Specialty Fabrics Review May 2020 - 50

FOCUS

ADVANCED TEXTILES

THE NET EFFECT
OF ALL OF THESE
ACTIONS WILL BE
GREATER DEMANDS
FOR TRANSPARENCY
IN THE TEXTILE
SUPPLY CHAIN,
BOTH IN PRIVATE
CONTRACTS AND
FROM REGULATORY
AUTHORITIES.

purposes of calculating whether a particular
product meets minimum regional content
thresholds. The USMCA also revises specific
rules of origin for products, including many
textile products, for purposes of tariffs and
country-of-origin labeling.
The USMCA also includes specific chapters
on digital trade, intellectual property,
financial services and labor enforcement that
the Trump administration touts as "state of
the art" provisions to be replicated in future
agreements. The Trump administration
expects that much of the USMCA will be a
starting point for negotiating with U.S. trade
partners. Thus, the USMCA is intended to be
a template for other trade agreements that the
U.S. is negotiating, such as with the U.K., as
well as future bilateral negotiations that the
administration may initiate.
TARIFFS' IMPACT ON TEXTILES
The Trump administration has also raised
tariffs on significant volumes of imports, particularly from China. As a result of an investigation of China's intellectual property practices,
the United States currently imposes tariffs on
$370 billion worth of annual imports from
China. Many tariffs on imported non-apparel
textile goods went into effect on Sept. 18, 2018,
initially at 10 percent, and now at a rate of 25
percent. In addition, select apparel items from
the European Union (EU) now are subject to
25 percent tariffs as a result of a World Trade
Organization (WTO) dispute concerning subsidies to EU aircraft maker Airbus.
Although these tariffs do not directly affect
the textile sector, the Trump administration
has also imposed national security-related
tariffs on imports of steel and aluminum from
all sources, subject to select exceptions for
countries (most notably, Canada and Mexico).
Similar tariffs may apply to automobiles
and automotive parts, although the Trump
administration has to date refrained from
imposing such tariffs.
Accordingly, although the Trump
administration's actions amount to a flood
of new trade actions, textile imports are
largely in the same position as they were
when President Obama left office. Although
USMCA changes some of the rules for textiles,
textile manufacturers in USMCA countries
now can count on continued market access

under the USMCA, something that was
doubted when President Trump threatened
to terminate NAFTA.
The major exception, of course, is with
respect to China, in which case textile imports
face higher duties. Other than imports from
China, and a small amount of apparel imports
from the EU, U.S. imports of textiles remain
subject only to tariffs established for all WTO
countries in the Harmonized Tariff Schedule
of the United States.
Looking ahead, textiles could become
subject to new trade actions, particularly
antidumping and countervailing duty
(AD/CVD) investigations brought by U.S.
manufacturers interested in targeting specific
products. This occurred in 2018, for example,
when U.S. producers of certain polyester
staple fibers sought and succeeded in imposing
increased tariffs on imports from South Korea,
India and China.
For U.S. industries seeking to raise the
price of competing imports, AD/CVD cases,
unlike the broader trade actions described
above, can strike with precision, covering only
well-defined and narrow classes of goods. For
importers, AD/CVD cases can be devastating
or, depending on the market, a mere nuisance.
CHANGES IN NON-U.S.
TEXTILE TRADE
Since President Trump took office, important
changes relating to sales of textiles outside
of the United States have come into effect.
First, because of the Trump administration
trade actions summarized above, U.S.
exporters of textiles are subject to increased or
proposed increases in tariffs for sales to nonU.S. markets. In addition, recent national
security-related actions have targeted the
textile industries of Iran and North Korea,
creating new compliance challenges.
In 2017, the United Nations Security
Council passed Resolution 2375 which,
among other things, prohibits U.N. members
from buying, transporting or receiving textiles
originating from North Korea. This resolution
means that trafficking in North Korean-origin
textiles could carry severe penalties under
each U.N. member's domestic laws, including
U.S. and non-U.S. jurisdictions.
The U.S. government has also issued
advisories warning the private sector that

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Specialty Fabrics Review May 2020

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