USFIA - United States Fashion Industry Association

29 Haitian garment factories exported 300 million clothing articles to the U.S. last year

Ed Gresser, Vice President and Director for Trade and Global Markets at the Progressive Policy Institute, published his trade fact of the week, looking at “a last useful job for Congress: extend the U.S.’ three small ‘trade preference’ programs — acronyms “GSP,” “AGOA,” and HOPE/HELP” — for lower-income countries.” This piece highlights the importance of the Haitian garment industry for the country’s GDP and how important the Haiti HOPE/HELP program is to these factories in the face of Haiti’s persistent political crisis over the past two years.

The factories persist because of a special trade program — HOPE/HELP, suitably upbeat acronyms for “Haitian Hemispheric Opportunity through Partnership Encouragement”, and “Haitian Economic Lift Program” — created 20 years ago. This waives the pricy 16.5% tariff a cotton T-shirt normally gets, and has unusually simple and easy rules for the sorts of fabric factories can use to make the shirt. Last authorized in 2015, HOPE/HELP is scheduled to end in September next year. So each week the uncertainty about its future prospects grows, and the prospect of its end appears already to be pulling business away. As the ILO’s staffers were writing up their report, one of their [29] factories had shut, and the other two were temporarily closed. This week, only 13 factories appear to be open and producing. So the already substantial worries facing the seamstresses and their employers are growing rapidly more intense.

Now back to Congress, in this session’s last days. Haiti relies more heavily than any other country in the world on American ‘trade preference’ support. Haiti’s is an exceptional case in which loss of trade preference could spark a national economic crisis as well as well as harm to the workers. But an exceptional case, HOPE/HELP isn’t alone. The 24-year-old benefit for Africa, the “African Growth and Opportunity Act” — frequently termed the “cornerstone” of U.S.-African economic relations — is also set to expire next year, and the broader “Generalized System of Preferences” has been in a sort of legal limbo since 2020, with renewal serially frustrated by intense arguments over what we see as relatively minor differences in the wording of eligibility criteria, and then by ‘hostage-taking’ on unrelated topics. Putting off renewal until next year is full of risk: a new Congress with new members unfamiliar with the programs, along with typically slow agency nominations, both make timely renewal hard to imagine and outright lapse fully possible.

Analysis of Global Apparel Import Tariff Rates

President Trump promises he will announce reciprocal tariffs on April 2nd. In advance, we share this recent analysis from Dr. Sheng Lu, Professor in the University of Delaware’s Department of Fashion and Apparel Studies:

Apparel Import Tariff Rates around the World (Updated March 2025)

Apparel products are often subject to high tariffs for various reasons. In developed countries such as the United States, apparel has long been considered an “import-sensitive” sector, with relatively high tariff rates imposed primarily to “protect” specific domestic interest groups with political influences.

However, as importers, not exporters, pay the tariffs, heavy import duties have been a significant concern for US fashion companies for decades. According to data from the US International Trade Commission (USITC), in 2024, apparel (HS chapters 61 and 62) accounted for about 2.5 percent of total US imports but contributed approximately 15.6 percent of total tariff duties. Likewise, US fashion companies paid $11.9 billion in tariffs on apparel imports in 2024, an increase from $11.6 billion in 2023. The average applied tariff rate for apparel items reached 14.6% in 2024, a notable increase from 13.7% before the imposition of Section 301 tariffs on Chinese products. Additionally, due to retail markups, every $1 in tariffs could result in a $1.50 to $2 increase in the final retail price.

Meanwhile, developing countries, especially those least developed, also often impose high tariffs on apparel—either to protect their nascent domestic industries from import competition or to generate government revenues. For example, in Africa, the apparel import tariff rate commonly exceeds 35% as of 2023 (the latest data available).

In February 2025, President Trump announced the imposition of a so-called “reciprocal tariff,” aiming to “match” the tariff rates that other countries impose on US exports, thereby promoting “fairer trade practices.” However, the details of the “reciprocal tariff” idea remain highly uncertain.

