Trade and tariffs, Part II: What can be done

Editor’s Note: As president and CEO of the National Council of Textile Organizations (NCTO), Kimberly Glas is in a unique position to view the impact this administration’s approach to trade in general, and tariffs, in particular, has had on the textile industry. In Part II of an interview conducted with Glas, she also addresses steps that could be taken to better support the textile industry. 

We also wanted to get perspectives from textile companies and more recently invited Laura Martin, global trade & logistics manager with TVF Inc., and Ted Fetterman, vice president, sales & marketing, Bally Ribbon Mills, to offer commentary.

The situation is, in fact, so dynamic that dramatic changes have occurred since the interview with Glas was conducted on August 18. President Trump announced a 50 percent tariff on a range of Canadian goods, which sparked retaliatory tariffs, upwards of $20 billion, from Canada, effective September 8.

Earlier this summer, CNBC.com reported that the U.S. proposed tariffs of up to 12.5 percent on imports from 60 economies for failing to ban forced labor goods. Economies with partial forced labor bans face a 10 percent duty. “The move marks a major step in Trump’s push to reinstate his country-specific tariffs that were mostly struck down,” the report said. This went into effect Sept. 1. – jp

Q: Given the uncertainties in today’s trade environment, how is your company managing it?

Martin: Early on, it felt like we were flying by the seat of our pants. As things have evolved, I feel like we have built processes to help us assess and pivot as necessary. One of the first things I realized is that I need to keep my finger on the pulse of the policy changes. To do this, I utilize many resources including subscriptions to customs bulletins, customs brokers newsletters, and trade lawyer updates. I also attend as many webinars and read as many articles as possible to stay up to date on the evolving policy changes. 

There’s also a lot of data that goes into understanding these policy changes. We have to fully understand where we’re at today, where we’re projecting things will be tomorrow, and be able to quickly update any of the inputs to help us understand the impact of the changes. Between familiarizing myself with new reporting in the U.S. Customs and Border Protection Automated Commercial Environment (ACE) and our robust enterprise resource planning (ERP) system, I’m grateful to have these tools that allow us to pivot quickly. 

Q: What could be done right now that would be most helpful in the industry? 

Martin: I don’t think there’s any quick fix to this situation. Ultimately all solutions require time and money. We can try to pivot our supply chains, but as it stands most countries are not excluded from the Section 301 forced labor tariffs currently in place. 

The Section 301 excess capacity tariffs coming down the pipeline would impact imports from a majority of the top 10 countries producing textiles. The knowledge and expertise for products are also regional, so the costs to shift to new countries has additional time and costs implications. So, ultimately, our supply chains are still more expensive. 

It’s great when we can buy American textiles, but the offerings aren’t always there, or the costs can be too high for the markets we’re in. So, we’d still need significant domestic investment of time, money, and knowledge to shift supply chains back to the U.S.

When all is said and done, the industry has to come to terms with the fact that things are going to be more expensive, it’s just a matter of where we want to put that money and how patient we can be in seeing that investment through.

Q: How is Bally Ribbon Mills managing to maneuver through the uncertainties regarding trade policy in general and tariffs in particular?

Fetterman: Tariffs have potential to affect us three ways:

1. Raw material imports – a few of the narrow fabrics we produce are made from high-performance fibers from Japan. The new rate is 12.5 percent, increased from 10 percent effective July/Aug 2026. When we pay higher prices based on this tariff change, we transfer this additional cost to our customers in the form of price increases. Just like we would with overhead changes caused by other price increases we are experiencing. 

It is not a current Bally Ribbon Mills’s policy to absorb any increased costs due to tariffs or any other sources; we pass it along, mainly because the market has no alternatives. Our customers pay the price because they must pay it. In this regard the tariff for this type of material is a tax on goods that incentivizes no one to make a structural change to the supply chain. 

1. Equipment/Loom Parts. The same applies to these tariffs. Increases in the costs of machinery parts increases our overhead, and we pass along this additional cost.

• Finished Goods Exports. In cases where we are shipping to Canada, these materials are exempt under the USMCA FTA Textiles. Our business to Canada is not affected. Regarding exports to other nations, our customers are paying import duties. The presence of import duties/tariffs imposed on our goods exported into a foreign country does not affect our decision making. Our customers are purchasing our materials because of our expertise, our quality, and/or they have very few choices. 

The summary of all of this is that U.S. trade policy in the U.S. does not affect us directly as much as it may seem; 85 percent of our business is within the U.S.   Our competitors are paying the same tariffs for raw materials and equipment. We are not less competitive because of the policies. 

Q: Is there some recognition on the part of those in power in Washington, whoever is most likely to be listening to people like you and the industry leaders who I’m sure are reaching out to them. Is there anybody who has some grasp really of what this is doing to industry that was, I’m sure, in large part unintended.

GLAS: Unintended completely. 

Q: The point was not to hurt American manufacturing but support it.

GLAS: That’s right. 

Q: So, does somebody get that, and is there some indication from some suggesting another path forward?

