Toward a New Industrial Revolution: Revitalizing American Soft Goods Manufacturing

As we celebrate our independence in the United States this July 4th, we should recognize that in the 2020s we're experiencing the first real challenge to globalization in a generation (and for good reason).

For 50 years we've exported the construction, development and design of soft goods (apparel, fabrics, etc) to low cost production environments, most significantly in Asia. The consequences are clear: in 2023 the United States can support less than 10% of the annual demand for the domestic consumer and defense industry with domestic manufacturing resources. According to the U.S. International Trade Commission, the United States imported around $127 billion worth of apparel, while the domestic apparel production was estimated at $12 billion by the Bureau of Economic Analysis.

In the arc of the United States' industrial history, a significant diminution has occurred in its once vibrant soft goods manufacturing sector. Between 1970 and 2021, American soft goods manufacturing witnessed a stark decrease in capacity, with the industry shedding over 7.2 million jobs, representing a fall of nearly 60% (U.S. Bureau of Labor Statistics, 2021). This decline in manufacturing has left the United States' defense and consumer industries critically reliant on imports, particularly from China and Southeast Asia. To reverse this, the United States needs to recalibrate its trade policies and invest in the skill development of its workforce.

The Rationale for Increased Tariffs

The case for increased tariffs on imported finished soft goods from China and Southeast Asia is compelling. Notably, the practice of leveraging tariffs to stimulate domestic industry has proven effective in several economies. For instance, in the 1980s, the United States instituted Voluntary Restraint Agreements to counteract the influx of inexpensive Japanese automobiles. Rather than escalating market prices, these tariffs incentivized Japanese manufacturers to establish factories within the United States, bolstering the domestic auto industry.

By raising tariffs on the approximately $110 billion worth of textiles and apparel imported from China alone (U.S. International Trade Commission, 2022), similar incentives could stimulate a revival of soft goods manufacturing within the United States.

The Need to Avoid Tariffs on Raw Materials

However, it is imperative that tariffs on raw materials and intermediate goods from Asia used in the manufacturing process are avoided in the near term. Such tariffs could stifle domestic manufacturing expansion by inflating production costs. Lessons from the U.S.-China trade war in 2018, where tariffs on Chinese steel led to a rise in domestic steel prices, adversely affecting dependent industries, exemplify the potential harm (Congressional Research Service, 2019).

Addressing Capacity Shortfall and Skill Deficiencies

The present manufacturing capacity within the United States is insufficient, a fact glaringly highlighted during the COVID-19 pandemic when a critical shortage of Personal Protective Equipment (PPE) was evident. Similarly, the U.S. defense industry, reliant on approximately 8,000 different textile items, often looks abroad to meet its demand (National Council of Textile Organizations, 2021).

However, the challenge is not solely about manufacturing capacity but also about bridging the skills gap. To cultivate a proficient workforce capable of propelling a manufacturing revolution, we must plan for (and assign federal funding resources to) extensive training programs spanning the next decade. These programs should encompass not just line workers but also pattern makers, designers, and engineers, fostering a comprehensive talent pool to support the industry. Along with an historic trade policy and revision of public purchasing rules (updated Berry amendment), there should be a Public / Private partnership with industry leaders, vocational schools and State funded educational institutions to create in a decade of investment in manufacturing skills training.

What Next

Economic development and national security necessitate a new industrial revolution in the United States, one that capitalizes on strategic tariffs, the development of new scaled soft goods manufacturing facilities, and training centers. The creation of equipment service centers to enhance productivity and the formulation of extensive training programs to bridge the skills gap are equally critical. Such a concerted effort will stimulate domestic industry, thereby mitigating reliance on foreign manufacturing and securing America's future economic and national security stability.