In theory, if strict “tariff matching” is required on a product-by-product basis, US apparel imports from most leading sourcing destinations—particularly those in Asia without a free trade agreement with the US–would face a significant increase in tariffs. Similarly, beneficiary countries under the African Growth and Opportunity Act (AGOA) could face a similar issue, as AGOA is a trade preference program that does not provide duty-free market access for US products in Africa. If apparel exports from AGOA-member countries to the US were subjected to the same 35%+ tariff rates that US products currently face in their markets, it would be a devastating scenario.

CAP: Trump is Sending the Economy in the Wrong Direction

The Center for American Progress (CAP) released an article earlier this month arguing that the steep tariffs on trading partners, federal agency layoffs, and frozen Congressional appropriations are set to send the U.S. economy into “a period of slower growth and higher inflation.” After only two months of the Trump Administration, there are many concerning economic signals – a 161.9% rise in the Economic Policy Uncertainty Index, a 12.6% drop in U.S. Consumer Confidence from the Conference Board, the Atlanta Fed’s GDNow forecast of a projected economic contraction, a softening job market, and talk of rising prices and inflation. CAP also worries that Administration policies are set to remove social safety net programs that “are designed to give Americans stability by providing health coverage and food assistance, including during economic downturns.”

The report concludes:

To reverse these concerning economic trends, President Trump and Elon Musk’s DOGE would need to cease all haphazard, harmful, and unlawful cuts to government employment and programs. Congress should heed the signals of economic volatility by protecting the social safety net rather than gutting it to fund tax cuts for the richest Americans.

Cotton Campaign Releases New Report on Forced Labor in the 2024 Turkmenistan Cotton Harvest

This week the Cotton Campaign released a report on the use of forced labor to harvest Turkmenistan Cotton. The Cotton Campaign calls on the Turkmenistan government to “expand the preliminary measures it took in the 2024 harvest to reduce forced labor through reforms that address root causes, empower workers and farmers, and allow independent monitoring and reporting.” They also warn that global supply chains may be at risk of using Turkmenistan cotton harvested with forced labor.

"Turkmenistan Cotton: State-Imposed Forced Labor In The 2024 Harvest And Links To Global Supply Chains" shows that despite some initial steps to address forced labor, such as not mobilizing doctors and teachers in some workplaces and increasing the picking rates to incentivise voluntary picking, state-imposed forced labor remained widespread and systematic. … The report launched today also exposes government interference with ILO monitoring of the 2024 cotton harvest and retaliatory action against the director of Turkmen.News. …

The global apparel and home textiles industry is, knowingly or not, benefiting from the forced labor of state employees and exploitation of farmers in Turkmenistan. The report launched today shows that Türkiye, in particular, is a manufacturing hub of textiles using cotton from Turkmenistan. In addition to Türkiye, brands and retailers are at risk of sourcing Turkmen cotton through suppliers in other countries, including Pakistan, but also European hubs for textile production such as Italy, Poland, or Portugal. In Turkmenistan, forced labor in the harvest is predicated on a top-down system of control whereby regional governors order state institutions to mobilize workers to the cotton fields.

CRS Publishes Two De Minimis Reports

With de minimis in the news, the Congressional Research Service published two new reports on Section 321.

The first report is on Imports and the Section 321 (De Minimis) Exemption: Origins, Evolution, and Use. The report discusses why Congress enacted Section 321 in 1938, its policy expansion in the 1990s to “recast Section 321 as a tool of trade facilitation” and increased use in international negotiations, and emerging concerns and legislative proposals aimed at addressing the current de minimis framework.

Since the Entry Type 86 Test and the Section 321 Data Pilot were initiated, an increasing percentage of entries claiming the de minimis exemption have used the programs (Table 5). In 2020, 29% of de minimis entries entered using the Entry Type 86 Test and the Section 321 Data Pilot. By 2023, approximately 79% of de minimis entries had entered the United States under the Entry Type 86 Test and the Section 321 Data Pilot providing additional data, including HTSUS codes on de minimis entries.

