As news of tariff?related court orders, lawsuits and refunds broke in rapid-fire last week, no better vantage point existed than at the two-day American Apparel & Footwear Executive Summit in Washington, D.C.
It was in Atrium Ballroom A at the Ronald Reagan Building and International Trade Center on Wednesday and Thursday, after all, that chief executive officer Steve Lamar and customs policy chief Beth Hughes read aloud the Court of International Trade’s verdict on billions of dollars in additional duties levied under the International Emergency Economic Powers Act and tipped attendees off to a brewing lawsuit by 24 state officials over new Section 122 tariffs.
With the theme “The Next Moves: Bold Ideas, Smart Futures,” the conference already promised brisk discussion. But rapid shifts on both domestic and international fronts — the Supreme Court’s decision on the limits of presidential tariff authority, for instance, and the dramatic escalation of hostilities in Iran — drove the trade group to reshuffle its agenda at the last minute to keep conversations current.
Concerns about a world in turmoil were reflected in the audience, which responded to a question about the biggest geopolitical sleeper issue by tapping out a word cloud where terms like “uncertainty,” “China” and “Trump” circled the much larger “war.”
“We are in a very topsy-turvy world right now, shifting every day or, it seems, every minute,” executive vice president Nate Herman said as he launched into a panel titled “Risk and Power in a World on Edge.”
“In just the last week, we started a war with Iran,” he said. “There’s an open war between Pakistan and Afghanistan. The drug war has escalated to new levels with the killing of El Mencho in Mexico. The U.S. is doing land incursions in Ecuador over drugs and is still blowing up boats in the Caribbean and Pacific. Meanwhile, we’re still dealing with a lot of uncertainty in Asia, the Middle East, Europe, Africa and Latin America.”
Here’s what else you might have missed.
Community Matters
In Lamar’s welcome speech, he mused about the nature of community within the AAFA, which includes manufacturers, retailers, wholesalers, importers, exporters and solution and service providers. They don’t always agree, he said, but when they choose to work together and align their supply chains, they are “capable of extraordinary things.”
“We’re quite literally the community that helps Americans and the rest of the world get dressed every day,” he said. “We are a network of shared expectations. This means shared responsibility, shared accountability and, most importantly, shared possibility. In other words, community is not something we have; it’s something we build and something we practice. And when I look at our industry, I see a community that has been practicing this for a very long time.”
Lamar said he’s seeing a “long-overdue” rebalancing of the buyer-supplier relationship, one that didn’t come from mandates or outside pressure — “at least, not entirely” — but from community and the recognition that “no brand succeeds if its partners fail, and no manufacturer thrives if its buyers collapse.”
“Under the weight of disruption, a resilient supply chain is fundamentally a shared ecosystem, and it only works when every part is healthy,” he said. “And that means making strategic decisions that reflect community values, forecasting that respects the realities of production; commitments that acknowledge risk and compliance; expectations that are clear, aligned and achievable, and relationships that treat transparency not as a burden, but as a baseline.”
When brands hesitate to place orders, cancel in-progress orders or delay payments on shipped products, suppliers feel the pain, Lamar said. And when suppliers go slow on investment, workers and communities suffer, too.
“The entire system rises or falls together,” he added. “That is why community is not just a value, it is a strategy.”
Uncertainty Is the Only Certainty
The “speed of change” makes it difficult to contemplate what the future will look like even though the prevailing wisdom is to keep one eye trained on “solving for today” and another on “how we win in the future,” said Lizanne Kindler, executive chair and CEO of KnitWell Group, whose brand portfolio includes Ann Taylor, Chico’s, Talbots and Lane Bryant.
With supply chains being reshaped by tariffs and geopolitics monthly — if not weekly — and AI accelerating “faster than any technological shift that we’ve ever seen,” she said, just when you feel like you’ve figured things out, the game “completely changes.”
