Asian nations may gain as US threatens additional tariffs.

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Several Asian nations may gain in the US clothing market if the threat to impose additional tariffs on Chinese clothing imports is carried out, says a report by global business information firm Textiles Intelligence. If additional tariffs are imposed, the landed prices of imports from Chinese suppliers will rise, negatively affecting imports from there. Suppliers in China have been under pressure in recent years to reduce their prices in order to maintain order volumes. Also set to benefit are the industries in Bangladesh, Cambodia, Indonesia and Sri Lanka, despite the fact that US imports from each of these four countries have either stalled or declined in recent years, says a report in issue 42 of ‘Global Apparel Markets’ by the company. ‘Global Apparel Markets’ is published four times a year by Textiles Intelligence. Each issue provides an independent and worldwide perspective on the global textile industry.

The United States has started the legal process necessary to impose additional tariffs on virtually all remaining imports from China, including clothing, after it imposed additional tariffs on $200 billion worth of imports from China in May 2019. As a result, the switch in sourcing away from China which has been apparent in recent years will accelerate, and other major supplying countries in Asia, especially India and Vietnam, are likely to make gains. In South and Central America, however, suppliers in El Salvador, Honduras and Mexico are likely to continue to struggle to maintain orders. To offset any decline in US clothing imports from China, and maintain production levels, Chinese producers may set up outward processing arrangements (OPAs) with their counterparts in other Asian countries so that the operations which determine a garment’s origin, such as sewing, are performed in other countries while operations which do not affect a garment’s origin, such as minor sewing, finishing and packaging, are carried out in China, says the report.

Garments manufactured in this way would be deemed to have originated in other Asian countries, rather than China, and as a result they would not be subject to additional tariffs, a press release from the company added.