As always, the CRS report concludes with considerations for Congress. It notes that Congress does not currently authorize the President to adjust the de minimis threshold to account for inflation and highlights that it is difficult to estimate the potential impact of eliminating Section 321 due to the wide variety of industries and countries involved, but cite a 2024 economic study that concluded eliminating de minimis “would reduce aggregate welfare by $10.9-$13.0 billion and disproportionately hurt lower-income and minority consumers.”

The second publication is an In Focus Report on China’s E-Commerce Exports and U.S. De Minimis Policies. The report provides insight into how China has intentionally grown their e-commerce expansion into the U.S. market through use of Section 321.

CBP estimates that from FY2018-2021, 67.4 percent ($228.3 billion) of U.S. de minimis imports were from the PRC ($149 billion from mainland China and $79.3 billion from Hong Kong). (Figure 2). It estimates that in 2023, total U.S. de minimis imports were one billion parcels valued at about $54.5 billion. The PRC reports $18.4 billion in 2023 de minimis exports to the United States; this amount is roughly one-third of the $54.5 billion U.S. de minimis imports from all sources that CBP reported for 2023. (Figure 1). While CBP data does not delineate which U.S. de minimis imports involve e-commerce transactions, the U.S. International Trade Commission estimated that in FY2022, 83% of total U.S. e-commerce imports were de minimis imports.

CRS3 2.4.25

CRS Updates Report on China Shipbuilding Issues

The Congressional Research Service updated the In Focus report on Section 301 and China: Shipping and Shipbuilding Issues. The report includes a call-out section on the 301 process and timeline, USTR’s proposed remedies, and options for Congress, noting that “U.S fees alone arguably are unlikely to fully address U.S. industry gaps, PRC anticompetitive practices, and the effects of PRC actions on U.S. allies.”

Congress could consider whether to support the U.S. shipbuilding industry through grants or tax incentives. It might consider the effects of U.S. tariffs on inputs (e.g., steel) for U.S. shipbuilding. It might examine corporate deals (e.g., U.S. BlackRock’s bid for some of Hong Kong’s Hutchison Whampoa’s port operations, and Frances’ CMA CGM’s plan to invest $20 billion in U.S. shipping) to assess their effectiveness in advancing U.S. interests. Congress also might consider whether to act on USTR’s proposals to

Address PRC anticompetitive shipping practices;

Ban PRC equipment and data systems of concern and create preferences for non-PRC alternatives; and

Recommend plurilateral efforts to counter PRC actions.

CSDDD Textile Sector Handbook Published

In support of the European Commission directive on Corporate Sustainability Due Diligence (CSDDD) that went into effect on July 5, 2024, four organizations joined forces to publish a Handbook for Due Diligence Implementation in the Textile Sector. The organizations involved in the handbook are Policy Hub, the Social and Labor Convergence Program, Fair Wear Foundation, and amorfi. With so many requirements for brands and retailers the CSDDD Handbook provides a valuable “overview of the textile industry’s existing tools, instruments, formats and guidance, and identifies the gaps where further clarification is needed.”

The Handbook:

maps key learnings from ongoing implementation efforts
identifies areas where further work or clarification is necessary to ensure efficient and effective compliance with the CSDDD requirements
assesses the realities of the textile sector and the issues to be taken into account for a practical and effective implementation of due diligence
supports the exercise of developing the general CSDDD guidelines and accompanying measures

Be sure to take a look at Annex I, which provides a comprehensive list of the many due diligence tools available for the textile sector.

CSIS: Tariffs Using Emergency Economic Powers Risk Undermining U.S. Economic Security

On Monday, the Center for Strategic and International Studies published an analysis of Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs on China, Canada, and Mexico. Navin Girishankar, President of the Economic and Security Technology Department, and Philip Luck, Director of the Economics Program and Scholl Chair in International Business, discuss how the tariffs against Mexico and Canada “in particular risk undermining U.S. economic security by their direct economic repercussions” and their “inadequacy in motivating policy change by our partners, and their likelihood of degrading partnerships essential to countering global threats, in particular from China.”

