In the hardscrabble world of New York real estate, Donald Trump earned a reputation for bringing chaos to negotiations, setting everyone on edge and then grabbing what he could out of the madness.
Trump brought that approach to Washington in his first term and promises to bring it back when he’s sworn in again as president on Monday.
But in the White House, Trump is a kind of chaos of his own — and other interested parties are looking to get what they can as political and policy norms are shattered.
The future just might be there for the taking.
And that has given the boosters of some causes — anti-vaxxers and anti-immigration groups, for instance — a new seat at the table.
Trade always had its place, but before Trump started hammering away at the issue, the decades-long debate over imports and tariffs was really argued within predetermined bounds.
And it led in only one direction: To ever-more open markets.
For people who have been pushing for trade reform for years — including Bayard Winthrop, chief executive officer of Made in U.S.A brand American Giant — Trump is an imperfect messenger, delivering a message that nonetheless needs to be heard.
“His narrative is dark and it is doomsday [oriented] and it pits people against each other,” said Winthrop, describing the tone and divisiveness as “unnecessary.”
But maybe it took a shock to shake loose the trade debate.
“Did you need this bull-in-the-china shop mentality to shift the paradigm a little bit?” Winthrop wondered. “I don’t have an answer to that. I am struck that the guy seems to genuinely not give a s–t about anything. Some of that is beneficial probably when you think about blowing up paradigms. You have to have some measure of, I’m going to — in a totally unfiltered and unvarnished and impolitic way — change the energy in the room.”
The energy has certainly changed.
On the campaign trail, Trump started out promising a new universal tariff, plus duties of up to 100 percent on Chinese-made goods.
On Tuesday, he hinted at more to come on social media: “Through soft and pathetically weak Trade agreements, the American Economy has delivered growth and prosperity to the World, while taxing ourselves. It is time for that to change. I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources.”
Importers and big retailers argue that tariffs are actually a tax on consumers and that, when it costs more to bring in goods made abroad, shoppers ultimately have to pay that cost.
America has gone from making 95 percent of its own apparel 40 years ago to about 5 percent, said Winthrop, describing it as “one of the great foreign policy misjudgments of the last 100 years” and one that was supported by both Republicans and Democrats.
“The philosophy behind it was: We were the biggest market in the world. We’re the dominant superpower. We’re modernizing rapidly, we shouldn’t be in the business of base level manufacturing that can be done much more cheaply with cheaper labor in places like China,” he said. “The benefit of that will be it’ll drag China into the first world order. They’ll become a peaceful partner on the world stage, and Americans will get much more access to a much broader range of cheaper goods.
“One part of that bore out today, you and I can go into a Walmart and get a great flat-screen TV for a hundred bucks. And that’s sort of an unarguable good in my mind.”
Bayard Winthrop
JOSHUA SCOTT
But the U.S. is still at loggerheads with China and Winthrop said the process resulted in “a general hollowing out of the viability of working class, middle class Americans” and a widening in the class divide between the haves and the have-nots.
“That growing separation — which has created a country that is kind of at each other’s throats — has resulted in a growing sense of the American Dream, maybe even capitalism itself, doesn’t work and is not available to me,” he said.
That is not a political divide, but more of a schism in the culture and the economy, one that has twice helped put Trump into the White House, completely transformed the Republican Party and left the Democrats beaten and battered down.
The twist is, it’s an issue that could also unite.
“This discussion about how do we re-inject vitality and dignity and opportunity for middle class Americans is a totally bipartisan issue,” Winthrop said. “It is not the domain of Republicans, it’s not the domain of Democrats. It should be something that we can all hold hands around and work on.”
While Winthrop uses different language, he agrees with Trump that trade barriers are too low for products coming into the U.S.
“The beneficiaries of that policy are big multinational corporations,” he said. “They’re the big apparel companies. They are DHL, FedEx, UPS, Amazon. That stuff drives me crazy because to me it is an anathema to the American idea that we really have got to be, to some degree pushing back on this massive increase of company valuations in the stock market to some benefit for the average working American. And as I say those words, I feel a little bit like I sound like a communist and I am a free trade advocate.”
Instead, Winthrop said he’s looking for a “rebalancing.”
“Do you think it’s good societally, do you think having access to $10 sneakers that kind of wear out in six months, that arrive in your doorstep the day after you order them, is that a good thing? There is an argument to say, ‘Yes, it is that this unfettered consumerism is a good thing.’ I’m not in that camp,” he said.
While many brands would say they just can’t make apparel at scale in the U.S., American Giant does and Winthrop said there would be room for plenty more companies to do the same, if the rules of the game were changed.
Last year, Walmart — which for years has been trying to buy more domestic goods — started selling $12.98 American Giant cotton T-shirts in 1,700 doors. Sweatshirts for $38.98 are being added this month.
“There’s a lot of things I can disagree with Walmart on,” Winthrop said. “They’re a very different company than we are. We’re premium, we’re committed to American-made. They’re value-oriented, they’re globalized. And yet we ought to celebrate brands and companies that are stepping up like this in service of a common goal. They came to me, that started a conversation that ultimately resolved in the T-shirt program. They made a very big commitment [to buy American Giant shirts] over a very long period of time.”
That commitment let American Giant lock in with its suppliers, tweak its production processes and lower prices.
“It does show you what happens when you structurally change the market dynamics, which Walmart has done by saying, here’s a volume commitment that you can count on, take that down into the supply chain and build a supply chain that’s going to be durable over time,” he said. “And with that we can unlock efficiencies. The same thing is going to happen if there is in fact a policy change from a trading perspective. You change the market dynamics by doing that.”
American Giant is one of the few brands to make fashion in the U.S.
Courtesy
Many CEOs and economists disagree and would argue that there’s no commercially viable industry in the U.S., that it would take too long and would be too expensive to build and that the country should focus more on high technology than apparel production.
“I don’t believe at all this idea that Americans are going to become Google engineers, lawyers,” Winthrop said. “We will forever have the need for labor, for low-skilled work, for people that only have high school degrees. We need good viable work in towns and cities all across the country that may be low-skilled work. That is a vital part of the U.S. economy.”
This is a debate the country clearly needs to have — or at least is going to have one way or another.
It should include people like Winthrop, who have a strong point of view and can articulate it without shouting and can reach out and work with people on the other side of the issue.
“We are so fixated societally right now in the things that divide us,” said Winthrop, adding, hopefully, that there are also “so many things that bind us together.”
It would be good to remember that when Trump is sworn in on Monday.
The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000. It appears every other Thursday.
