American Apparel & Footwear Association (AAFA) president and CEO Steve Lamar explains how the changing direction of US trade policy under the Biden-Harris administration is impacting global fashion sourcing and supply chains.

Lamar tells apparel industry executives, veterans and other stakeholders at the 16th Istanbul Apparel conference that US trade policy is at crossroads, adding that trade should be for the benefit of all.

He explains Ambassador Katherine Tai of the United States Trade Representative (USTR) often talks about the US Government forging a new “worker-centric” and “inclusive trade policy.”

He explains this means the administration is now spending time trying to make sure individuals and communities who they feel were bypassed by previous trade policies are “no longer left out.”

In August, Tai unveiled a fresh approach signalling US trade policy is no longer built on the “pursuit of efficiency and low cost” in supply chains.

At that time, she said these policies inadvertently encouraged a “race to the bottom,” where countries competed by lowering standards to attract business, leading to a concentration of production in a single economy, notably China.

This consolidation and reliance on vulnerable supply chains were exposed during recent crises, showing the urgent need for resilient supply chains to ensure national and economic security.

She noted that traditionally trade policy aimed to benefit consumers and large corporations, assumed the benefits would eventually “trickle down” to workers. However, Tai acknowledged the inadequacy of this approach and mentioned the significance of recognising individuals as both consumers and producers.

Lamar commends this shift in policy focus, however he highlights the administration’s stance has not always been clear leaving industry onlookers uncertain about the direction of US trade policy.

He points out major trade programmes have been allowed to lapse for record periods of time which casts a doubt about the viability of other trade programmes.

He argues “the approach which includes providing traditional market opening initiatives suggests we have lost momentum in forging new opportunities.”

Lamar highlights that smarter enforcement is absolutely vital but the industry needs facilitation and new agreements too.

Plus, he adds that while there’s a policy focus on supply chain resiliency, that is often seen as a proxy for how to get more items made according to the United States.

Diversification away from China

One of the most significant changes affecting the US apparel industry according to Lamar is the diversification away from China. But he adds there’s very little consensus translating into action on what to do next, and how policies could elevate China’s competitors to be part of the equation.

He points out the one thing that does seem to be uniting everybody in Washington is how to construct trade policies to target competitiveness from China with stats for the eight-month period ending August 2023, compared to the eight-month period ending August 2026, suggesting apparel imports from China into the US market will drop from 42% to 35%.

Footwear imports will decrease from 72% to 59%, while travel from China will fall from 84% to 50%.

Lamar is quick to point out these market shares are from the US, however, there seems to be a similar trend around the world.

He continues: “Companies are looking for ways to eliminate risk and foster stability, proximity to markets and suppliers, avoiding supply chain disruptions, driving sustainability and so on. But a big question remains, where to go, and how to best develop the capacity and capability to support that journey and destination.”

However, Lamar notes that US Trade Policy has decided to go dark, saying that while signals from Washington certainly reinforced the notion it was time to diversify away from China, those same signals are silent on what to do next.

He warns that inaction from the government will only work in China’s favour.

He says it’s possible we’ll see some action later this year or even early next year. But it’s also just as possible that any meaningful action will be postponed until after the 2024 elections.

Transparency and traceability – key supply chain drivers

In an era of increased transparency and traceability, the apparel industry is witnessing growing demand for information and accountability throughout the supply chain.

Lamar remarks this trend is probably the biggest supply chain driver and he notes there’s greater demand for more information with efforts to delve further back in the supply chain than ever before.

In this current day and age, he explains fashion brands and retailers need to know and understand the entire supply chain all the way back to the material stage.

He says a laser focus remains on labour practices and methods to track and reduce the carbon footprint for better buying practices as well as implementing smarter auditing practices to reduce audit fatigue and ensure there’s no trace of forced labour or restricted substances anywhere in the supply chain.

The momentum for these changes comes from both internal and external sources, including governmental regulations, quality control programmes, and efforts to combat climate change.

He notes there has been an “explosion” in commerce thanks to online shopping, and this has intensified the focus on what happens before the product reaches the consumer. The apparel industry, along with other sectors, is realising that it must invest in innovative practices and supply chain transparency to meet these evolving demands.

Looking ahead: A role for Türkiye

As the apparel industry navigates these dynamic shifts, Lamar believes Türkiye can play a pivotal role, urging the transcontinental country to “figure out” its role in the sourcing chain.

He suggests that businesses, policymakers, and industry leaders in Türkiye must determine their competitive advantage and how it can enable them to attract businesses that are on the move.

He places emphasis on forging strong partnerships with brands and retailers that share the same values as being key, given the focus is on traceability, transparency, and sustainability.

He urges country leaders to build policies that embrace clean energy and climate supporting carbon mitigation efforts, however he adds: “Don’t hold your breath for tariffs and trade agreements – certainly not those coming from the United States.”

Lamar believes Türkiye has a unique role to play in shaping the future of fashion, sustainability, and accountability.

He concludes the apparel sector must remain adaptable and forward-thinking, placing emphasis on both innovation and ethical practices.

By Just Style