The authors also ponder the endgame of this strategy:

The more interesting question is what the administration seeks in exchange for removing tariff threats: point-in-time reductions in the merchandise trade deficit, relatively narrow noneconomic ends such as fentanyl interdiction, or cooperation on the innovation and commercialization of critical and advanced technologies. If it is the third, then the modus operandi will likely need to change. The United States does not have an absolute advantage across sectors and technologies that will drive growth and security. It needs its long-standing partners, particularly its neighbors.

GAO Publishes Report on Textile Waste

The Government Accountability Office was asked by Senate Environment and Public Works Committee Chairman Tom Carper (D-DE), House Appropriations Committee Ranking Member Rose DeLauro (D-CT), and House Appropriations Interior, Environment, and Related Agencies Subcommittee Ranking Member Chellie Pingree (D-ME) to review issues related to textile waste and recycling, including laws, agency documents, and leading practices for interagency collaboration. GAO analyzed how textile waste affects the environment, how and why the rate of textile waste has changed in the U.S. over the last two decades, and what federal actions should be taken to reduce textile waste, advance textile recycling, and opportunities for interagency collaboration.

GAO published their final report last week with recommendations for Congress, the EPA, the Department of Commerce’s National Institute of Standards and Technology, Office of Science and Technology Policy, Department of State, Department of Energy, and the National Science Foundation.

GAO used three figures, which you can see below, to illustrate the common pathways of discarded consumer textiles in the U.S., the current linear economy for textiles, and an example of a circular economy for textiles.

Figure 1 – Common Pathways for Textiles Discarded by Consumers

GAO12.19.24

Figure 2 – The Current Linear Economy of Textiles in the U.S.

GAO12.19.24 2

Figure 3 – An Example of a Circular Textile Economy

GAO12.19.24 3

GOA notes that textile waste has increased due to multiple factors, “including a shift to a fast fashion business model; limited, decentralized systems for collecting and sorting textiles; and the infancy of textile recycling technologies.”

GAO included Goodwill and Helpsy Holdings as examples of organizations that offer collection and donation options for used textiles in the report and Ambercycle, Inc. as an example of a U.S.-based textile-to-textile recycling company.

They highlighted the disposal ban on textile waste in Massachusetts that was passed in 2022. The state identified that 5% of the total weight of their municipal solid waste streams were textiles.

Used textiles were … identified as a valuable commodity due to their reuse and recycling potential. The disposal ban on textiles includes clean and dry clothing, footwear, bedding, towels, curtains, fabric, and similar products.

One of the largest challenges was the lack of accurate data on textile waste because there is no national requirement for states to report municipal solid waste to the EPA. GAO used the EPA’s limited textile waste data and crosschecked it with the ITA’s textile and apparel import data from 2000 to 2023. The EPA does have a pending request with the Office of Management and Budget to collect municipal solid waste data from state agencies and revise its data reporting methods for the upcoming Advancing Sustainable Materials Management: Facts and Figures Fact Sheet, however EPA officials said they do not know how many states will have textile waste data.

The report concluded by noting that the federal government is beginning to plan or implement efforts that reduce textile waste and advance textile recycling, but these initiatives are not coordinated. One of the key recommendations is the creation of an interagency mechanism to improve coordination.

Managing textile waste and recycling is not tasked to one federal entity. Because reducing textile waste and advancing textile recycling is still an emerging issue across federal entities, congressional direction could require them to take coordinated action to reduce textile waste and advance textile recycling. In addition to congressional direction, interagency collaboration is essential to implementing current and future efforts more effectively and efficiently. For example, EPA’s National Recycling Strategy has the goals of increasing the national recycling rate by 50 percent by 2030 and transitioning toward a circular economy nationwide, including for textiles. Increasing interagency collaboration through a mechanism that incorporates identified best practices, such as identifying and leveraging resources, may also help agencies better manage fragmentation amongst their efforts.