“When we take a step back, what we’re hearing is the economy is doing great, GDP has been growing, consumers are resilient, companies are resilient, unemployment is low, inflation is not too bad at just shy of 3 percent,” Kindler said. “But then it’s contradicted by this idea that consumer sentiment and confidence are probably at an all-time low, as well as this idea that inflation is very stubborn; it’s not moving. And then we’ve got this idea that there’s a K-shaped economy, that there are consumers at the lower end of the income level that are really struggling to make ends meet. So how do we reconcile all of this?”
As leaders, she said, it’s important to be comfortable with the coexistence of both clarity and uncertainty. She quoted the late Austrian American management consultant Peter Drucker, who said that in times of turbulence, the biggest danger is to act with yesterday’s logic.
“For me, when I think about us coming together at this conference and the future, it’s about understanding the baseline from which we operate, but it’s also really about opening and embracing the fact that this uncertain environment is not going to go away,” Kindler said. “We have to have that coexist with the clarity of what are the goals, what are some of the big, bold moves that we can make to shape the future and not assume that past stability or normalcy is ever going to come back. I don’t think it ever will.”
Cargo ships are a key link in the global supply chain.
Getting Yippy About IEEPA
The room roared with laughter when Peter Harrell, a lawyer, trade expert and visiting scholar at Georgetown University’s Institute of International Economic Law, flashed a slide with the headline: “When will I get my refund?”
This was before the Court of International Trade forced the issue of refunds and Customs and Border Protection said it was preparing its Automated Commercial Environment system to electronically process an estimated $166 billion in IEEPA tariffs over the next 45 days. But as far as Harrell was concerned, the Supreme Court’s decision that wielding emergency powers to enforce tariffs was beyond the scope of presidential powers was a “good, clean” one that left no room for ambiguity.
U.S. President Donald Trump’s administration has also floated fallback options, with the new global 10 percent tariffs under Section 122 of the 1974 Trade Act as its immediate — if disputed — Plan B. Does a trade deficit count as a balance-of-payments crisis? Harrell thinks the courts could be deferential to the White House in that respect, but that increasing the duty to 15 percent could invite greater legal scrutiny and make the argument more wobbly.
There’s a possibility that the Section 122 tariffs will wind up in July to be replaced by Section 301 levies that will allow the White House to impose the original IEEPA rates on a country-by-country basis. That, however, requires individual fact-finding by the U.S. Trade Representative with analysis from the Commerce Department.
“Now they can kind of cluster some of the 301s; like they can do a 301 on labor practices that might cover 15 or 20 countries, or they can do a 301 on industrial policy that might cover 20 countries, but they still have to do some individual fact-finding,” Harrell said. “So I’m not sure, sitting here today, I see how they could do 301s that will cover all 171 trading partners, or whatever we have by the end of July. But I think they will.”
Harrell expects further Section 232 rollouts on a product-by-product basis. Trump has so far imposed half of all Section 232 tariffs, meant to protect U.S. national security, since 1962, “so it’s a statute he’s been using very aggressively,” he said. And if those Section 301 tariffs end up being specious, Harrell added, he also anticipates more lawsuits.
Nate Herman of the AAFA; Lester Munson of BGR Group; Jeremie Waterman of the U.S. Chamber of Commerce, and Emily Harding of the Center for Strategic and International Studies speaking on stage at the AAFA Executive Summit in Washington, D.C., on March 5.
The China Dilemma
“It’s a pity we have so little to talk about,” quipped Jeremie Waterman, president of the China Center at the U.S. Chamber of Commerce and its vice president for China, Hong Kong, Taiwan and Mongolia, at the start of his panel.
Taking a more serious tone, Waterman said new issues keep cropping up in new areas — all while the U.S. and China are planning to hold a new round of trade talks in Paris, replete with its own set of tensions.
“Ironically, I think the Iran conflict may provide a little bit more space for President Trump and President Xi [Jinping] to transact, because China does have some equities in the Gulf,” he said. “I know there’s talk that the administration will cut a deal on Taiwan. I can’t speak to how President Trump sees Taiwan as a core U.S. ally but what I continue to hear is he very much understands the importance of Taiwan as a semiconductor manufacturer and just how important those semiconductors are to the U.S. economy.”
