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EDITOR’S NOTE: With a new administration in Washington as of one year ago, change and its inherent uncertainties have been ongoing. I asked these experts in the industry to respond to questions about navigating the changes:
- Sara Beatty, president, Whitehaven Trade Advisors, Washington, DC
- Auggie Tantillo, president, Washington-based SRG & Associates, U.S. Industrial and Narrow Fabrics Institute (USINFI) consultant
- Mark Harries, president, Bally Ribbon Mills, Bally, Pa., and chair, USINFI
I posed questions about trade policies and tariffs: What is the best path forward for a business—large or small—that relies on a supply chain that includes (in whole or part) international trading partners? Can they depend on the situation they are facing today, or should they be aware of upcoming additional changes? How do they get the best and most current information, as well as an interpretation that speaks to their own situation? How about manufacturers in the U.S. who sell parts/components or end products internationally? If they’ve lost buyers, globally, or collaborators in a project-in-development, what is their best path forward? How can they reassure once-reliable partners that there will be stability going forward? — Janet Preus, senior editor, Textile Technology Source.
The tariff story
by Sara Beatty
The tariff story remains ongoing, and uncertainty continues to run high. In addition to the China Section 301 tariffs that have been in place since the first Trump administration, the President instituted wide-sweeping tariffs beginning early last year under the International Emergency Economic Powers Act (IEEPA). These actions are part of the broader America First Trade Policy, intended to review and recalibrate unbalanced U.S. trading relationships, while also addressing issues ranging from the fentanyl crisis and immigration to geopolitical concerns and revenue generation.
USINFI’s position—advanced on Capitol Hill during our Advocacy Days—has been to support increased penalty tariff rates on finished textile and apparel products from China and other Asian suppliers, such as Vietnam, that rely heavily on China-sourced components. At the same time, we have consistently pressed for reasonable exclusions for manufacturing inputs and machinery that are not available from alternative sources, as well as for maintaining or restoring duty-free treatment for Western Hemisphere free trade agreement–qualifying trade, which frequently incorporates U.S. components.
The industry has seen some success on this front. An exclusion for USMCA-qualified trade was secured, and more recently, the restoration of duty-free status for CAFTA-DR-qualifying goods from El Salvador and Guatemala has been agreed to in principle and is now awaiting implementation. Despite these gains, more work remains to be done on exclusions and keeping pressure on Asian suppliers.
Overall, a high level of uncertainty persists, driven by two primary factors: legal challenges and ongoing bilateral negotiations. The U.S. Supreme Court heard oral arguments last November on the scope of executive authority to impose tariffs under IEEPA and has twice been expected to issue a ruling, only to delay. Should the tariffs ultimately be overturned, the administration has indicated it would seek to rely on alternative statutory authorities—although none would fully replicate the scope, scale or durability of the current IEEPA tariffs.
At the same time, with a court decision still looming, the administration continues to pursue bilateral negotiations with individual countries to modify reciprocal tariff rates and address related trade issues. These discussions have the potential to further reshape the tariff landscape, including for major textile and apparel exporting countries such as Bangladesh.
Buy American
by Auggie Tantillo
President Trump has certainly taken an aggressive approach to recalibrating the international trading structure through his “America First” policies that are designed to help revitalize and expand U.S. manufacturing. A logical next step toward this worthy goal would be to take an equally aggressive approach to reform federal procurement practices to increase government purchases of U.S. made goods.
Over several decades, loopholes and lax adherence to federal Buy-American rules have resulted in extremely limited benefits for U.S. manufacturers and workers when it comes to overall government procurement. One key exception is the Department of Defense (DOD), where there is greater emphasis on Buy-American procurement practices than what exists in other federal agencies.
As an example, a statute known as the Berry Amendment requires that all textile-related products purchased by DOD be fully made in America. The Berry Amendment results in DOD purchases of more than $1.8 billion worth of U.S. made textile goods for the military annually. Many of these products are made from highly advanced technical yarns and fabrics.
The President could extend the Berry Amendment to other federal agencies for numerous products, including textiles. To put this in context, note that on an annual basis, the federal government purchases almost $800 billion worth of goods and services. If federal agencies were to increase the procurement of U.S. made goods by just a few percentage points, that would equate to tens of billions in new orders for domestic manufacturers and workers.
President Trump clearly supports Buy-American. Our hope is that he can be persuaded to translate that support into a specific Executive Order directing federal agencies to purchase significantly more American made products, including technical and industrial textiles.
An SME response
In an interview, Mark Harries addressed three areas: workforce impacts related to immigration policies, Bally Ribbon Mills’ (BRM) ongoing work with NASA, and acquiring and maintaining necessary machinery that’s not available in the U.S.—jp
Workforce. “Immigration policies don’t affect us as we hire mostly local,” Harries says. “We’re also in a single location, and we have great people in the area. However, just like everyone else, it’s harder to find people who want to work in a factory, so you do have to devote more energy in order to find people.”
He says interfacing with local secondary and technical schools is definitely worthwhile. “You have to market yourself. It’s a lot more resource intensive to find those people, and then you have to keep those people, so they stay long-term.”
Machinery. Like other manufacturing sectors, the textile industry has been “shrinking for a long time,” Harries say. “A lot of textile companies have gone out of business or gone overseas.” That means that textile machinery businesses also have gone out of business, or have moved out of the U.S.
“When I have to buy textile machinery, sometimes I can’t find it in the U.S. It’s just not produced in the U.S. anymore,” he says. In terms of tariffs, “They are good when strategically managed, but if I have no choice but to buy overseas, then the tariffs are starting to hurt.”
And, as he points out, his competition overseas doesn’t have that added expense. Nevertheless, he says, “It is what it is. Everything else though, our products, we are 100 percent USA made.”
Working with NASA. Even though BRM doesn’t work directly with the National Science Foundation (NSF), for example, “We are affected by the big budget decisions to our countries research capabilities,” he says. A specific instance, in his company’s case, would be NASA.
“A lot of their work is to develop and do the research that enables them to do future missions. That research, that technical work, it doesn’t just stop. It stays with us. If we get a project with NASA, that knowledge and that work stays with us, and we can apply it to other customers.”
For example, NASA came to BRM to learn about its weaving capabilities with certain fibers, needing woven thermal protection systems that can stand the heat of atmospheric reentry, a project started in 2010.
“We’re still working on items and still utilizing the knowledge we gained from that work. … On the commercial side, the aerospace companies do the work, so we’re doing thermal compression pads used in part of the Orion capsule. … The dollars spent on research really do trickle down to small business,” he says.
“Our benefit generally is the knowledge we gain figuring out a project. It’s the process that we can use to make another product better,” he says.
Harries calls his company very diversified. “We have a lot of different product lines,” he says. “We’re pretty lucky in that respect.” This has helped the company weather uncertainties in the textile industry, which has “taken a lot of hits,” he says. However, he adds, “We still have a great textile industry in the U.S., and we are optimistic for the future.”