Business,  Marketing

Tariffs and Textiles in Interior Design

As an interior designer, workroom or anyone else in the trade, have you recently received a notice from your fabric sources about needing to raise the prices of goods due to the new tariffs on imported textiles?  What was your immediate reaction?  Did your mind go straight to how your bottom line would be affected?  Did you worry how to charge that much more to your clients?

On September 26th, I received the email from Lee Silberman CEO of the Robert Allen Duralee group:

As you may have seen in the news, beginning on Monday, September 24, 2018, the US Trade Representative’s office imposed a 10% tariff on virtually all Chinese textiles coming into the US. If no agreement between the US and China is reached by January 1, it has been stated by our government that the tariff will go up to 25%. As a result, effective September 24, 2018, The Robert Allen Duralee Group has raised prices on those items impacted by this tariff…

It is important to note that our price adjustments are dollar for dollar the same amount as the actual cost of the government-imposed tariff to us. It is possible in the future that some drapery hardware from Paris Texas Hardware and The Finial Company may be affected by the tariff as well.

 

(sigh….)  And so it starts.  Who gets the ultimate tax increase?  Our customers do, most likely.  Change is pain but it can be other things as well.  It could be the beginning of a do-over stating that, yes, we have given the Chinese the opportunity and the technology and the responsibility and American jobs and billions of dollars to supply us with manufactured goods, but it has backfired on us.  In many cases, they have abused the opportunity by stealing technology that we haven’t given them, ignored our patent rights and bullied us with it. We have taken employment for Americans and given the jobs to Chinese.  In the meantime, we have been losing the training and knowledge our people used to have to manufacture textiles as well as facilities and machinery to keep up.  Maybe we need to figure out how to get it back.

Fabric manufacturing is still alive in this country. Although China (number 1) and the European Union dominate as the top exporting textile companies, the United States is in the fourth position as an exporter.  In testimony, in May of this year before the U.S. Office of Trade and the public hearing about the proposed tariffs on China, the President of the National Council of Textile Organizations, Augie Tantillo testified,

“The U.S. textile industry urges the Trump administration to include textile and apparel end products in any Section 301 retaliatory tariff action against China,” Tantillo added as he noted that China’s predatory, illegal trade actions, including IPR theft, have contributed to the loss of millions of U.S. manufacturing jobs, including hundreds of thousands in textiles.

“China’s domination of global textile markets has clearly been aided by its rampant theft of U.S. textile intellectual property.  From the violation of patents on high-performance fibers, yarns, and fabrics to the infringement of copyrighted designs on textile home furnishings, China has gained pricing advantages through blatantly illegal activities.  Putting 301 tariffs on Chinese textile and apparel exports would send a long overdue signal that these predatory actions will no longer be tolerated.”http://www.ncto.org/u-s-textile-industry-calls-for-china-301-tariffs-on-textile-apparel-end-products/

 Reading the list of items that come under the new taxation gives one a realization of how thoroughly saturated our country has given itself over to Chinese mercy in the marketplace  https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff%20List-09.17.18.pdf.  (Find the raw materials used in the textile trade in the 5000 subheading listings). We are so dependent that even if we can do some of the manufacturing in the United States, the Chinese often hold the supplies needed for finishing – which will now be taxed 25% in January 2119.  Many companies in the U.S. worry that the tariffs will be in actuality a “Made in America” tax due to not being able to import the raw materials at reasonable costs needed to be made or sold in the States.

Another angle to this tangled web is that China’s labor cost has risen on average 7% yearly.  Couple that with tariffs, China is looking for ways to get around its dilemma.  One way is to go south for its labor seeking out countries like Viet Nam, Myanmar and others in southeast Asia.  Another, braver move, is to seek opportunities in the US of A.  We have cheaper utilities, land that is already primed for renewal and a hunger to get our manufacturing back.  The drawback here is that China may have the funding but they can’t bring their own skilled labor aboard and the labor force here has to be retrained or at the least brought up to date.   Companies from Brazil, Canada, China, Dubai, Great Britain, India, Israel, Japan, Korea, Mexico and Switzerland, as well as in the U.S., have projected plans to open or expand textile plants in Georgia,  North Carolina, South Carolina, Tennessee and a few other southern states.  Couple the interest from countries outside our borders with advancements in technology for cleaner, less noisy plants often employing robotics and substantial financial incentives and we very well see the tide turning to bring back textile manufacturing in the country better than ever.

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