GLAS: I have been, and industry has been, reaching out consistently both to their members of Congress. We’ve also been meeting regularly with the administration. The administration definitely does understand and sympathize with the plight facing the industry. And, you know, my sense of urgency — you can’t work fast enough. Right now, we need an aggressive, thoughtful solution that actually helps the industry in real time, stabilizes production, and then grow production, which is, you know, of course, incredibly important. 

You have to understand that Washington right now is so many voices because so many things are happening all at once. We’re talking about Canada today. Next week we’re going to talk about the EU, or whatever. We’re going to have forced labor tariffs finalized likely by September 1. (See Editor’s Note.)

We have excess capacity tariffs coming out. There’s so much that the agencies have to do right now in Washington on behalf of the administration that it’s hard, you know? I think people are very sympathetic when they hear from us. And of course, they want our ideas on  how to fix this, but there’s a larger paradigm, a larger structure within the Trump administration where, if you get President Trump’s focus on something, you can get something done. 

We’re doing everything possible to elevate everything directly to the president in terms of what’s going on in the industry, so that he understands there are certain actions he can take that would help our industry a great deal right now. It wouldn’t take much to get our industry running full. It wouldn’t take much to get some of those idled facilities turned back on. But we really need the administration’s support. Without it, we’re going to continue seeing this, regrettably, because of the issues that I’ve outlined. 

Q: You said it wouldn’t take much to get back some of the facilities.

GLAS: It wouldn’t take much.  

Q: It wouldn’t take that much, so they’re not shuttered forever?

GLAS: Some of them are: some of them could still be operational, if there was new demand. It would take a series of months to get, you know, restaffed and hiring back people and all that, but it is very possible. Some are no longer feasible and cannot be operational again, having sold assets, et cetera. 

But my first priority is to get all the facilities that we have currently running up to 100 percent. Just by the stroke of a pen, the President, for example, could require that all textiles purchased by the U.S. government be fully made in America. So much of this is made in Bangladesh and Pakistan and elsewhere. 

And there are loopholes in our By American rules that allow us to source offshore. I mean, that huge demand, and the amount the U.S. government purchases of those products with U.S. taxpayer dollars, would help unleash a lot of the industry. There are incentive proposals that could be inserted as part of any trade regime. 

Let’s say we have 301 [tariffs on specific imports to address unfair trade practices] for forced labor, excess capacity, pay buyers. If you buy more of our stuff, you get credits. You can offset penalty tariffs from these eligible countries in Asia, so it’s a win-win: the more you do here, the more you benefit the U.S. industry. That would be huge for our industry and would grow jobs in the United States, not just stabilize our industry. 

So, there are three or four things that I think the administration could do if they really crack down on customs enforcement. There are a lot of trade frauds and cheats who are trying to get their product to the U.S. paying less than they should, mislabeling their product, gaming the system We found that trade enforcement, ironically, in this administration has declined. 

Q: Declined? That seems strange.

GLAS: Increasing [trade enforcement] would unleash a lot more business to the industry. A combination of a few things would really help our industry. Right now, all we can do as an industry is keep pressing forward, making sure the administration understands what’s happening and why having a textile industry is important for our national security – and certainly important for our health security as we saw during COVID-19 when we pivoted to make all PPE. 

Q: I hadn’t thought that, in the midst of all of this, enforcement is lax, comparatively speaking.

GLAS: Yes, completely. 

Q: Is this pretty significant? You brought it up, so that tells me it is, but I want to confirm that.

GLAS: It’s significant. Yeah. The Uyghur Forced Labor Prevention Act (UFLPA), bans imported products suspected of being made with forced labor. For our industry, we’ve seen a 73 percent decline in enforcement activities of that law over the last year. Enforcement in our free trade agreements—importers   claiming the product was made with U.S. inputs, but really it was a factory that’s using all Pakistan or Chinese inputs and claiming it’s U.S.—that  is happening all the time to get better tariff rates into the United States, but we’re seeing anemic enforcement. 

There’s a combination of things that I think are happening internally in the administration. We have so much going on in trade that tariff and trade enforcement officials are spread thin. You have to implement new customs authorities in order to implement new trade provisions. Also, customs are under the Dept. of Homeland Security, so as ICE activities have increased, there’s been a demand to shuffle staff over to those activities as opposed to trade enforcement. 

Our industry is sounding the alarm on that too, and we need to see some progress here. It’s important for our industry, and the integrity of our industry, and the economic health of our industry, that we make progress on these issues. 

TVF Inc. is a fabric supplier to a range of end product markets headquartered in Carmel, Indiana. As Global Trade & Logistics Manager, Laura Martin oversees global trade, logistics, and customs compliance.

Ted Fetterman is vice president, sales & marketing, Bally Ribbon Mills, headquartered in Bally, Pa. The company manufactures specialized woven fabrics, webbing and tapes for industries in aerospace, defense, medical, safety and automotive fields. 

Kim Glas is president & CEO at the National Council of Textile Organizations. Based in the Washington, D.C, area, she has extensive experience with government agencies and U.S. and international trade activities. 

Janet Preus is senior editor of Textile Technology Source. She can be reached at janet.preus@textiles.org.