A rare alliance of U.S. textile manufacturers, apparel brands and retailers has asked the Trump administration to adopt a tariff-credit incentive program as part of its Section 301 crackdown on forced labor, while a separate coalition of circular-economy companies is pushing to have recycled fibers written into the same plan.
The National Council of Textile Organizations, the American Apparel & Footwear Association, the United States Fashion Industry Association and the U.S. Industrial and Narrow Fabrics Institute filed a joint submission this month urging the Office of the U.S. Trade Representative to build the incentive scheme into any remedy emerging from its ongoing Section 301 investigations. Read Here
The four groups, which have often clashed over trade policy, said it was the first time they had united behind a single trade proposal, calling it a constructive alternative to mechanisms USTR had already floated.
Under the plan, brands and retailers would earn tariff credits by purchasing U.S.-made textiles and qualified apparel from Western Hemisphere free-trade-agreement partners. Those credits could then be applied to offset Section 301 duties on goods imported from countries flagged in the forced-labor probe. Supporters argue the structure would let companies diversify sourcing away from higher-risk markets without abandoning cost competitiveness.
The coalition estimates the program could generate more than 56,000 new U.S. jobs and unlock billions of dollars in domestic investment, with knock-on benefits for cotton growers and the wider supply chain. If adopted, the groups project annual textile exports to the Western Hemisphere could roughly double to $29 billion.
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The proposal lands in the middle of a high-stakes regulatory process. USTR determined on June 2 that 60 trading partners had failed to adequately police forced labor in their supply chains, teeing up additional duties of 10% or 12.5% depending on the country. Bangladesh, Pakistan and the European Union are among 14 economies facing the higher rate, while roughly 46 others, including India, China, Vietnam and Turkiye, face the lower tier. The duties are not yet in effect; USTR closed public comments on July 6 and opened hearings before its Section 301 Committee the following day.
Embedded in that same notice is what USTR has described as a textile mechanism rather than a full exemption: a system that would let qualifying volumes of apparel and textile imports enter at a reduced Section 301 rate depending on a trading partner’s purchases of U.S. textiles, cotton and cotton products. USTR has asked for comment on how the mechanism should be designed, including tariff levels and product scope.
NCTO, in its own separate written comments, said it opposed the mechanism “as it stands” and called for reforms, including excluding raw cotton from the scheme, preserving duty-free treatment for USMCA and CAFTA-DR qualified goods, exempting manufacturing inputs and machinery unavailable domestically, and tightening customs enforcement. The group said the right design could double domestic industry capacity, while the wrong one risked U.S. jobs.
American Circular Textiles, an independent policy platform representing companies across the circular textile value chain, filed comments arguing that any incentive program should explicitly reward recycled fibers, reuse and domestic recycling infrastructure. The group said recognizing circular manufacturing inputs would strengthen U.S. and broader Western Hemisphere supply chains while reducing reliance on higher-risk sourcing hubs abroad. AMCIRC has previously pressed USTR to prioritize remanufacturing, repair and recycling as ways to generate additional economic benefit from domestic textile policy.
The dueling submissions underscore how a single forced-labor tariff proceeding has become a proxy battle over the future shape of U.S. textile trade policy, pitting calls for broad Western Hemisphere integration against demands to protect narrower categories of domestic production and to fold in sustainability goals. No final action has been issued, and companies with significant exposure to the proposed duties have been advised to keep reviewing tariff classifications, supply contracts and sourcing plans while the comment record remains open.
USTR is expected to weigh the competing recommendations, along with rebuttal comments due in the coming weeks, before finalizing the scope, rates and design of both the forced-labor tariffs and the textile mechanism.