheng Lu, professor of apparel studies at the University of Delaware agrees stating that a “temporary relief for US fashion companies” is that they “won’t face new Trump tariffs immediately”.
However, he adds that the new Trump Administration will evaluate every possible option and develop a plan on 1 April 2025.
Dr Lu points out that Trump’s America First Trade Policy aligns with Trump’s presidential campaign promises and in the trade area specifically, Trump’s aim is to: “Cut trade deficits, collect more tariff revenues, and take additional measures to address China’s concerning trading practices.”
Dr Lu shares the tariffs plan options include but are not limited to “imposing a global supplemental tariff, launching new investigations authorised by US trade laws such as Section 301, Section 232, Section 337, and the International Emergency Economic Powers Act, and even revoking China’s Permanent Normal Trade Relations (PNTR) status.”
Uncertainty over US trade agreements, trade preference schemes
The new Trump administration will explore new bilateral or sector-specific trade agreements and renegotiate existing ones deemed necessary on the basis of “reciprocity” and “mutually advantageous concessions.”
For this reason, Dr Lu suggests the US apparel sector, whose business model relies on imports, could not only face a heavier tariff burden in the coming months but also find it more challenging to seek policy support during Trump’s second term.
He cautions that the prospect of renewing several trade preference programmes, including the Generalized System of Preferences (GSP), the African Growth and Opportunity Act (AGOA), and Haiti’s HELP/HOPE program could also become more uncertain as these programmes are “primarily about imports as opposed to promoting US exports”.
Potential for greater demand for apparel in the US
Saunders can see “crumbs of comfort” coming from Trump’s attempts to reduce energy costs and to boost the wealth of Americans.
He asserts this “should push up domestic demand for apparel”.
He adds: “While President Trump will sweep into office like a whirlwind, many of these policies will come through over time and give apparel firms a chance to adjust – but they will need to stay on their toes as changes are coming.”
