America’s ball cap industry is in trouble

America’s ball cap industry is facing a potentially devastating financial future if planned tariffs on Chinese imports for specific goods critical to our businesses are enacted. Thankfully, more than 150 congressional leaders are lining up to request an exemption process for the most recent list of products tagged with Section 301 tariffs. In short, placing tariffs on Chinese imports critical to our industry will not help achieve the administration’s goals concerning trade with China.

Members of the American Headwear Alliance make the ball caps fans love to wear bearing the logos and branding of their favorite sports teams—and inclusion of our industry’s imports on the USTR Section 301 tariff list will mean significantly higher prices, resulting in job cuts and a reversal of growth for an expanding industry.

{mosads}Can you image attending the playoffs without your favorite cap? We can’t either, and neither can several leading members of Congress.

169 members of the House of Representatives, led by Reps. Ron Kind (D-Wis.) and Jackie Walorski (R-Ind.) sent a letter to U.S. Trade Representative Robert Lighthizer calling for an exemption process, similar to that which earlier products tagged for tariffs were afforded. Sen. Tim Kaine (D-Va.) is circulating a similar letter and call to action on the Senate side.

Thankfully, they understand that the headwear products we import from China are “finished goods,” ready to sell with embroidered team logos, and we also import some “blank” products, without any logos. We also work with domestic production partners in Arkansas, California, Georgia, New Jersey, Texas, Minnesota, Missouri and Massachusetts, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania and Utah, and when playoffs or other events arise, some of us employ additional factories around the country to capture the results of last night’s game by decorating the ballcaps with the winning team’s logo, and have them in local stores by the next morning.

Given that background, the Alliance and our congressional champions are strongly opposed to the enormous increase in duties, knowing such an increase will be significantly detrimental to our business, and the thousands of individuals and their families across the U.S. that support us. If these proposed tariffs are passed, average duties on the majority of our products will increase from 7.5 percent up to 32.5 percent. This will result in a multi-million dollar annual cost increase and will significantly reduce our ability to grow and add jobs.

Most consumers cannot or would not pay 25 percent more for a ballcap. Ultimately, we would be forced to absorb the increase and make up the difference by cutting overhead costs, which would lead to eliminating jobs in order to stay afloat. You may ask why we don’t move our headwear manufacturing to the U.S. or at least out of China – the answer is simple – we cannot.

The “cut and sew” infrastructure in the U.S. moved overseas decades ago and would take at least a decade to return, if it could be re-established at all. There are currently no operations outside of China that could produce the quality and quantity of goods required by our companies.

Design, decoration, sales, customer service: all of these departments are generally housed domestically, add value to each of the imported caps and ultimately create jobs for people within our communities. It’s ironic that if the administration’s proposed tariffs pass, people now will be more at risk for losing their jobs than they were years ago when companies stopped domestic production.

Additionally, due to the requirements of many U.S. retailers, we are required to work with manufacturers that maintain the highest level of social responsibility standards. We have invested years building long term, effective and mutually beneficial partnerships with trusted and industry-leading headwear manufacturers in China. Our Chinese partners must pass routine unannounced audits and are committed to socially responsible engagement with their employees. They manufacture our headwear products in high quality, safe, modern facilities.

As we told our representatives in Congress, we are supportive of the president’s desire to protect U.S. businesses, continue economic growth and bring jobs to the U.S., but our position is that these proposed tariffs will do the exact opposite.

We also understand that in some matters of intellectual property, there is a trade imbalance. Not only do we audit our Chinese manufacturing partners regularly to avoid intellectual property violations, but our partners are proactive in ensuring they are protecting intellectual property rights. In short, our relationship with our Chinese manufacturers is an IP success story.

Finally, headwear is not part of China 2025 – so these tariffs won’t meet USTR goals.

As we continue to talk to the administration, and work with members of Congress to understand the unique nature of our imports, we’re asking USTR to create an exemption process—much as they’ve done for prior products. We’re confident that upon closer inspection of an exemption process, nobody will want to cripple an industry like the current tariff will impact ours.

The clock is winding down. We’re calling on Congress to help save the day.

Jim Day, spokesman for the American Headwear Alliance.