Nonfederal stakeholders, including local agencies and nonprofit organizations, are also piloting programs and efforts to reduce textile waste and advance textile recycling. Federal funding to support these efforts, such as grants from EPA and other federal entities, are available. However, information about potential federal sources is not easily accessible on EPA’s website. By making funding information more accessible, stakeholders could use funding toward efforts that help decrease the harmful environmental effects of textile waste or advance textile recycling technologies and infrastructure.

How Tariffs Affect U.S. Apparel Import Prices and Retail Prices

Dr. Sheng Lu, Professor in the University of Delaware’s Department of Fashion and Apparel Studies, published a new analysis exploring the relationship between U.S. apparel import tariffs, U.S. apparel import prices, and U.S. apparel retail prices. We reprint it in full below:

According to the “America First Trade Policy” released in January 2025, the Trump administration aims to leverage tariffs to achieve various policy objectives, from reducing the U.S. trade deficit to countering “unfair” trading practices.

On February 1, 2025, the Trump Administration further announced the implementation of a 25% punitive tariff on imports from Canada and Mexico, along with an additional 10% punitive tariff on goods from China, in addition to the existing duties. With over 98% of clothing sold in the U.S. imported from abroad, U.S. fashion apparel companies are likely to be among the hardest hit by the tariff increase, particularly since Mexico and China are two of the leading apparel-sourcing destinations for the country.

This study aims to explore the dynamic relationship between U.S. apparel import tariffs, U.S. apparel import prices, and U.S. apparel retail prices. Since tariff rates, import prices, and retail prices are interrelated, a vector autoregression model (VAR) was used to analyze their interactions. The analysis was based on monthly data from January 2015 to November 2024 (latest data available), including:

U.S. apparel tariff rate (data source: USITC; tariff rate=value of calculated duties/custom values)

Price index of U.S. apparel imports (data source: St. Lous Federal Reserve; January 2015=100)

Price index of U.S. apparel retail price (data source: St. Louis Federal Reserve; January 2015=100)

Index of U.S. apparel retail sales (data source: St. Louis Federal Reserve; January 2015=100)

Consumer Price Index for all U.S. urban consumers (data source: St. Louis Federal Reserve; January 2015=100)

The results show that:

First, from January 2015 to November 2024, the average U.S. apparel tariff rate ranged from 12% to 17%. The fluctuation of the tariff rate during that period was primarily caused by the U.S. imposition of Section 301 punitive tariffs on imports from China, along with fashion companies shifting their sourcing from China to other countries, including members of U.S. free trade agreements.

Second, the average price of U.S. apparel imports rose by approximately 6% from January 2015 to November 2024, which aligns with the U.S. apparel retail price increase of 4%. However, this increase was significantly lower than the 34% rise in the U.S. Consumer Price Index (CPI) over the same period. This pattern shows that despite overall inflation and higher operational costs, apparel exporters and U.S. retailers remained cautious about increasing prices due to intense market competition.

Third, the impulse response function (IRF) indicates that a positive tariff shock (i.e., a tariff increase) would lead to a rise in the U.S. apparel retail price. However, the magnitude of this effect is moderate, with the impact being most felt two months later. Specifically, a one-standard-deviation increase in tariffs would result in a 0.16 standard deviation increase in retail prices during Period 3. In other words, the price effect of the tariff increase typically appears in about two months. However, U.S. fashion retailers usually do not transfer the entire burden of tariffs to consumers, likely because of fierce competition in the market.

Fourth, the impulse response function (IRF) indicates that a positive tariff shock (i.e., a tariff increase) would lead to a slight decline in U.S. apparel import prices. This price decrease would also persist for about three months. Specifically, a one-standard-deviation increase in tariffs would result in approximately a 0.01 standard deviation decrease in apparel import prices through Period 4. This result aligns with previous studies indicating that following the implementation of Section 301 punitive tariffs in 2018, some Chinese exporters agreed to reduce their selling prices to keep sourcing orders.

