How the Election Could Shape Fashion’s Legislative Hopes

Fashion has been out trying to prod Americans toward the voting booth. 

Saks Fifth Avenue spelled it out, literally, with big neon “Vote” signs in the windows of its storied Manhattan flagship. Levi Strauss & Co. worked to get community college students to the polls. 

And Michael Kors, Tory Burch, Wes Gordon and Karlie Kloss marched with about 1,000 industry executives from Herald Square to Bryant Park on the first day of New York Fashion Week in September to push voter registration, with a surprise appearance by First Lady Jill Biden.

“Let’s remember this next president, your next president, will likely appoint new Supreme Court justices, your next senators will confirm them, and our children and grandchildren will have to live with those consequences,” Biden said. “But first, you get to decide. Elections matter.”

Now that the day has arrived, fashion is pivoting from get out the vote to get out the crystal ball to try to infer not just the outcome of the election, but how that outcome will shape the business landscape. 

So far, nothing is certain.

Democrats are expected to struggle to maintain control of the Senate while the House is up for grabs and the presidency, well, who knows? At least, that’s the considered take of many pundits and pollsters.

What comes next hinges on whether there’s a decisive win for a President-elect Kamala Harris or Donald Trump, or if there’s a confusing and contested result. The stakes are as high as they get for the country’s democracy, especially given Trump’s refusal to accept his last election loss and the specter of the violent Jan. 6, 2021, attack on Congress looming over the process.

The spotlight for now is mostly on the race for president. 

But once that process is decided — hopefully smoothly — the White House will have to start to work with Capitol Hill, which is where, for all the bluster of the presidency, the laws that govern the U.S. are written. 

If the Senate and the House are in sync with the president, a lot can get done quickly — from changes to the corporate tax rate to trade deals and more. 

But syncing up isn’t something Washington does so often, and even when the legislative and executive branches are held by allies, the system is designed to be laborious. 

“Next Congress, it’s quite possible we see both chambers flip control, leaving us with a still-divided government,” said Josh Teitelbaum, senior counsel at Washington, D.C.-based law firm Akin Gump. 

Even so, Teitelbaum, who helps brands navigate evolving trade laws, said there are issues that are important to the fashion industry that could find common ground in a divided Washington. Other issues and approaches to governance will live and die by who’s elected.

Here, some of the ideas Congress has already been kicking that are front of mind for the fashion industry.

De Minimis Rules

“De minimis is one of those issues that happens to cut across party lines,” Teitelbaum said, referring to the trade provision that allows individual shipments worth $800 or less to enter the country duty free. 

Often referred to as a “loophole” in trade regulations, the de minimis rules are important to the business models of Shein and Temu, which ship goods from overseas directly to consumers, bypassing duties in the process. 

The push to close that “loophole” has united politicians from both sides of the aisle. 

“It’s about cutting off trade with China, which, in this political environment, is quite popular with both Democrats and Republicans,” Teitelbaum said. 

In August, a bipartisan group of senators introduced the Fighting Illicit Goods, Helping Trustworthy Importers, and Netting Gains (FIGHTING) for America Act, which would bar certain “import sensitive” categories like textiles, apparel and leather goods from utilizing de minimis. The House Ways and Means Committee also in April introduced the “End China’s De Minimis Abuse Act,” which targets the country’s outsize application of the trade rule.

Tariffs

Tariffs have become the unexpected hot-button issue of this year’s election, with Trump touting a proposed 10- to 20-percent universal baseline tariff on goods imported from all over the world. He’s also promised to raise punitive duties on China-made goods by up to 60 to 100 percent. 

On Monday, the National Retail Federation said Trump’s tariff plan would reduce Americans’ spending power by $46 billion to $78 billion annually, with consumers paying up to an additional $13.9 billion to $24 billion more for apparel to cover the duties.

“If Donald Trump wins and he tries to impose higher tariffs on goods from China, he can use the existing authority that he has . . . and those tariffs still remain in place,” Teitelbaum said.

Presidents don’t need to wait for the green light from Congress to exercise that power; President Joe Biden has maintained the Trump-era tariffs, and recently added new duties on China-made products from other strategic sectors.

But there’s no support from Democrats on tariffs-for-all — and “it’s much more unclear whether Donald Trump has statutory authority to issue an executive order to establish a universal baseline tariff,” Teitelbaum said. “He may have to go to Congress to seek that authority” — though he’s likely to at least try to get the job done through an executive order, the lawyer said.

