Struggles For ‘Made In America’

“We want products made by our workers in our factories stamped with those four magnificent words — made in the USA,” Trump said. Many American clothing firms have welcomed this proposal with open arms; they believe that the new administration’s view will finally clear the foggy future of American manufacturing and return it to its glorious past. However, the future the USA fashion industry seems far more uncertain when analysing the potential consequences that this shift may entail for the brand “Made in the USA”.

On the one hand, there is the Trump version. The apparel manufacturing industry in the USA has experienced a decline in the workforce from 940,000 jobs in 1990 to 135,000 in 2015. This is thanks to, amongst other things, the low tariffs set by trade deals such as the Trans-Pacific Partnership. Therefore, he will abandon those trade deals (already done in the case of the TPP) and will raise tariffs for the garments imported from cheap-labour countries in order to make USA made clothing more cost-competitive, shifting their demand upwards.

“Our goal as a nation must be to rely less on imports and more on products made here in the USA,” Trump said.

On the other hand, despite the proposal making sense in theory, the reality is much more complex.

Firstly, skilled workers in the manufacturing industry have already dramatically decreased. If we add this to the fact that the Department of Labour estimated that immigrant labour made up about 75% of the apparel industry workforce in 2005, Trump’s vision towards immigrants may not only damage the international opinion about him but also seems to collide with his desire of strengthening the industry.

Secondly, the rise in tariffs will also lead to higher production costs as the imported raw materials will become more expensive and, consequently, higher prices should be set in order to keep the profit margins. Just in case this wasn’t enough, it is worth remembering that American wages are much higher than wages in China, the Philippines or Mexico, which mean that, as a starting point, the “Made in the USA” garments are going to be relatively more expensive.

One may think that if tariffs are set, all garments made worldwide will increase their selling price in the USA too, but what is going to happen with the clothes from the European fast-fashion brands? Will they be charged higher tariffs too while the government is trying to establish closer economic links with their origin countries? H&M or Primark t-shirts can be as cheap as $3; can a “Made in the USA” product compete against them even with a higher tariff set? If customers want better quality clothes, what will prevent them from buying garments from a worldwide known brand instead of a not so famous American brand? Given these obstacles, American brands will likely choose to target the high-end segment by offering high-quality garments with a striking design, but they will still face the competition from the increasingly successful fashion designers coming from Europe.

The belief that the “Made in the USA” proposal will be enough to tip the balance towards buying more expensive locally manufactured clothes, therefore, lacks evidence. Only the emergence of a widespread national sentiment that overcomes the price barrier and diminishes the appeal for foreign garments would increase the demand. Nevertheless, American society is currently divided and most importantly, the brand “Made in the USA” has been unavoidably linked with Trump and his idea of “Make America Great Again”, which constitutes one of the main obstacles that the whole industry will have to face.

Years of tireless campaigns made by American brands to promote the nationally produced garments have been clouded by Trump’s rise and such associations could not only lead to an internal division, but also a decrease in the external demand. People all around the globe may start to be unwilling to buy a garment whose origin is so closely linked with Donald Trump, therefore the administration should begin to work in removing such an association. For now, “Made in the USA’s” future is uncertain.

By | 2018-04-08T16:24:35+00:00 March 22nd, 2017|Industry News|0 Comments