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How Chinese Textile And Garment Foreign Trade Enterprises Cope With The Tariff Policy Of The United States On China

2025/4/10 14:21:00 0

　　 On April 2 local time, President Trump of the United States officially announced the imposition of "equivalent tariffs" on the world in accordance with the IEEPA (International Emergency Economic Power Act). A benchmark tariff of 10% will be imposed on global imports, which will take effect on April 5; Higher tax rates will be imposed on some economies, and will take effect on April 9 temporarily. According to the new policy, the United States will impose 34% of the equivalent tariff on China, adding to the 20% previously imposed, and this year the additional tariff imposed by the United States on China has reached 54%.

　　 Moreover, the "800 dollar small exemption" policy, which had been pending before, was also confirmed to be cancelled, and 30% tariff or 25 dollar tariff per piece would be levied (it would rise to 50 dollars per piece after June 1).

　　 For Chinese export enterprises, the impact of this policy combination is multiple. Traditional bulk commodity exports face higher tariff barriers, and the "small batch, multi batch" export model through cross-border e-commerce channels has also been directly curbed. At the same time, because Vietnam, Indonesia, Cambodia and other countries have also begun to impose tariffs, China's export enterprises have significantly increased the difficulty of passing the "third party" entrepot trade.

　　 Foreign trade factories hit in the "cold winter"

　　 In fact, the imposition of tariffs is a common challenge for all enterprises exporting to the United States, but there is no doubt that the situation of foreign trade factories is more serious.

　　 An enterprise specializing in sock production in Jiangsu Province recently told a reporter from Textile and Clothing Weekly that the tariff adjustment has led to a sharp rise in the export costs of enterprises. However, in order to maintain market competitiveness, it is difficult for enterprises to completely transfer costs to the United States, and profit margins have been severely squeezed. Next, it may further lead to order reduction and sales decline. "After the imposition of tariffs, the procurement costs of American importers will increase, and they will tend to reduce their purchases from China and turn to other low-cost countries. This will lead to a sharp decline in orders from Chinese textile enterprises to the United States, a precipitous decline in sales, difficulties in capital turnover of enterprises, and possibly a backlog of inventory." The person in charge also said that the United States will impose tariffs on countries with trade deficits, The difficulty of Chinese enterprises' entrepot trade through Vietnam, Indonesia, Cambodia and other "third parties" has increased significantly, and the way of indirect exports to the United States has also been blocked.

　　 The immediate problem is that the cooperation rhythm between upstream and downstream enterprises in the supply chain is disrupted, and problems occur in raw material supply, production planning, product delivery and other links. For example, upstream raw material suppliers are afraid of reducing orders from downstream enterprises and dare not produce in large quantities, leading to unstable raw material supply; Downstream production enterprises dare not purchase raw materials blindly due to uncertain orders, which affects normal production.

　　 "The wool comes from the sheep", the cost rises, and the price rise is almost a sure step. But the price rise also means that the price advantage of China's supply chain is weakened. In fact, before the announcement of this round of tariffs, some foreign trade enterprises said that American customers would not bear the increased costs alone, either through negotiation or termination of cooperation. The business situation of the foreign trade factory is closely related to the order of the head customer. If the order of a major customer is not completed, the factory may be closed; However, its limited profit space is difficult to be transferred. Even if the two sides bear half of the tariff, it may also be the entire profit of the factory.

　　 Seagoing enterprises are "attacked from behind" 　　

　　 Under the difficult situation, building a factory at sea was the "way out" that many factories had been looking forward to. Faced with the high tariffs that the United States may impose on China, many factories and enterprises choose to transfer their supply chains to Southeast Asian countries with lower costs. However, at present, the United States has implemented 46% tariff parity with Vietnam, 49% tariff parity with Cambodia, and 32% tariff parity with Indonesia, which will significantly reduce the cost advantage of textile enterprises going to Southeast Asia. The strategy of "export by way" is invalid, and the overall profit space of the industry will be compressed.

　　 According to statistics, only 2.5% of clothing and 1% of shoes in the United States are made locally, while Asian countries such as Vietnam are the main sources of imports of clothing, shoes and hats in the United States. According to the data of Vietnam Textile and Clothing Association, Vietnam's textile and clothing exports will reach 44 billion dollars in 2024. The United States is its largest market, and more than 35% of the production capacity of clothing brands such as Nike and Lululemont will be concentrated in Vietnam. As the so-called "equivalent tariff" measures of the United States are about to be implemented, these clothing brands will be forced to raise prices.

　　 As the largest production base of chemical fiber fabrics in China, the fabrics produced by Jiangsu Shengze are directly sold to Southeast Asian countries, then processed into ready to wear clothes, and finally sold to Europe and the United States. "60% of our exports are sold to Southeast Asia. After tariffs are added, the final consumption will be in the United States. After tariffs are added, it will be transmitted to the upstream of our textile industry chain, especially in our textile and weaving sector. Either profit margins are compressed or orders are reduced. Although the impact and challenge are not small, Shengze Town has a complete textile industry chain foundation, and also has high technology content. " Lu Ziping, deputy mayor of Shengze Town, Wujiang District, Suzhou, said that Shengze is a world-class textile industry cluster, especially with the world's leading high-end industrial silk. At present, it is difficult to find substitutes for real silk products in the international market. Therefore, this is the middle and long-term confidence of Shengze enterprises and a source of confidence to cope with current tariff shocks.

