Clothing Suppliers Want Free Trade, Not Protectionism

A recent study shows that anti-trade rhetoric in the nation’s capital is worrying U.S. executives who represent clothing brands, retailers, importers, and wholesalers.

This rhetoric should concern the rest of us, too.

According to this U.S. Fashion Industry Association study, the “protectionist trade policy agenda in the United States” has emerged as the industry’s single biggest business challenge.

This is a major increase from last year, when protectionism—the attempt to protect specific domestic industries from foreign competition by taxing or otherwise restricting imports bought by other Americans—was only the 10th-highest business challenge.

Concerns about trade restrictions are both serious and widespread: 69 percent of respondents in the study ranked the protectionist trade policy agenda in their top five business challenges, well above the next highest-ranked concern.

Furthermore, the spike in concern about protectionism coincides with a sharp drop in optimism about the fashion industry overall.

The percentage of respondents who are “optimistic” or “somewhat optimistic” about the five-year outlook for the industry dropped 21.3 percentage points over the last year, from 92.3 percent in 2016 to 71 percent in 2017.

It may be tempting to think of the fashion industry as being far removed from the concerns of ordinary Americans, but U.S. families actually pay billions of dollars extra each year because of regressive taxes on imported shoes and clothing.

In 2016, the average U.S. tax on imports of these goods amounted to 13.1 percent.

Moreover, low-income Americans are the greatest victims of these taxes. Because lower-income households spend a higher share of their income on tradeable goods, including apparel, they also face a greater burden from any tariffs on those goods.

Tariffs therefore act as a regressive tax—a tax that falls hardest on the people who can least afford it.

That’s one good reason the government should follow the advice of the 93 percent of industry leaders who want to reduce taxes on imported clothing and accessories.

More free trade, not less, is what America needs in order to prosper.