What will the apparel industry look like post-pandemic?

The apparel and footwear industry is undergoing some profound changes as the pandemic’s grip loosens, what will the industry look like?

The apparel and footwear sector were already under siege when the COVID-19 pandemic struck. Tariffs introduced by the former Trump Administration had led to retaliatory tariffs igniting trade skirmishes with many of the nation’s trading partners and all out trade war with China. Even with the trade deal negotiated in late 2019, China and the United States still remain at odds over trade. And the Biden administration, while it isn’t as wed to the issue of reducing trade deficits as the former administration, nevertheless is unlikely to give up a negotiating advantage without China conceding on some points. There was also another round of tariff hikes on China designated to take effect on March 31st.

The Sri Rejeki Isman, known as Sritex, factory in Solo, Indonesia. (Photo: Dimas Ardian/Bloomberg)
The Sri Rejeki Isman, known as Sritex, factory in Solo, Indonesia. (Photo: Dimas Ardian/Bloomberg)

It is with this backdrop that Stephen Lamar, chief executive officer of the American Apparel and Footwear Association (AAFA) asked that the tariffs be removed quickly, explaining in an interview with Seana Smith of Yahoo Finance, “Look, during a pandemic is the worst time to be charging tariffs. It’s a cost. It means that we’re paying these taxes to the US government, that prices get inflated. It denies us the ability to hire more workers to pass along those savings to consumers. This is the wrong time to be adding tariffs. So, we’re hoping they’ll be able to turn their attention to that as quickly as they possibly can.”

Lamar (and the AAFA) has many reasons to want the tariffs to drop but the bottom line is that the apparel and footwear industry has been taking a beating and have either closed shops or gone outright into bankruptcy like legacy department stores and outlets including Century 21, Lord & Taylor, Neiman Marcus, the Gap, Brooks Brothers, JC Penney, Abercrombie & Fitch, Francesca’s and Macys.

To be sure, tariffs weren’t the sole cause. The pandemic’s lockdowns accelerated a move to e-commerce that devastated brick and mortar business. But for an industry based largely on imported goods, the double whammy of tariffs and lockdowns has altered the business landscape.

The question Lamar and others have in the post-pandemic reality is will the apparel and footwear industry rebound, and in what fashion?

Stimulating a Recovery

For now, Lamar got his wish. On March 11th, President Joe Biden signed the $1.9 trillion COVID-19 relief bill into law a few days after temporarily extending tariff exclusions. And as Lamar in his statement said, “This relief comes just days after the decision to temporarily extend tariff exclusions for imports of crucial Personal Protective Equipment (PPE) and to temporarily lift other punitive tariffs which have been undue taxes on American businesses and consumers.”

But Lamar also…

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