　　 Of course, for the US textile industry itself, in the short term, local enterprises will reduce competition and expand market share due to tariff protection. However, in the long run, retaliatory tariffs of other countries will hinder their overseas market expansion. In addition, the rise in domestic product prices will reduce consumers' willingness to buy, which will have a negative impact on the overall development of the industry. In addition, the US textile industry relies on the global supply chain, and the imposition of "equivalent tariffs" may lead to supply chain disruption or cost increase, affecting production efficiency and product quality.

　　 In the short term, China's textile exports to the United States may be impacted by "equivalent tariffs". However, the tariff range imposed by the major trading partners of the United States is slightly higher than that of the United States, giving Chinese goods a "potential tariff advantage". If other countries' textile exports to the United States are reduced due to "equivalent tariffs", Chinese textile enterprises are expected to seize shares in other markets by virtue of their industrial and cost advantages, partially making up for losses in the United States market.

　　 The imposition of "equivalent tariffs" by the United States has brought many uncertainties to the global textile industry. Textile enterprises need to pay close attention to policy dynamics, flexibly adjust market strategies and supply chain layout, and find new development opportunities in the crisis.

The transformation of cross-border e-commerce from "low price competition"

　　 In addition to the tariff policy, Trump also signed an administrative order announcing that the "small tax exemption" policy (T86 model) will be officially cancelled on May 2. The administrative order pointed out that all goods related mail sent through the international postal network with a value of 800 dollars or less and meeting the minimum exemption conditions should pay a tariff of 30% of its value or 25 dollars per piece (increased to 50 dollars per piece after June 1, 2025). This will supersede any other duties, including those imposed by previous orders. Previously, this policy was temporarily cancelled in early February, but because the United States customs system was overwhelmed, resulting in millions of packages backlog, the Trump government was forced to announce a suspension of implementation on February 7.

　　 The amount of $800 covers most categories of cross-border small packages in China. China's cross-border e-commerce platforms, represented by Temu and Shein, realized rapid expansion in the United States through the T86 model in the early days. Now, the full custody business of all platforms also mainly depends on this policy. For small and medium-sized enterprises with limited financial strength, they are also more likely to use this to sell their goods to the U.S. market.

　　 The cancellation of the small amount exemption policy also means that the T86 customs clearance mode is invalid. Direct mail sellers may face longer processing time, higher declaration costs and more complex processes. The person in charge of a Guangdong based cross-border export company said: "90% of our orders are sent by direct mail. After the tax exemption policy below 800 dollars is cancelled, the price advantage of the products will be lost, and the American market may not be easy to do."

　　 It is generally believed in the industry that distribution sellers and low profit sellers who rely on direct mail face greater risks, and the urgency of transformation is more obvious.

　　 "After the cancellation of T86, the form of cross-border small packages is difficult to exist. Overseas buyers have a large number of spot goods to put in the local market for retail or resale," said Zhang Kuo, president of Ali International Station. "In the medium and long term, the proportion of overseas warehouses will increase."

　　 The policy has been implemented, and overseas enterprises have to adjust the existing model. Overseas warehouse, localized operation and diversified market layout will become the core strategy to deal with trade barriers. Some industry experts believe that this will also force Chinese enterprises to shift from "low price competition" to branding and supply chain globalization layout, which may promote industrial upgrading in the long run.

　　 Build multiple defense lines to fight against foreign trade risks

　　 China is a super large economy. In recent years, we have actively built a diversified market, and our dependence on the US market has declined.

　　 The share of China's exports to the United States in total exports has dropped from 19.2% in 2018 to 14.7% in 2024, and the decline in exports to the United States will not have a disruptive impact on the overall economy. However, many products in the United States are highly dependent on me. At present, the United States is not only inseparable from China in many consumer goods, but also needs to import many investment goods and intermediate products from China. Some categories are more than 50% dependent. It is difficult to find alternative sources in the international market in the short term. Under the background of deep integration of global production and supply chains, Sino US trade cannot be completely interrupted.

　　 At the same time, emerging markets have huge potential for economic and trade cooperation, which has increasingly become an important foundation for China to stabilize foreign trade. China is a major trading partner of more than 150 countries and regions in the world. Since 2018, the proportion of China's exports to ASEAN has increased from 12.8% to 16.4%, and the proportion of China's exports to countries jointly building the "Belt and Road" has increased from 38.7% to 47.8%, maintaining a rapid growth momentum.

　　 The domestic market has broad buffer space and is an important rear area. According to statistics, among the hundreds of thousands of enterprises with export performance in 2024, nearly 85% of them will carry out domestic sales at the same time, accounting for nearly 75% of the total sales. The country is accelerating to break through the "export to domestic sales" policy blockages and blockages, and various policies to expand domestic demand are also expanding. The accommodation effect of the domestic demand market will become increasingly apparent.

　　 On the demand side, the demand of the US market still exists, and a large part of it is rigid demand; On the supply side, Made in China is still the most efficient supply chain in the world. Even if there are risks, business growth is still the main trend. As the world's second largest economy and the second largest commodity consumption market, no matter how the international situation changes, China's door to the outside world will only open wider and wider!