Should Trump win the White House and the Republicans gain control of both chambers of Congress, Teitelbaum said the former president might have an opportunity to seek Congressional approval to tweak tariffs as a part of next year’s tax reform debate. 

Should Harris take the White House, that agenda is out the window. Harris has referred to Trump’s plan as an additional sales tax on American households that would raise prices on a multitude of products. She has not indicated that she plans to roll back tariffs on China-made goods, nor has she said she would raise them or implement new tariffs on other countries or product categories. 

Taxes

As usual, Republicans and Democrats also have very different outlooks when it comes to taxes and it’s Congress that holds the purse strings.

As president, Trump helped pushed through a major tax cut in 2017, which the National Retail Federation has described as very good for merchants, saving hundreds of billions of dollars that were invested in employees, infrastructure and more.

The Biden administration has since been moving in the other direction, looking to, for instance, raise corporate taxes to 28 percent from 21 percent and then use that money to invest in people and national priorities through other programs. Harris has also called on a tax on unrealized capital gains, which she refers to as a wealth tax.

Trade Deals

Trade programs like the Africa Growth and Opportunity Act (AGOA) and Haiti HOPE/HELP, which allow duty-free access to the U.S. market, are set to expire next September, and their fate will rest with the new Congress.

While these programs have bipartisan backing, the industry has worried for months that they will “fall victim to the same dynamics that have led to the expiration of other trade programs,” like the Generalized System of Preferences and the Miscellaneous Tariff Bill, which lapsed years ago without renewal, Teitelbaum said.

The government’s inertia around AGOA and Haiti HOPE/HELP has stumped and frustrated many, but Congress “needs the deadlines to create urgency, in order to act,” he said. It’s broadly seen as likely that AGOA will be renewed, even if it comes down to the wire and there’s a divided Congress. U.S. Sens. Chris Coons (D-Del.) and James Risch (R-Idaho) put forth the AGOA Renewal and Improvement Act of 2024 in April, signaling an appetite for movement.

China, Yes, but the Americas Too

“No matter the outcome of the election, the Senate and Congress in general will remain focused on China and trade,” said Rachel Kibbe, chief executive officer of American Circular Textiles, a coalition of circular textiles stakeholders advocating for domestic policy solutions. “Climate, environment and sustainable elements of trade policy will not be dismissed, but run secondary to other priorities.”

According to Kibbe, there’s a “slow but growing movement with policymakers who realize that U.S. manufacturing has environmental and sustainable advantages over global competitors,” as evidenced by the introduction of the Americas Trade and Investment Act in March.

Kibbe’s group advised lawmakers throughout the drafting of certain provisions of the bipartisan bill, aimed at harnessing economic potential across North, Central and South America through long-term private sector development. The bill contains $14 billion in incentives for domestic circularity and innovation for fashion and textiles.

It also seeks to tackle de minimis reform through a “unique approach — directing funds from closing the de minimis loophole into decarbonized domestic manufacturing, like textile circularity, rather than back to the general ledger,” Kibbe said. 

“The Americas Act, or at least certain provisions within it, still has a fair shot, with momentum building around regional production,” she said. “There’s work to be done for it to advance, but if Democrats hold the Senate, we’d likely see a more direct path for this kind of hemispheric trade policy.” Harris has also stated a desire to improve trade relations in the region, should she win. 

Carbon at the Border

American Apparel and Footwear Association senior director of sustainability Chelsea Murtha said the trade group is keeping its eye on the prospect of a carbon border adjustment mechanism — a fee tacked onto imports from other countries that accounts for their carbon impact. The idea is that the penalties can up the competitiveness of domestic industry against countries that lack environmental protections and produce cheaper, more polluting products.

“I think a carbon border adjustment tax is something that could be embraced in either a Trump or a Harris presidency, in part because there’s the natural appeal to Democrats of dealing with climate, but Republicans have already demonstrated some interest during this Congress,” Murtha said. 

Several bipartisan bills have already been introduced. Coons and Cramer authored the PROVE It Act, for example, which would compel the Department of Energy along with other federal agencies to conduct an Emissions Intensity Study of covered products produced in the U.S. and compare their impact with those made around the world. The findings would help hold countries with less stringent standards accountable for their emissions output.

While this proposal and others have stagnated, Murtha believes the interest in the concept is still percolating — especially since the European Union set a precedent by introducing its own carbon border adjustment mechanism last fall. “No matter the exact makeup of a chamber, or who’s president, I see this having enough bipartisan appeal that it could legitimately get done,” Murtha said.

And getting things done in Washington is what Congressional candidates by and large campaign on — if the politics of a nation so bitterly divided allow it.