Tariffs Driving Industry Anxiety Even for Goods Outside Section 301 Lists, T-Shirt Importer Says

SanMar Corp., which imports T-shirts, sweatshirts and polo shirts that are used for fun runs, corporate logos and the like, hasn't been hit with Section 301 tariffs yet, but its executives are anxiously watching trade policy. Melissa Nelson, general counsel for SanMar, said she used to be able to stay away from Washington, D.C., but with the surge of tariffs in the last year, that's no longer true. Even Section 232 tariffs, which you would not think would affect an apparel importer, are increasing costs for them. Nelson explained that SanMar is buying clothes racks for a Jacksonville, Florida, warehouse; she said they're worried about the cost.

Nelson, who was speaking at the Washington International Trade Association annual conference Jan. 29, disagreed with a fellow panelist that tariffs are not a primary consideration for sourcing, because of the impact of regulations, infrastructure and other business climate factors. "Pennies matter when you're selling a white T-shirt," Nelson said. She said that SanMar sources from either 16 or 17 countries right now. "We've been taking advantage of CAFTA. We're taking advantage of AGOA," she said, referring to the Central America Free Trade Agreement and the African Growth and Opportunity Act.

But Nelson complained that clothing labels say "Made in" the country where cutting and sewing happens. "Shirts come back and say, 'Made in Honduras,'" she said. But the shirt was designed here in the U.S. The cotton was grown here. "The yarn was spun in the United States. It was in Honduras for a brief, brief time." She said after it returns, the SanMar customer adds embroidery or screen printing.

She said that SanMar employs 4,400 people in the U.S., and that people would rather have marketing jobs, merchandising jobs or even warehouse jobs than cutting and sewing jobs. She said SanMar bought a cut and sew and a dyeing facility in Tennessee. "We bumped up comp, we still can't find people," she said. The fact that they're having so much trouble recruiting, she said, creates "a real decision point for us" about whether they should invest "more than $10 million to upgrade the facilities."