JASMIN MALIK CHUA | March 13, 2024

Several factors characterize competitiveness, said Julia Hughes, president of the U.S. Fashion Industry Association, which represents American brands, retailers, importers and wholesalers that conduct business globally. There’s speed to market, sourcing cost, risk of labor and social compliance, risk of environmental compliance and flexibility and agility. But one more element plays an important role in determining competitiveness today, Hughes said, and that is geopolitical risk.

“There are many ways to define this risk—geographically there are risks such as the Houthis attacking ships in the Red Sea and disrupting logistics; and politically there are risks such as the desperate situation we see today in Haiti,” she said. “With all this uncertainty, brands and retailers are responding with an emphasis on greater diversification as part of their successful sourcing strategies. And this diversification includes looking at the competitiveness of the countries you are reviewing today.”

Hughes also pointed out one thing to consider when making policy recommendations: most-favored-nation tariffs on clothing are higher than any other industrial good, and apparel is excluded from the Generalized System of Preferences, a.k.a. GSP, program.

“High tariffs represent an important impediment to sourcing from each of the countries covered by the commission’s study,” she said. “If the U.S. government is serious about encouraging apparel brands and retailers to diversify their supply chains to these competitive suppliers, which we assume is part of the purpose for this report, then the government should lower tariffs on these suppliers. Lower tariffs and lower sourcing costs would be a clear benefit for American families and consumers.”

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