Reality check on push for Made-in-USA goods

The Star

The new US administration's Made-in-USA push is prompting some US clothing retailers to expand domestic production of everything from T-shirts to coats and suits.  But limited capacity makes a large-scale shift to US production unlikely, and American-made clothing comes at higher cost because of elevated labour expense and tariffs on materials.  WATCH MORE: https://thestartv.com/c/news SUBSCRIBE: https://cutt.ly/TheStar LIKE: https://fb.com/TheStarOnline

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00:00Already, numerous car companies have announced that they will be building massive automobile

00:23plants in America, with Honda just announcing a new plant in Indiana.

00:29One of the largest anywhere in the world.

00:32If you don't make your product in America, however, under the Trump administration, you

00:36will pay a tariff, and in some cases, a rather large one.

00:54I mean, Trump said it from the beginning that he was going to do this.

00:58I think all of us just hope it was a negotiation ploy, which I still think it is, because

01:03it can't be long-term, because it would have a devastating effect on the economy.

01:08When we get a price increase, if we can't absorb it, we have to pass it on, and that's

01:13what it amounts to.

01:14It's going to be a tax or a price increase, however you want to call it.

01:19It's a cost to us, and we'd have to pass it on.

01:23Let's hope it doesn't come to that.

01:25We're definitely getting a lot more testing the waters of domestic manufacturing.

01:32Just this morning, I received an email from somebody we made shirts for 20 years ago that

01:37used to work with my father here, and they said, hey, we'd be interested in doing, maybe

01:42getting into a little bit of small batch production again with you.

01:45Over the last, probably six months since November, simply, we've definitely gotten a lot more

01:51interest in domestic production again.

01:55It certainly seems to be a hot topic in the industry.

01:58I think that there's got to be a cautious approach to how much business we bring into

02:02the facility.

02:04We certainly don't want to overload it and kick out the existing customer base that has

02:09been a steady with us.

02:11We all get excited with new business, but I think it has to be measured about how much

02:15we bring in.

02:17That's going to be a challenge to scale it.

02:20We live and die by the cost sheet, which means how much does it cost to make a jacket,

02:25a fine tailored jacket.

02:27When we look at manufacturing inputs, there are two main inputs.

02:30The first input is labor.

02:32The second input is materials.

02:3470% of what we make here is labor, 30% is material.

02:39The tariff situation, I think, has certainly created a lot of uncertainty in the marketplace.

02:46We feel a lot of pressure from China, Indonesia, Malaysia, Vietnam, India.

02:53It's definitely a global market.

02:55We source right now from China 100% of our buttons because there is no domestic supply

03:01chain for American-made buttons, so there's no other option for me to go.

03:07The first initial 10% increase was combined with an 8% increase on the side of China.

03:15My prices went up 18%, which basically translates to about a $5,400 per order extra charges

03:23in just buttons alone.

03:26Policymakers understand really well headline risk.

03:30The headline hits, and whether it's an automated system that reads an institutional news feed

03:37and instantly executes a trade, or a human that sees what's going on, sees their portfolio

03:46needs to be rebalanced, it's the same reaction function.

03:48They're reacting to the headline.

03:51That's what markets do.

03:52They price the present value of today's risk for tomorrow.

03:57The U.S. has de-industrialized over the last few decades.

04:02We've offshored a lot of our industrial capacity.

04:06If you look at the performance of the working class American, the best indicator for that

04:14is actually real median household income.

04:18I think what the President rightly recognizes is we need to shift back to being an industrial

04:24power if we want to be a strong nation.

04:27We have to be a nation that makes things.

04:30To accomplish that, you need a multitude of policies working together, and tariffs are

04:35one of those policies.

04:38We've seen throughout our country's history effective use of tariffs to drive domestic

04:44production.

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