Homeland Security Faces Daunting Task in Policing Duty Free Entry of Foreign Textiles and Apparel

“It’s just hard to compete with that,” William Lucas, general manager of Eagle Sportswear, a clothing manufacturer in North Carolina, told the Times about de minimis. “Someone just has to change the law. Someone has to change the rules.”

The Times wrote that through most of the 20th century, textile mills were abundant in the Carolinas, having largely moved there from the Northeast by the 1970s. Their heyday wasn’t long lived. Once NAFTA was signed in 1991, textile factories moved to Mexico. In 2001, China joined the World Trade Organization and quickly became America’s go-to manufacturer for everything from Nike sneakers to Ralph Lauren bathtowels and golf shirts. U.S. apparel manufacturing employment has declined 65 percent since, according to the Bureau of Labor Statistics.

The surviving companies are mostly family-run and privately held, consistently steering money back into their businesses to pay for expensive new equipment and automation to remain competitive, the Times reported. Many produce items for the U.S. military, which gives them a Defense Department contract they can rely on for a steady income stream. 

According to CPA’s Domestic Market Share Index, domestic manufacturers make up roughly 12.2 percent of all apparel and leather goods sold here. The rest, some 82 percent, are all imports. 

Textile and apparel imports are the fourth largest source of the trade deficit, trailing behind autos, computers and cellphones and electronic appliances.

Many in Congress seek changes to the de minimis provision. If what Choy told the Homeland Committee this month is true, textiles and apparel are one of the reasons why. They are seen as the biggest losers from de minimis. 

Congressional leaders like Rep. Earl Blumenauer (D-OR) has been trying for more than a year to convince members of both parties to reform de minimis. And now the House Select Committee has taken the issue on as well, as promised in its year-end 2023 forecast for legislation they’d support in the new year. 

For that Committee, the Uyghur Forced Labor law may be a way to enact change – as de minimis is seen as an easier way to get around those restrictions. Others have tried to bring up contraband shipments or convince Congress that the loophole is putting pressure on traditional retailers, as the Times reported last spring.

Many textile manufacturers called it quits in 2023. Some started the year with lay-offs.

The American Prospect magazine noted in an article this week titled “Domestic Textile Industry Crashing Because of Trade Loophole” that some textile companies that have closed or laid off workers cited de minimis as a key factor. Others may have closed for other reasons.

CPA member Parkdale Mills, a yarn company, closed three of its four plants in Hillsville, Virginia, and laid off 326 workers after closing a separate facility in South Carolina, in February.  National Spinning said it will shut the doors to its last yarn-spinning facility in Whiteville, North Carolina, which had operated for sixty years. 

If the economy is not in a recession, and if consumer spending is at a two and a half year high, then either Americans are not buying clothes and fabric, or those who make those products here are being overwhelmed by imports. 

More than one billion packages entered the U.S. by de minimis last year, according to one Congressional report. 

CPA chief economist Jeff Ferry estimated in 2022 that the U.S. imported $187.9 billion worth of goods from China under the de minimis rule. These imports were not counted in the official government import statistics published monthly by the U.S. Census. The official Census figures state that the U.S. imported $536.3 billion of goods from China in 2022. But adding these estimated de minimis figures would make it $725 billion, a record.