VOGUE BUSINESS | CHRISTINA BINKLEY
The most pressing need for fashion from Joe Biden in the US is a Covid relief plan and stimulus package.
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On Saturday, major news networks projected Democratic nominee Joe Biden to be the winner of the US presidential race. With a Biden administration on the horizon, fashion retailers and brands anticipate broad shifts in economic policy, environmental and labour rules, import tariffs and the response to Covid-19. While not every new direction is likely to favour the fashion industry, there’s a wide consensus that a less chaotic approach to governing will benefit businesses and could help stabilise the economy and consumer confidence.
Many brands expect, and say they will press for, a more universal response to Covid-19 both in managing the pandemic and in providing businesses and consumers with economic relief. National measures for prevention and treatment would encourage consumers to shop again, says Stephen Lamar, chief executive of the American Apparel & Footwear Association trade group. And economic relief packages both this year and next year are essential to the fashion industry, he says.
“The first thing we need is a Covid package and a much better job of managing Covid,” Lamar says, hoping the lame-duck Congress will start immediately now that the election is nearly behind them. “Go in that room, be sure you’re wearing masks, and don’t come out ’til you have a deal.”
The fashion industry is likely to push for relief that's seen as long overdue since the first relief package in the spring. “Look, 400,000 small businesses have gone bankrupt since the pandemic and many are part of the fashion industry,” says luxury industry consultant Robert Burke. “The fact that the stimulus package has been stuck and the Republican senate could get through a Supreme Court nominee in 30 days — certainly many people in the fashion industry won’t ever forget it.”
The Trump administration has been poorly regarded by many in the fashion industry for its social policies, anti-immigrant stance and racist views. Once the pandemic hit, 1.8 million creative industry jobs were lost, according to an analysis by the Brookings institute, deeply impacting fashion designers, seamstresses, photographers, art directors and public relations firms in addition to retail stores and brands. A Biden administration is widely regarded as a potential boon to the industry, though a split US Congress could temper its social policy impacts.
The American Apparel & Footwear Association is lobbying to attach certain tariff exceptions to a Covid relief bill, part of a number of tariff policies that fashion brands hope will be addressed before year-end. One has particularly terrible timing in the midst of a pandemic: a 7.5 per cent tariff exception would expire for cloth face coverings imported from China, raising the cost of masks.
Seesawing tariffs and threats have been a hallmark of the Trump administration. Some, such as a duty on French luxury handbags, never came to be. But several tariff laws and exclusions are set to expire 31 December: The Miscellaneous Tariff Bill, which provides duty relief for certain small-volume yarns, fabrics, shoes and coats, and the General System of Preferences, which allows for the duty-free import of some handbags, belts and accessories.
It isn’t clear that a Biden administration would take a friendlier stance to the fashion industry’s tariff concerns. “Tariffs damage the US economy full stop,” says Lamar. “We’ve had a little bit of success explaining that to the Trump administration. We don’t know about the Biden administration if they take office.”
With the Trump campaign pursuing lawsuits to limit ballot counts and demanding a recount in Wisconsin, it’s unclear whether or when President Donald Trump will allow a transition to begin. That could further hobble a lame-duck Congress at a sensitive time.
Many retail stores remained boarded up this week, and peaceful protests were organised to support vote counts in key states. National Retail Federation president and chief executive Matthew Shay made a plea for patience, issuing a statement on Wednesday as states raced to count ballots: “While the outcome remains unclear, we encourage the American electorate to continue to be patient and peaceful as we await the results on who will lead our nation as president for the next four years.”
But many businesses as well as Wall Street welcome the likelihood of a Joe Biden presidency, as well as a potentially Republican-led Senate balanced with the certainty of a Democrat-led House of Representatives. Stocks rallied this week with gains by all the major indices.
Election challengers during the 2020 general election in Detroit, Michigan on 4 November. © Salwan Georges/The Washington Post via Getty Images
“Divided government normally means more modest things happen,” says David French, senior vice president of government relations for the National Retail Federation. “It also means a return to a more normal approach.”
A Biden administration is likely to quickly shift to support sustainability efforts that apparel brands and retailers have swung behind dramatically. Biden tweeted on Wednesday, the day the US retreated from the Paris Climate Accord, that his administration will rejoin that treaty soon after he is inaugurated in January. Although a Republican senate might slow environmental legislation, the White House has an array of tools at its disposal that many in fashion welcome.
Lamar says he anticipates “a robust discussion with a Biden administration” to make new procedures regarding labour, tariffs and other rules clearer and less chaotic. Some Trump administration orders gave businesses just days to implement. “It reflects an incomplete knowledge of supply chains,” Lamar says. “We’re hoping for a much more process-based approach under a Biden administration.”
It’s unlikely that a Biden administration would immediately warm relations with China given the snarl of issues with production, competition and counterfeit goods. (The American Apparel & Footwear Association plans this week to launch a publicity effort encouraging consumers to “shop safe online” — meaning to avoid buying counterfeits.) But it is expected that Biden would warm relations with other countries, encouraging tourism once the pandemic is over. Restoring tourism from China and the Middle East could be a potent booster for luxury sales in the US, says Burke.
“We will see a whole lot of immigrations rules changed,” French predicts. The National Retail Federation sued the Trump administration several times over immigration policies that made it difficult for retailers to hire needed employees.
French anticipates more protective federal policies toward health care, workforce management and independent contractor rules. That could impact the way brands pay influencers, for instance, or whether they pay benefits to makeup counter associates and the delivery people who have played an important role in getting products to consumers during the pandemic. Brands that pay these people as independent contractors could risk being sued by them.
“I expect the Biden administration will increase the risk of litigation there,” French says.