Although the United States’ $380 billion apparel industry is one of the largest in the world, approximately 97% of apparel is manufactured outside of the country. Retailers import goods from countries such as China, Mexico and Taiwan, but that may soon change. The election of President Donald Trump has some industry giants concerned. Trump campaigned heavily on the promise that he would impose a border tax on companies which move jobs outside of the US, and he has been backed by Congressional Republicans, who support a border adjustment tax.
Fashion retailers are wondering how this tariff will affect their bottom line. Because overseas workers are paid well below the US federal minimum wage, sometimes earning less than $500 per month, retailers enjoy a large profit margin on the goods sold. Outsourced workers work for pennies on our dollar to create the jackets and jeans that hang on the racks of US retail stores.
Alan Auerbach of UC Berkeley claims removing the currently existing incentives to relocate might help to lessen the impending strain on the American economy. He believes it may drive higher wages and investments, but admits that it won’t likely work across all industries, due to cost differentiation.
The Garment Worker Center is a workers’ rights organization protecting garment workers in Los Angeles. Director Marissa Nuncio expressed doubts that Trump’s proposal will bring about the desired change, and that the United States garment industry will likely not see a resurgence.
An example of the direct effect of increasing imports on the American workforce can be found in California. Southern California is home to the largest apparel manufacturing plants in the United States, employing approximately 46,000 workers. Most of the remaining factories are in the fashion district of Los Angeles, where American employees cut, dye and sew fabric for retail apparel. While 46,000 American employees may seem a substantial number, it’s actually roughly half the number employed 10 years ago, and is still decreasing.