Fifth, the impulse response function (IRF) further shows that a positive tariff shock (i.e., a tariff increase) could hurt U.S. apparel retail sales in the short to medium term. Specifically, a one-standard-deviation increase in tariffs would lead to approximately a 0.82-2.33 standard deviation decrease in U.S. apparel retail sales from Period 3 through Period 5. This result may be driven by higher selling prices, suppressing consumer spending on clothing.

Additionally, the variance decomposition analysis reveals that, in the short to medium term, about 50% to 80% of the variation in U.S. retail prices is explained by its own past values, underscoring the persistence of retailers’ pricing practices. Meanwhile, U.S. apparel retail sales account for about 27% of the changes in U.S. apparel retail prices. In comparison, apparel tariff changes explained only about 5% of the retail price fluctuations. In other words, market factors, particularly consumer demand, play a more significant role in shaping fashion companies’ pricing decisions than tariffs.

In summary, the study’s findings confirm the interconnections between apparel tariff rates, U.S. apparel import prices, and U.S. retail prices, although these relationships turn out to be more complex and nuanced than previously suggested. It is important to note that only apparel imports from China were subject to tariff increases during the examined period in this study. If tariffs were to increase on apparel products from a broader range of countries during Trump’s second term, the economic impact on U.S. apparel retail prices could be much more significant and persistent.

Impacts of Tariffs: Gen Z’s Perspective

Dr. Sheng Lu, Professor in the University of Delaware’s Fashion and Apparel Studies department, has been speaking to his students about their perspective on the initial impacts of recent tariff increases. These responses have been published in a Gen Z on tariffs series by Just Style. You can read the students’ thoughts on tariffs in the news, how they will impact retail prices and product availability, whether sustainability still matters, and more here.

You can also read the full series on Just Style here:

Kharon: Uzbekistan’s Cellulose Kingpin Supplies Russian Arms Factories

Kharon recently published a brief on the connection between two Uzbekistan cellulose factories and Russia’s military operations.

Since Russia’s invasion of Ukraine in February 2022, two factories in Uzbekistan have played a critical role in supplying materials to support Russia’s military efforts, including its production of explosives.

According to trade data reviewed by Kharon, the plants—Fargona Kimyo Zavodi MCHJ and Raw Materials Cellulose MCHJ—have supplied more than $170 million worth of cellulose to Russian munitions factories, defense contractors, and other military end users.

The cellulose produced by these factories has been purchased by several major Russian military suppliers, including the state-owned Kazan Federal State Gunpowder Plant, Perm Powder Plant, and Tambov Powder Plant—each of which was sanctioned by the U.S. Department of the Treasury in 2023 for its role in supporting Russia’s defense industrial base.

Kharon 1

NCTO Urges Stronger UFLPA Enforcement from White House

A Wall Street Journal story published online last Friday discussed increased enforcement of the UFLPA as one potential weapon the Trump Administration could use in its trade war with China. The WSJ included a quote from Kim Glas, President of the National Council of Textile Organizations, urging stronger enforcement:

We're really hopeful that they will take it even further to step up enforcement even more, because industries like ours matter and that this will help them achieve some of their key goals.

Nazak Nikakhtar, who served as an Assistant Commerce Secretary during the first Trump Administration, also expressed disappointment with how the UFLPA has been used so far:

It was really disappointing, the light touch, or barely any touch that [the Biden Administration] had in enforcement.

New PCA Report: Impact of the Central American Textile/Apparel on the US Industry

The Partnership for Central America recently published a study that analyzes the complementary textile and apparel value chain between Guatemala, Honduras, and El Salvador (Northern Triangle countries) on the U.S. industry.

The U.S. and Central American apparel and textile industries do not directly compete due to differing specializations. The U.S. focuses on technical textiles, specialty fabrics, niche markets and advanced processes requiring high investment and technology. Conversely, Northern Triangle countries (CA-3) specialize in assembling basic apparel with labor-intensive processes for the private-label mass production demand market, complementing rather than competing with U.S. production. The U.S. apparel and textile industry shows no signs of decline, and eliminating the 10% tariff to CA-3 countries would not halt or reverse its growth.

