Tariffs and global trade remain the talk of most industries in the U.S. today. 

But the topics can incite some confusion, as well as worry, over the future of many sectors, including fashion and apparel. 

As part of Sourcing Journal’s annual Fall Summit, trade experts Stephen Lamar, president and CEO of the American Apparel and Footwear Association (AAFA), and Josh Teitelbaum, senior counsel at Akin Gump Strauss Hauer & Feld LLP, joined Kate Nishimura, Sourcing Journal’s senior news and features editor, to discuss tariffs, trade relationships and President Donald Trump’s upcoming day in Supreme Court. 

Trump and the Supreme Court

Trump has been using the International Emergency Economic Powers Act (IEEPA), which allows the president “broad authority to regulate a variety of economic transactions following a declaration of a national emergency” as a justification for what he calls “reciprocal tariffs.” The Supreme Court is set to decide whether Trump’s continued use of IEEPA is constitutional. 

Lamar said that, while the Supreme Court has agreed to fast-track the case’s hearing, he hopes a decision about Trump’s ability to use IEEPA for sweeping tariffs will be in short order. 

“Soon, I hope, but at some point, we’ll learn, did the president have the authority to do all these tariffs, or did he overstep his authority?” Lamar said. 

But even if Trump’s IEEPA-related actions are found unconstitutional, there could be a “plan B” up his sleeve to continue justifying tariffs. 

Teitelbaum said the president could attempt to leverage a number of different statutes, including Section 338, which “would allow the president to impose tariffs of up to 50 percent after a short process…that [shows] that a country is discriminating uniquely against the United States.” He also cited Section 122 of the Trade Act of 1974, which he said would allow Trump to hand down tariffs of up to 15 percent for 150 days and noted that Section 232 investigations, which are national security based, and Section 301 investigations, which are for country-specific discrimination, would be potential options for Trump in the future.

“The main takeaway, I think, for you all, is these other tools are just not nearly as flexible as the President is currently using the authority he has now,” Teitelbaum told the audience. 

The state of tariffs and de minimis

Tariffs have proven tumultuous for small, medium and large U.S. enterprises in the fashion, apparel and retail sectors. Teitelbaum and Lamar said recent months have put forth unprecedented uncertainty and noted that negotiations are far from over. 

Nishimura asked Teitelbaum about the state of trade with the U.S.’s major partners, like China, India and the European Union. 

Teitelbaum said negotiations have grown significantly more complicated in recent months. 

“If you would’ve asked me this question in 2016, there might [have been] one or two trade negotiations where I could brief you on the details. We are negotiating literally dozens of trade agreements right now, which is just a huge shift,” Teitelbaum said. 

Teitelbaum said, prior to Trump’s first term, the U.S. maintained stable, equal-treatment trade relationships with other countries in the World Trade Organization (WTO) and the General Agreement on Tariffs and Trade (GATT). That’s now changed significantly, he told the audience.

“What I think we have now is a deals-based order, where the point is to treat countries differently. So if you are willing to cut us a deal, if you’re willing to cut your tariffs on our exports to you, we’ll give you a good deal. If you have a bad phone call with the president, if you think a trade deficit doesn’t matter, that could be bad for you,” Teitelbaum said. 

For the fashion and apparel industries, he said, the negotiations with Thailand, Indonesia, Cambodia, Vietnam, Bangladesh and Pakistan, which are expected to see progress by the end of October, will be particularly important. 

Another of Trump’s moves that has caused some chaos is the elimination of the de minimis exemption, which previously allowed parcels valued at less than $800 to enter the U.S. without duties. 

Teitelbaum said the move increased supply chain complexity and costs; he specifically spoke about other countries’ post offices pausing shipments into the U.S. and some third-party logistics carriers choosing to do the same. Simultaneously, U.S. Customs and Border Protection (CBP) has been working to ensure it has the systems set up to collect the applicable duties and process the necessary paperwork, which Teitelbaum said could see some shipments being slowed down in the immediate near-term. 

“We went from one of the most permissive regimes in the world to one of the most restrictive in a matter of months, essentially, and so we’re still dealing with a lot of that fallout,” Teitelbaum said. 

AGOA and Haiti

As Trump continues to toil away at tariffs, Lamar said other pressing relationships are due to go by the wayside.

The African Growth and Opportunity Act (AGOA), which is meant to improve economic relations between the U.S. and Sub-Saharan Africa, and a trade preference program for Haitian textiles and apparel, are both set to expire at the end of this month. Lamar said the tariffs have taken the president’s eye away from those important programs.

“[With] all this activity about all these different trade agreements, the administration has been focused on those agreements and not really been focused on AGOA [and] Haiti,” he said. “One of the big conversations that’s been happening in the last couple of months and weeks and days is, exactly where the administration is—does the administration support renewal, whether it’s a long-term renewal, which I think we all would like to see, or a short-term renewal to kick the can down the road?” Lamar said. 

Despite the continued tariff and trade negotiations, Lamar said he has faith in the trade preference program and AGOA being renewed in some way by the end of the calendar year. 

If the administration should choose not to make that effort, he said, it could be viewed negatively by multiple economies during a time when some U.S. economic relationships are already strained. 

“I’m cautiously optimistic that the stars will align, that we can get this done before the end of the year,” he said. “If we don’t, we really create a worsened situation in Haiti, and we send a terrible message about whether the U.S. wants to stay engaged with the African continent, and I know that’s not the message the administration wants to send, and they’re very aware that their inaction sends a message they don’t want to send.”