USTR Vessel Fees Could Cut US Apparel Exports by 5%

U.S. apparel exports could decline 5% if the Office of the U.S. Trade Representative activates fees on Chinese-built and operated vessels, the United States Fashion Industry Association said in comments filed Friday.

USFIA, the American Apparel and Footwear Association and the National Retail Federation support a two-month pause. USTR has not issued a final decision.

What does the 5% export estimate mean?

USFIA cited an economic study prepared by Trade Partnership Worldwide in March 2025 for a possible 4% loss in fashion and apparel employment and output.

Moongate Associates estimated that 70% of imported garment value supports U.S.-based jobs in design, sourcing, distribution, retail and service.

These are industry-submitted scenarios, not observed export or job losses. The 5% and 4% figures depend on fees taking effect and cannot be treated as current results.

USFIA president Julia Hughes said each proposed remedy would hurt the U.S. economy, whether imposed alone or with other measures. She also said higher costs could reduce sales and employment across retail and wholesale.

“Rising supply chain expenses, such as higher labor and transportation costs, can lead to increased production expenses for clothing manufacturers,” Hughes said. “These elevated costs may be passed on to consumers through higher prices, potentially diminishing consumer spending and adversely affecting sales and employment within the fashion retail sector.”

Hughes also warned that the Western Hemisphere supply chain relies on U.S.-manufactured inputs, which could lose competitiveness if disrupted freight flows raise production costs.

What changes if the pause expires?

The levies briefly took effect last October and November before a one-year postponement as U.S.-China tariff tensions cooled. If USTR adopts the proposed extension, Jan. 9, 2027 becomes the new deadline.

Without a decision, the existing one-year suspension remains scheduled to expire at 11:59 p.m. Eastern time on Nov. 9. The comment period closed Friday with 64 submissions.

USFIA said the fees would raise supply-chain costs, make planning harder and do little near term to rebuild U.S. shipbuilding. The associations also warned that renewed levies would extend disruption beyond the proposed pause and reduce the practical value of a short reprieve for seasonal buyers.

AAFA, which represents more than 1,100 brands and more than $561 billion in annual U.S. retail sales, urged USTR to announce a longer-term resolution early. Its trade and transportation manager, Audrey Clark, said the fees had not demonstrated meaningful progress toward strengthening America’s shipbuilding and maritime industries.

Clark said carriers redeployed non-Chinese-built vessels on U.S. routes while continuing to expand orders at Chinese shipyards. She also said Chinese carriers shifted some port calls to Canada and Mexico to avoid the fees, diverting business from U.S. ports and American workers.

AAFA noted that apparel, travel goods and footwear chains depend on long-term shipping contracts, seasonal production schedules and complex transport networks. Members generally do not control vessel selection, so sudden changes in maritime fees and routes can disrupt cargo. Clark said the extension prolongs uncertainty for American businesses.

The association also warned that tariffs on ship-to-shore cranes and cargo-handling equipment could raise costs and hinder port modernization because alternative suppliers are limited. It cited investment and allied partnerships as a more durable path, including South Korean shipbuilder Hanwha’s announced $5 billion investment in a Philadelphia shipyard. That is an announced commitment, not proof that new capacity has started operating. No final USTR decision has tested AAFA’s rerouting and shipbuilding claims.

Who wants the fees to proceed?

The National Retail Federation urged a substantially longer suspension or removal of the fees while U.S.-China negotiations continue. Executive vice president David French said routing and contracting decisions occur months before cargo loads overseas.

“This makes it more difficult for retailers, manufacturers and other importers to properly forecast demand, secure transportation capacity, negotiate rates and plan inventory,” French said. “That uncertainty can constrain available capacity and create additional volatility in ocean shipping prices as we continue to see today.”

The World Shipping Council, which represents ocean carriers, sought a permanent pause. It said retroactive charges on vessels already built or ordered would penalize past business decisions without reducing dependence on Chinese shipbuilding.

Hapag-Lloyd’s U.S. subsidiary met USTR officials on Friday. It proposed incentivizing cargo onto U.S.-flagged vessels instead of imposing the fees.

The Alliance for American Manufacturing and the United Steelworkers were among the few groups opposing the suspension. They called the levies a corrective tool against Chinese government subsidies, non-market practices and predatory pricing that continue to weaken the U.S. maritime industry.

AAM president Scott Paul said the USTR notice showed no elimination or meaningful remedy for those practices. He argued an extension would prolong uncertainty for shipyards, suppliers, carriers, workers and investors, while delaying the market signal intended by the original action.

The USW led a coalition of five unions that filed the Section 301 complaint behind USTR’s nine-month investigation into China’s dominance in maritime, logistics and shipbuilding. The investigation produced the vessel-fee proposal now under review.

What does this change for apparel sourcing teams?

No named apparel buyer reported cutting orders, moving factories or changing carriers, and USTR has not confirmed a fee schedule. Sourcing teams should treat the proposal as a cost scenario, not a booked surcharge.

They should identify contracts exposed to Chinese-built or Chinese-operated vessels, retain routing alternatives and recalculate landed costs only after USTR publishes its final notice. USTR’s action on the two-month pause remains the compliance trigger for any surcharge, carrier rerouting or landed-cost reset.