The adjustments to the U.S.-China trade tariffs have indeed had a significant impact on garment export enterprises.
Details of Tariff Adjustments
According to the Joint Statement of the U.S.-China Geneva Economic and Trade Talks released on May 12, the U.S. will cancel 91% of the tariffs imposed under the executive orders of April 8 and 9 starting from May 14. It will modify the 34% "reciprocal tariffs" in the April 2 executive order, suspend 24% of the tariffs for 90 days, and retain the remaining 10%. China will correspondingly cancel 91% of its countermeasures tariffs, suspend 24% of its countermeasures tariffs for 90 days, and pause or remove non-tariff countermeasures.
Impacts on Garment Export Enterprises
• Cost and Profit: The previously imposed high U.S. tariffs significantly increased the cost of garment exporters and severely compressed profit margins. Even with the current tariff reduction, the remaining 10% reciprocal tariffs—combined with an overall 30% tariff increase compared to last year—still keep export costs high and affect profitability.
• Order Situation: Before the tariff adjustments, some enterprises faced the risk of order loss due to tariffs. However, with the temporary tariff easing, U.S. orders for some companies have gradually resumed. Nevertheless, policy uncertainties make it difficult for enterprises to plan stable long-term orders.
• Market Competitiveness: The tariff reduction has enhanced the price competitiveness of Chinese clothing. In particular, orders for price-sensitive low- and mid-end textiles may accelerate their return, with a noticeable increase in U.S. orders expected in the next 90 days.
Suggestions for Enterprises
• Diversify Markets: Expand into other markets such as countries along the Belt and Road Initiative, the EU, and Southeast Asia to reduce reliance on the U.S. market and diversify trade risks.
• Technological Upgrades: Introduce smart technologies like AI cutting beds and 3D knitting to improve production efficiency, reduce costs, and enhance product quality and added value.
• Optimize Supply Chains: Consider establishing overseas warehouses at appropriate times to reduce uncertainties and extra costs from direct shipping, while strengthening collaboration with upstream and downstream enterprises to jointly address market changes.