The investment promotion activities from the PCA will not halt or reverse that growth and would likely instead fill growing demand. Regional chain integration would benefit both parties, the U.S. maintains advantage in specialized materials, CA-3 strengthens its role in manufacturing and assembly, more resilient and competitive supply chain, will compete against other exporters, mainly in Asia, for a larger share of the US import market, rather than encroach on domestic producers’ market share or domestic employment.

OECD Releases Results of Fair Wear Foundation Assessment

Last month the OECD published Sustainability initiatives for responsible business conduct, the results of their alignment assessment of Fair Wear Foundation against the OECD’s Due Diligence Guidance for Responsible Supply Chains in the Garment & Footwear Sector. The OECD finds that “the introduction of a new Fair Wear HRDD Policy in 2023 and revisions to the Brand Performance Check (BPC) process took the initiative to a strong finding of partial alignment for its revised standards, including all Step 1 criteria fully aligned and improvements across all six due diligence steps.”

We encourage members to take a look at the strengths of Fair Wear’s standards and the improvements for future monitoring and oversights.

PIIE: Trump’s threatened tariffs projected to damage economies of US, Canada, Mexico, and China

Warwick McKibbin and Marcus Noland from the Peterson Institute for International Economics have published an analysis on Trump’s tariff threats “over illegal immigration and the flow of drugs.” They find that the tariffs would damage all of the economies involved, but include the caveat that “history suggests that Trump may not act on his threats.” The authors conclude that renegotiating USMCA would be preferable to the fallout from Trump’s tariff threats, though the “political uncertainty tempers hope of finding a resolution.” The potential of the threatened tariffs against China coming to fruition are higher, given Trump’s actions during his first term.

Below we share the projected tariff scenarios.

Figure 1 shows that the imposition of the tariff would slow growth and accelerate inflation in all three countries.

PIIE1 GDP

PIIE1 Inflation

Figure 2 shows the damage that an additional 10 percent tariff could inflict on the Chinese and US economies… [and] the results of a retaliation scenario (dotted lines).

PIIE2 GDP

PIIE2 Inflation

The result of combining the threats—a 25 percent tariff on Canada and Mexico and an additional 10 percent tariff on China (which retaliates)—is shown in figure 3.

PIIE3 GDP

PIIE3 Inflation

PPI Publishes Paper on Tariffs and Economic Isolationism: Four Principles for a Response

Ed Gresser, PPI’s Vice President and Director for Trade and Global Markets, published an analysis of the impact and opportunities of tariffs earlier this week. Tariffs and Economic Isolationism: Four Principles for a Response uses the following four principles to “bridge the Constitutional, economic, strategic, and political issues the various Trump proposals raise.”

Defend the Constitution and oppose attempts to rule by decrees.
Connect tariff policy, both as taxation and trade policy, to growth, work, prices and family budgets, and living standards.
Stand by America’s neighbors and allies.
Offer a positive alternative.

Gresser highlights the fact that there already are substantial tariffs on key consumer products, including apparel and footwear:

Congress can ease the cost of living by reforming the permanent tariff system, stripping regressivity and sexism out of the clothing, silverware, shoe, and other consumer goods schedules — where hundreds of lines simply raise the prices of cheap mass-market goods not made in the U.S. for decades, and the higher rates imposed on women’s clothes as opposed to men’s extracts $2.5 billion from women each year — and making the functioning of this system transparent.

We encourage USFIA members to read the analysis as we prepare for the possibility of more tariffs.

PPI Trade Fact of the Week: A New Container Ship Launches Every Day

Ed Gresser, Vice President and Director for Trade and Global Markets at PPI, published his most recent trade fact of the week looking at the world’s container shipping fleet.

