The Trump administration announced new tariffs on imports from 60 economies last month, targeting goods produced with forced labor. A clause in the policy, called the “textile mechanism,” has drawn sharp criticism from U.S. textile manufacturers. They argue it will harm domestic production while benefiting Asian suppliers.
The National Council of Textile Organizations (NCTO) warned the exemption allows Bangladesh, Cambodia, Indonesia, and Malaysia to avoid Section 301 duties on textile and apparel imports based on those economies’ imports of U.S. cotton and textiles through tariff-rate quotas. The NCTO also noted the administration did not exempt textile inputs and machinery that are not available domestically.
Manufacturers say policy backfires on domestic industry
NCTO President and CEO Kim Glas called the mechanism a setback, saying it will worsen job losses in an industry already struggling. The U.S. textile sector has closed 41 factories in the past two-plus years, leaving 453,000 workers employed. Glas said no other industry has been more disadvantaged by forced labor than the U.S. textile industry.
“We remain strongly concerned that USTR’s textile mechanism will harm the very domestic manufacturers the administration seeks to help,” Glas said. “These tariff benefits for Asia will come at the expense of U.S. textile manufacturers and the Western Hemisphere—the destination for 70% of total annual U.S. textile and apparel exports. Our hemispheric supply chains compete directly against Asia. Any apparel market shift to sources outside of the Western Hemisphere means less opportunities for U.S. textile exports and further contraction of our industry at home.”
Since 2019, Asia has expanded its U.S. market share from 77% to 79% while the Western Hemisphere’s share has narrowed from 16% to 12%. U.S. apparel imports from major Asian supplier countries that use textile components from China, including Bangladesh and Indonesia, increased by double digits last year. The NCTO stated the removal of Section 301 duties on apparel imports from Asian countries will only further accelerate these trends.
Related: 5 Trendy Earrings that doesn’t Require Ear Piercing
Glas said the mechanism would not promote the export of U.S. yarns and fabrics due to Asia’s reliance on subsidized textile inputs. She added the policy would have seriously damaging effects for domestic textile manufacturers if U.S. raw cotton is included in the mechanism.
Alternative proposal seeks to shift focus to Western Hemisphere
NCTO and retail industry groups united for the first time behind an alternative mechanism proposal to USTR that had the potential to double U.S. textile exports, spur growth and investment in the U.S. and the Western Hemisphere, and address forced labor concerns.
The textile mechanism instead offers duty relief based on imports of U.S. cotton. The NCTO says cotton produced with Uyghur forced labor in Xinjiang, China, is pervasive in global textile and apparel supply chains and has resulted in irreparable economic harm to the U.S. textile industry and the Western Hemisphere. The group has called for stricter enforcement of the Uyghur Forced Labor Prevention Act, which it says has declined by every measure.
For U.S. textile workers, the consequences are immediate. The industry’s decline has been steady, and the new tariff exemptions may accelerate the loss of domestic capacity. The NCTO argues the policy’s unintended effects could outweigh its goal of combating forced labor.
