TARIFF TALK: IS MADE IN THE USA A "MYTH"?
By Sydney Badger, Founder of Mile One, a boutique supply chain and sourcing firm; author of the fashion and sustainability substack, Tabs Open.
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With tariff pressures back in the headlines, we’re once again asking — can fashion ever truly be Made in the USA? What’s myth, what’s reality, and how should companies respond in this chaotic time?
Let's talk about tariffs, manufacturing and where our stuff is getting made these days amidst the noise of Trump’s first seven months (ugh, so long to go). These on-again, off-again tariffs are now in place as of August 7th and we have yet to see the impact they’ll have on the price of…well, everything, and, you know, the economy, and the disillusionment that the rest of the world has with America.
“IT’S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!” Trump proclaimed just before the deadline in a post on social media.
Flash quiz: what’s the current tariff rate on products coming into the US from Vietnam? Canada? China? TBH, I don’t bloody know because it’s impossible to keep track. So I’ve been using this handy reporting from Yale’s Budget Lab to keep abreast of wtf is going on and NY Times’ map for real-time (I think?) updates on country by country tariff rates.
According to Yale, as of August 1st, consumers face an average effective tariff rate of 18.3%, the highest since 1934. The effective tariff rate considers both the tariff on the final product (i.e. dress) and the tariff on the imported inputs (fabric, thread, buttons etc.) And, in case you’re curious, Vietnam - one of the largest producers of fashion globally - is currently at 20%, Canada at 35% (!!!) and China at 30%.
My not-so-hot take is that fashion manufacturing is most definitely not coming back to the U.S. About 97% of the clothes and shoes sold in the U.S. are imported, according to the American Apparel and Footwear Association. Quite simply, we don’t have the labor, skillset or infrastructure to meaningfully increase clothing production in the U.S.
But there is a lot of opportunity for the local circular economy: recommerce, reverse logistics, maybe recycling although I’m still not convinced that the economics will pan out (nor are some experts I’ve talked to). I’ve talked about returns before and that’s still an $890 billion problem in the US alone. Plenty of work to be done in this space and I plan on deep diving the world of recommerce, tech and logistics infrastructure in a future post. Boston Consulting Group (BCG) estimates that the “fashion industry could see waste recycling rates surpass 30%, generating new fibers with a raw material value worth more than $50 billion and creating approximately 180,000 new jobs.” This needs to be further examined
I spoke to the head of sourcing at a large ecommerce brand with a huge fashion and home business (over $700MM) and they told me that they’d already moved 100% of their production out of China in the last 6 months. And this is a supply chain that was predominantly China-based for the past 6 years. That’s no small feat. I was surprised to hear that they’d moved that quickly in response to some of Trump’s announcements given that other leaders’ responses have been to wait it out. “Trump just wants a deal and the second Wall Street turns on him, he’ll back down.” Plus, they say, it’s all too unpredictable to do anything strategic.
Most fashion companies have already moved sourcing out of China with lower wages luring companies to Bangladesh, Vietnam, Sri Lanka, India and even into Africa in the past ten years but the latest tariffs are really throwing a curve ball at every company with a global supply chain. But no, these orders aren’t moving to the US.
Let’s examine the bigger Trump strategy, to bring manufacturing - and jobs - back to the US and reduce reliance on other countries. Is it possible? Not for fashion my friends! This article by a manufacturing expert who has had a seemingly credible perspective on manufacturing having worked in Chinese, Mexican and US factories shares a really compelling breakdown on why bringing manufacturing back to the US won’t work.
It’s long so, if you don’t feel like reading the whole thing, here are a few of the takeaways that I think are spot on:
Chinese manufacturing labor isn’t just cheaper. It’s better… It’s the work ethic, knowhow, commitment, combined with top notch infrastructure, that makes China the most powerful manufacturing country in the world today.
You cannot underestimate what 40+ years of manufacturing prowess, experience, supply chain infrastructure does for a country, and for its culture. America is so far removed from manufacturing now that we don’t have any idea about how stuff is made. Nor do we really care. We care (maybe) about the materials, we hope they were made in a factory that was clean and paid people fairly but, we really don’t want to know.