China and the U.S. may be in a kind of stalemate — Waterman called it a “Busan freeze” in reference to one of the Korean War frontlines — but the “most important issue to the Chinese side, I think, is that the U.S. does not move into a re-escalatory mode.”
On the flip side, with midterm elections this year, China can “inflict real pain,” including through the weaponization of rare earth minerals, he said.
“Obviously, the Chinese would love to have a situation where the president comes in and agrees to change language on Taiwan, agrees to pull down additional export controls,” Waterman said. “Anything is possible with this president, as we see almost every day, but I’m not seeing some kind of grand bargain where the U.S. makes big trades and the Chinese make big trades. I think we’re locked in this long-term competition with the possibility for more modest transactions.”
Inside a fashion manufacturing factory.
Yo Quiero La Supply Chain
When dealing with supply chain pressures, Sally Gilligan, chief supply chain and transformation officer at Gap Inc., draws inspiration from an unexpected source: Taco Bell.
“As a suburban teenager, I spent way too many late nights enjoying their menu,” she said. “And if you look at Taco Bell and how they innovate, it’s amazing. They have a really limited set of ingredients, and they take that set of ingredients and repurpose it in so many ways. And it keeps exciting customers.”
Ditto for Taco Bell’s partnerships, for example, with Doritos, and how the fast-food chain leans into humor and relatability in a way that’s consistent, creative and profitable, Gilligan said.
“I think that we can take a lot of inspiration from that when we think about modularity,” she said. “I think actually having frameworks can give the team opportunity to play in a way that’s really liberating.”
Similarly, Christopher J. Volpe, chief operating and financial officer of United Legwear & Apparel Co., a licensing partner for Ted Baker, Puma, Skechers and others, described “inventory discipline,” which he defined as “focusing on the areas of our business that we can control without the outside environment affecting us.”
“With our more fashion-forward business with Ted Baker, we try to source that on a quick-turn, quick-to-market basis,” he said. “Then we have more basic programs and leg wear and underwear, where the lead times can be longer, and we can be more strategic on drilling down on cost versus delivery and speed. So it really depends on the product category and the brand and the marketplace you’re serving, but the key is making sure you’re always in stock, you’re always performing to your commitment to your customers, and you’re selling through at optimal levels.”
Another critical tool for United Legwear & Apparel Co.: AI. The company is trying to deploy AI tools on everything from inventory planning to merchandising to product development.
”There’s a huge amount of costs that are available to save, just on freight and sampling that we go through on a regular basis through AI and digital sampling and assets,” he said. ”But I think the overarching focus needs to be on looking at your company and setting up a horizontal approach to being a diverse, nimble company that can flex and move within that supply chain with the key trading partners.”
Leveraging the Power of Small
Using RFID — that’s radio-frequency identification — in “intelligent” labels to flag, track and manage items has been transformative, allowing companies to “true up” inventory from 65 percent accuracy to 95 percent, said Bill Toney, vice president of advance technology at Avery Dennison, a materials science and digital services provider.
“That way, depending on where your demand shifts are across the omnichannel, whether it’s in-store, online, shipping from a distribution center, depending on how the consumer wants to shop, you can actually make sure you have the right product in the right place at the right time,” he said.
Companies that are starting to lean more heavily on AI need to make sure they have accurate data from the get-go, too. Sixty-five percent inventory accuracy, Toney said, “is not going to work when you start to fuse that with AI.”
“We like to say AI is not just hungry for data, but starving for data,” he said. “And without multidimensional ground-truth data, intelligence is kind of guesswork. AI needs serialized, always-on multidimensional data. So when you serialize data, you can make a lot of decisions.”
Equally important to consider is that data tends to be time sensitive, Toney added. That goes especially for consumer insights.
”If I give you the lottery numbers the day before the lottery, that’s pretty valuable,” he said. “If I give you the lottery numbers the day after the lottery, that’s not very valuable.”
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