Feeling protected in her boots.

Weathering the China Tariffs: How Your Macs and Wellies are Faring

Millennials Brought Back Macs and Wellies

The modern raincoat has its roots in the British Mackintosh, a raincoat named after Charles Macintosh. A chemist from Scotland, Macintosh patented a method in 1836 for dissolving rubber in a petroleum byproduct to make a liquid that could be then brushed onto fabric to render it waterproof. The process paved the way for myriad new uses for rubber, including the manufacturing of tires using a process for vulcanizing rubber that was developed by Charles Goodyear of Philadelphia in 1839.

Mid-calf leather boots were popularized by Arthur Wellesley, first Duke of Wellington. In 1852, a gentleman named Hiram Hutchinson met Charles Goodyear and bought the patent for vulcanizing rubber in order to convert leather “wellies” to a full rubber boot. The North British Rubber Company produced nearly two million wellies for the British Army during World War I. That’s the same company you know today by the name of Hunter Boot, Ltd.

Both macs and wellies have been fully embraced by fashionable millennials. But will they be importing them from China for much longer?

“Most Frequently Misunderstood”

Waterproof textiles are high tech these days. They are hydrophilic (water-loving), letting water vapor (your sweat) to escape without allowing liquid water in, and they are hydrophobic (water-hating) to resist water, causing it to bead up on the surface. There are garments made from fabric that is “visibly coated” with rubber or plastics and then there are garments with a rubber or plastics “application” to make them water resistant.

There’s apparently enough confusion about which is which for the purpose of applying a customs duty that U.S. Customs and Border Protection published a 17-page ruling entitled, “What Every Member of the Trade Community Should Know About: Classification of Coated and Water Resistant Apparel” (I’m still confused after reading it). The introduction says, “Two of the most frequently misunderstood areas in the classification of wearing apparel under the Harmonized Tariff Schedule of the United States are the coated and the water resistant provisions.” Indeed.

Weatherproofing Against Tariffs

The distinction matters, however, to American designers of popular water-loving and water-hating apparel and footwear. Even before the current tariff war with China, companies like Columbia Sportwear based in Portland, Oregon were designing their jackets, gloves, and hiking boots with an eye to reducing their tariff bill. Moves like adding a thin sheath of fabric to the sole of a waterproof hiking shoe (which quickly wears away upon use) can enable the company to avoid a high 37.5 percent tariff on imported rubber soles. Waterproofing a jacket or gloves can yield a reduction from 27.7 percent tariff to 7.1 percent.

The savings are so significant that clothing designers precisely measure the “clearly visible” waterproof material on the external surface of a shoe with a planimeter to ensure they can meet a customs determination for the lower tariff.

Planimeter

Wikipedia: A planimeter, also known as a platometer, is a measuring instrument used to determine the area of an arbitrary two-dimensional shape.

When It Rains It Pours

American apparel companies often design, market, and merchandises their products from the United States, but most have shifted manufacturing overseas. According to its own Factory Transparency Map on its website, Columbia’s apparel and footwear products are made in 232 factories (all but two outside the United States) that employ over 328,000 workers in 17 countries. With 99 factories, Vietnam is home to the lion’s share of products made for Columbia, followed by China which has 64 factories that produce for Columbia.

In September last year, the Trump Administration finalized a list of $200 billion in imported goods subject to tariffs. The list included rubberized textile fabrics, affecting water resistant clothing, but seemed to spare the wellies. Anticipating the possibility of the tariffs rising on January 1, many producers and retailers, including Columbia, took early shipment of merchandise and reserved factory capacity for their 2019 fall lines – in factories outside China.

Before the Trump tariffs on imports from China, the U.S. fashion industry accounted for six percent of imports but was paying 51 percent of tariff receipts. In its State of Fashion 2019 report co-published by the Business of Fashion and McKinsey & Company, industry analysts speculate that, although it is becoming the world’s largest fashion market, China has passed its manufacturing zenith in favor of other producers in South and Southeast Asia. For apparel producers in China, when it rains it pours.