The proposal would turn Section 301 tariff exposure into an incentive for brands to buy more US-made yarns, fabrics and regional apparel.
A rare coalition of US textile producers, apparel brands, retailers and industrial-fabric manufacturers has asked the Office of the US Trade Representative (USTR) to adopt a tariff-credit programme designed to expand domestic production and revive Western Hemisphere apparel sourcing. The joint submission was filed by the National Council of Textile Organizations, the American Apparel & Footwear Association, the United States Fashion Industry Association and the US Industrial and Narrow Fabrics Institute.
The proposal is linked to USTR’s Section 301 investigations into economies that do not effectively prohibit imports made with forced labour. USTR has proposed additional duties of 10% or 12.5%, depending on each economy’s policy status, alongside a separate textile mechanism intended to link reduced-duty imports with purchases of US textile inputs.
How the credit would work
Under the industry proposal, brands and retailers would earn a base tariff credit equal to 20% of the declared customs value of qualifying apparel purchased from USMCA or CAFTA-DR partners. Those credits could then offset Section 301 duties on similar apparel imported from countries designated by USTR as eligible.
The incentive would increase where regional apparel uses US-made inputs. A buyer could claim an additional credit equivalent to 30% of the export value of US yarn, or 40% of the export value of US fabric, used in the qualifying garment. The two enhanced credits would be alternatives, not cumulative. Eligibility would depend on verified supply-chain information and confirmation that forced labour is absent from the supply chain.
A bid to shift sourcing geography
The coalition argues that the mechanism could expand Western Hemisphere sourcing while reducing concentration in Asia. Its submission estimates Asia’s share of US apparel imports rose from 77% by quantity in 2019 to 79%, while the Western Hemisphere’s share declined from 16% to 12%. It aims to lift the region’s share to 25%.
The signatories also claim that the programme could double US textile exports to the Western Hemisphere to $29 billion annually, generating nearly $15 billion in additional exports, new investment and more than 56,000 direct and indirect US textile-sector jobs. These are industry projections, not USTR forecasts.
Implications for Asian suppliers
For suppliers outside the US regional trade framework, the proposal reinforces a structural sourcing shift: US market access may increasingly be linked to traceable origin, verified labour compliance and the use of US or regional inputs. Pakistan is among the economies for which USTR has proposed a 10% additional Section 301 duty, subject to the outcome of the current process.
The immediate issue is whether USTR incorporates this credit model into its final remedy. The larger signal is already clear: tariff policy is being recast as an industrial tool to reward nearshoring, compliance assurance and regional textile integration.
