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What Will Trump's Proposed Border Taxes Mean for Ethical Fashion Brands?

A look at how socially responsible labels in the U.S. and abroad will be affected by the president's proposed tariffs.
Photo: Cosa Buena

Photo: Cosa Buena

When Donald Trump asserted that he would create 25 million new jobs for Americans during his inaugural address in January, he was making a bold claim. If successful, it would be the greatest number of jobs created under any president in American history — an accomplishment worthy of bipartisan praise.

But the roadmap Trump presented for how to get there has already become controversial on both sides of the aisle. As part of an initiative to encourage the country to "buy American and hire American," Trump's administration has proposed heavy import taxes that would advantage manufacturers who make their goods in the U.S. over those who produce elsewhere.

While the policy would have a notable impact on any fashion retailer that produces overseas, be that H&M or Madewell, the effect on brands that use fashion as a tool for development — which tend to be smaller labels — would be felt even more acutely. These "social enterprises" use for-profit business models to address issues like poverty, education, hygiene and more through job creation and social programming.

Mexico-based Cosa Buena is one such organization. "The proposed import tariffs could have a very negative effect on my small business and limit opportunities for growth because they would force me to increase the cost of our goods," says Vera Claire, Cosa Buena's founder. Cosa Buena focuses on education initiatives for its artisans, in addition to connecting them with a global market for their goods.

While she hopes the education aspect of the brand has given her artisan partners skills that would benefit them regardless of what happens, she admits that her ability to create meaningful impact on the ground would be hurt by high import tariffs. "I often hear people say that they would love to shop ethical brands, but that they are too expensive," she says. "It is already hard to convince even the well-intentioned consumer to pay more for something because it was produced or manufactured sustainably and the manufacturers were paid fair wages. Making these adjustments would make it even harder to reach consumers."

Kelvin Lai, creative director of Siizu, a label that produces sustainably made and accessibly priced clothing in China, Japan and the U.S., concurs. "We would review every step of our processes in order to minimize the overall cost so that this tariff would not have a major effect on our customers," he says, but he acknowledges that keeping prices down without compromising on values presents "a difficult challenge."

Inside one of Siizu's partner factories in China. Photo: Siizu

Inside one of Siizu's partner factories in China. Photo: Siizu

In theory, consumers who care about the ethics behind the clothing they wear should be willing to pay a little bit more to make sure that people and the planet were treated well in the production process. But studies show that American shoppers ultimately value a deal over everything else — they're more likely to buy something inexpensive, regardless of where it came from, than to actually "buy American" on principle alone. "You could call it the 'Wal-Martization' of America," says CNNMoney senior markets and economy writer Heather Long. "We're discount shoppers."

While some ethical labels believe navigating the increased costs of an import tariff would be tough but not insurmountable, others see it as potentially devastating for their business model. Chid Liberty, founder of Liberia-based ethical label Uniform, is one such brand leader. "I think we would essentially go back to the drawing board [if the tariffs passed]," he says. "I can't imagine that we would actually have a sustainable business with any type of border adjusted tariff."

Liberty's company was created in part to stimulate development in the Liberian capital of Monrovia, and it partners with local authorities to provide uniforms that allow low-income children to stay in school. While he sympathizes with the reasoning behind a border tax, he thinks it may not accomplish what it's intended to.

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Uniform uses fashion production and sales to benefit children's education in Liberia. Photo: Daniel Arnold for Uniform

Uniform uses fashion production and sales to benefit children's education in Liberia. Photo: Daniel Arnold for Uniform

"I love the sentiment of Made in America. I want people to have meaningful work in our country, too," he says. "But it's silly to believe we're somehow going to go back in time to another industrial revolution where the U.S. becomes a major garment exporter to the rest of the world. I think that's a foolish use of our resources and our knowledge economy."

Liberty imagines that if manufacturing were ever to truly thrive again in the United States, it would come about by following a model more like Germany's, which specializes in high-skill areas like technology and clean energy. If countries like Bangladesh can do clothing manufacturing so much cheaper than the U.S. will, he reasons, why not invest in fields like tech that would give the U.S. a competitive edge?

Long agrees that there may be a problem with bringing relatively low-skill jobs like sewing and cutting back to the U.S., but for slightly different reasons. "Even if the U.S. started to manufacture and produce clothing that has recently been done overseas, it could possibly be produced by robots rather than humans," she explains. "There are these proponents saying, 'Donald Trump wants to save jobs,' but he's really bringing back the jobs for the robots."

Robots assembling an automobile in Wolfsburg, Germany. Photo: Adam Berry/Getty Images

Robots assembling an automobile in Wolfsburg, Germany. Photo: Adam Berry/Getty Images

While the possibility of machines taking over more and more of the process is very real in the near future, the fact remains that, for now, it takes dozens of human hands to create every garment that ends up in your favorite retailer. And there's a whole segment of the ethical fashion space that champions Made in America goods in part because the proximity and stricter regulations in the U.S. allow brands to more easily monitor how the laborers behind their garments are treated.

For ethical Made in America brands, there are obvious boons to Trump's proposed tariffs. Because they've already factored the higher costs of producing stateside into their business model, the tariffs taxing out-of-country products would only make their USA-made goods more competitive — and if fast-fashion goods made in sweatshops weren't so cheap anymore, choosing their often higher-quality American-made counterparts might become a no-brainer for consumers.

Still, some conscious labels find it hard to rejoice in the proposed measures. One brand leader who wished to remain anonymous has worked in the Los Angeles garment industry for decades and sees the tariffs as useless if they're not accompanied by policies that protect garment laborers here in the U.S. "The same people that are pushing for Made in America are pushing for not protecting immigrants," the brand spokesperson said. "I think they have to go hand in hand. I don't think that I've ever met a garment worker in Los Angeles that was born in the United States."

Whether producing here or abroad, it's clear that the border adjusted taxes (or "reciprocal taxes," as they've more recently been called) raise concerns for ethical labels of all stripes. Still, some are hopeful that there could be real upsides in terms of consumer awareness about where their goods come from. 

"One weird benefit of what Trump is doing is that he is causing consumers to look again at where their things are made," Long says. "I'm hopeful that consumers may pause and actually ask, 'Where and how was this thing made?', which is something we've gotten out of the habit of doing."

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