When I was testing out different taglines for Public Habit in 2018, we experimented with something along the lines of, “Quality, straight from the factory floor.” Or, “Quality, factory direct to you.” Ok, I know they both suck but, we teased out the fact that having the word “factory” in our tagline was a major turnoff. No one wanted to hear about the factory unless it was an atelier or a workshop, whatever that means. But, the idea that 99.99999% of our clothing is mass-produced in a factory, typically on the other side of the world, by a worker who gets paid less than $300/month (current wage rates in Vietnam), no thank you we say. I don’t want to see it.
And the difference I felt in China is that manufacturing is part of their modern DNA. Millennials and Gen-Z, while they don’t aspire to work in manufacturing, they understand how it works, the economics of it, the importance of it, and they still don’t want to do it.
We have forgotten how to make products people wrongly consider to be basic, too.
More of the above. We don’t have this muscle anymore.
By the time “made in America” has begun, we will be electing a new president.
It typically takes up to 2 years to set up and establish a fully functioning factory and, guess what, most of that machinery required to run a cut and sew factory would be imported. I haven’t seen any talk of substantial subsidies for US clothing manufacturing, have you?
I do see that there are some exciting innovations happening right here at home, like Unspun’s on-demand weaving machines, but this is an expensive, sub-scale operation at this stage. And they are certainly seeing some tailwinds right now from the general panic around overseas supply chains. Additionally, there is a lot of momentum in reverse logistics, sorting, conditioning and recommerce but, the circular economy is still the Wild Wild West as far as I can tell.
Americans want less crime, good schools for their kids, and inexpensive healthcare.
They don’t want to be sewing shirts. The United States is trying to bring back the jobs that China doesn’t even want. They have policies to reduce low value manufacturing, yet we are applying tariffs to bring it back. It’s incomprehensible.
Perhaps most importantly, Americans don’t want factory jobs. We love being a consumer economy and we are so good at it. We’ve become a service economy and many economists believe that this specialization globally is good for productivity (but also good for persisting post-colonial tropes).
LA garment factory
Manufacturing clothing in the US is here, mostly in LA, some in NY and some in the South. And most of the workers in the industry are Hispanic or Latino. Listen to NPR’s Planet Money ep on “Made in America” to remind us what these jobs look like and who’s actually doing the work today. The norm is to pay workers - often undocumented workers - by the “piece-rate” and they’ll make something like $0.10/piece. So, the more they finish, the more they get paid. That leads to a lot of long hours and back-breaking work. And, at the end of the day, an LA garment worker, paid under-the-table in cash, is making about $1500/month, including overtime. And that’s still in conditions that could be much worse than you’ll find in Vietnam or Sri Lanka. And that’s still over 5x the cost of wages overseas. The maths doesn’t match.
So, what would I do if I were running a Global Fashion supply chain today?
When I work with brands today, either in an advisory capacity or as a client with Mile One, I have the same advice regardless of who I’m talking to, large or small. I’m particularly hopeful that in this really wild moment that we’re in, small businesses can find some opportunity to differentiate and rethink their operations more nimbly than bigger operations. You have less to lose and lots to gain.
Diversify. From chaos arises opportunity and now is a great time to rethink your supply chain to build resilience.
Double-down on material inputs. Where are you sourcing your raw materials? Can you hold more greige and hold it so that you can have more flexibility when it comes to your finished goods production?
Maintain an open line of communication and cement long-term partnerships with your key suppliers. They’re just as nervous as you are.
Experiment. Where is there an opportunity to test something new that you’ve been holding off on? Resale? New category? New channel? I would lean into the uncertainty and see what you can unlock that could also diversify revenue or reduce channel reliance.
So, do I think there will be pockets of production in America in the next twenty years? Yes. Especially for small-batch, highly automated (and expensive) quick turn production or merch. Look to Unspun, Resonance, Tailored Industry to see some of the emerging, tech-enabled, low waste production solutions in the US. And, of course, there’s always merch. Some of my favorite partners: Bio Blanks in LA, Midnight Supply printer in Washington, and of course, Mile One for your one-stop shop.
But, America’s fashion production days are behind us with better, faster and cheaper production too well entrenched overseas to ever be economically viable in the US. And that’s not a bad thing. Let’s specialize, embrace a globalized world - warts and all - and realize we cannot self-isolate if we want to prepare for the next 50+ years of chaos and change.
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