Retail Suffers As CIT Strikes Tariffs And Trump Touts Tanks Over Tees

Forbes

6 days ago

heavy tank with city camouflage on the USA flag background. 3d Illustration
Call it like it is.
Retail sellers of apparel and footwear are still in trouble, but perhaps some tariff relief light is shining at the end of the tunnel - with the U.S. Court Of International Trade (CIT) striking down IEEPA (the International Emergency Economic Powers Act).
Tariffs (even on pause) are truly bad for business. The all-important fall selling season is currently ramping up - just as retail inventories are slimming down and prices are rising up. With high interest rates to finance retail inventory, and confusion over tariffs, operating cash flow at has become a serious issue. While the court striking down the IEEPA tariffs is surely helpful, damage to the fall supply chain may have already put a huge dent in retail profitability and who knows what Team Trump will come up with next! For retailers, Trump's Liberation Day feels a lot more like Groundhog Day.
Glimmers of hope for the retail apparel and footwear trades have been coming fast and furious from the Trump Administration, but resolutions still remain fleeting - and the clock on fall deliveries keeps ticking. In one recent ray of light giving hope to importers, Treasury Secretary Scott Bessent said: 'President Trump is interested in jobs of the future, not jobs of the past. We don't need to necessarily have a booming (domestic) textile industry like where I grew up (South Carolina) again, but we do want to have precision manufacturing and bring that back.'
Obviously, his comment drew serious blowback from the U.S. textile industry, but President Trump actually re-enforced the same comment when he said of American manufacturing: 'I'm not looking to make T-shirts, to be honest. I'm not looking to make socks. We can do that very well in other locations. We're looking to do chips and computers and lots of other things, and tanks and ships.'
This rhetoric is music to the ears of importers for some retailers and fashion brands, but clearly the American textile industry is livid. However, that being said, the reality is that everyone needs to take a deep breath and sort these comments out. In America, we are fabulous at design, merchandising, and retailing. America also grows some of the best cotton in the world and has the best (automated) yarn spinning. The overall industry needs to sort out the difference between what is best to export and what is best to assemble in other geographic locations. None of this is mutually exclusive.
It is also true that America only manufactures 3% of the apparel that people buy - which means that 97% of apparel is imported. And, if one looks closely at the 3% assembled here – that part remains a very difficult business when it comes to using domestic raw materials – which are often hard to get in specialty fabrics and in short runs.
It is also quite interesting to note that by law, USA apparel manufacturing must be used for the military (Berry Amendment). It would be helpful if USA sewing manufacturers could get a huge chunk of that business but (and this is the truly amazing part), they have to compete for that business with the Federal Prison Industries - because FPI gets first dibs for federal uniform orders - to keep Federal prison factories operating under a program called UNICOR (which is part of the Bureau of Prisons (BOP) and part of the Department of Justice (DOJ)). So, to be clear, while the federal government may tell a sewing operator to manufacture in America – they also often directly compete with the very same operator for the same piece of apparel pie.
Recently, Walmart indicated that they would have to raise prices because of tariffs and President Trump took to Truth Social and said: 'Walmart should STOP trying to blame Tariffs as the reason for raising throughout the chain. Between Walmart and China, they should, as is said, 'EAT THE TARIFFS.' And not charge valued customers ANYTHING. I'll be watching, and so will your customers!!!'
In the real world, it's never a good idea for any retailer to eat a problem they didn't create - as it is a potential path towards financial loss. This situation somewhat like asking a pet hamster to stop eating their own poop as a way to cure a problem that doesn't make any sense.
To help put all this craziness in perspective, the incredibly articulate Ed Gresser at The Progressive Policy Institute recently noted that battery powered sex toys are 97% made in China, and that American retail stores could easily run dry this summer. The 97% number was eye-catching, as it's the exact same number as overall apparel imports from all countries.
What do these numbers actually mean? No clothes? No sex toys?
While both scenarios are highly unlikely, both are also quite real – will there be a shortage of retail product or will the prices just go up as retail scrambles to meet demand? Are we going to give up manufacturing of tee shirts and socks in America (as President Trump suggests) or are we going to get some qualified individuals in Washington to help explain to the federal government what works and what doesn't for the apparel and footwear trades and - how the industry can best take the wonderful assets on hand – and develop them into a thriving industry.
Almost a year before the Smoot-Hawley Tariffs became law in 1930, the humorist Will Rogers noted that: 'The tariff is an instrument for the benefit of those who 'make' to be used against those who 'buy.' As there is more buyers than there is makers, it is a document of the minority.'
Obviously, there is much to sort out here…….but indiscriminate tariffs and supply chain disruptions are clearly not the answer. Best of luck to retail this fall….they are going to need it….