Alphaliner, a Paris-based maritime consultancy, counts 6936 container ships operating worldwide this week, up from 5,101 in 2014, which makes up 6% of the world’s 105,000 cargo vessels and a seventh of the world’s 2.2 billion deadweight tons of merchant shipping. The full container fleet has a combined capacity of 29.7 million TEU, up 50% since 2014.
Denmark-based shipping association BIMCO says 350 new container ships launched in 2023, and 2024 will likely top 475.
The Dali's 948 feet or 300 meters long, with deadweight tonnage of 116,851 tons and a crew of 21. As of this month, 121 ships can carry 20,000 TEU or more. The largest one on the water today is MSC Irina, owned by Geneva-based Mediterranean Shipping Corporation, whose capacity more than doubles Dali’s at 24,326 TEU and 240,739 deadweight tons.
While the container-ship concept is almost 70 years old, most of the actual ships are young, and every 20,000+ TEU ship has been built since 2017. UNCTAD’s most recent Review of Maritime Transport says the average container ship is 14 years old.
Though not exactly a giant floating robot, a modern container ship isn’t far from that. Dali’s forlorn crew totals 21 people and the MSC Irina needs just 25. To put this in perspective, the Great Republic— the largest 19th-century clipper ship, built to sail back and forth from New to Australia — needed a crew of 67 to manage about 5000 tons of cargo.

PPI Trade Fact of the Week: Canada, Mexico, and China are the U.S.’ three largest trading partners

Ed Gresser, PPI’s Vice President and Director for Trade and Global Markets, published his trade fact of the week and he uses Maine to illustrate how much damage the IEEPA tariffs can cause.

Susan Collins (R-Maine) thinks of Maine businesses and (noting this week’s Arctic-level Lewiston thermometer readings) fears a sudden spike in home heating bills:

“The Maine economy is integrated with Canada, our most important trading partner. Certain tariffs will impose a significant burden on many families, manufacturers, the forest products industry, small businesses, lobstermen, and agricultural producers. For example, 95 percent of the heating oil used by most Mainers to heat their homes comes from refineries in Canada.”

To put a number on this, Maine bought $2.73 billion worth of fuel oil, mostly for heating oil from Canada last year, so Mr. Trump’s midwinter 10% energy tariff would have hit the state’s 590,000 households with a new $270 million bill. …

What then are the Senators’ options? Their concern about rising costs for farmers and lobster boat captains, cold homes, threats to jobs, and stretched family budgets is actually linked very closely to the first principle of response — defend the Constitution and oppose attempts to rule by decree. The Constitution’s tariff clause is not at all blurry: “Congress shall have the Power to lay and collect Taxes, Duties, Imposts, and Excises.” So Republican Senators and Representatives have no need to plead for special carveouts and exemptions. They have all the power they need to keep potash and heating oil prices down, and to preserve Congress’ constitutional authority from Mr. Trump’s power grab, by voting. They just need to use it.

PPI Trade Fact of the Week: Estimated Cost to Families of Trump Tariff Proposal is $1,500-$1,700

Ed Gresser, Vice President and Director for Trade and Global Markets at PPI, published his most recent trade fact of the week estimating how the Trump campaign’s 10% worldwide tariff, plus 60% tariff on Chinese-made goods, would impact American families. According to Gresser’s review of current economic analyses,

Two independent nonprofits, studying its probable effect this month, basically agree on what to expect. Mary Lovely and Kimberly Clausing, writing for the Peterson Institute of International Economics earlier this month, estimate an additional $1,700 in additional costs per U.S. household, with the greatest loss of purchasing power in the lowest-income families. Brendan Duke, a former National Economic Council economist now with the Center for American Progress, finds a similar $1,500 increase in costs per middle-income household, with specific examples including $120 in higher payment for fuels, $90 for medicine, $220 for autos and boats, $80 for consumer electronics, and $90 for food. Overall, the Bureau of Labor Statistics’ Consumer Expenditure Survey reports that on average households spent $19,154* on goods in 2022. Against this background, a $1,500 or $1,700 cost increase is something like an 8% or 9% burst of inflation in goods prices, or an equivalently high “tax increase” depending on the angle from which you look at it. Prices are higher either way.