News / Economy

US Jeans Manufacturers Fear EU Tariff Will Cripple Industry

High End Jean Manufacturers Fear Tariff Will Cripple Their Industryi
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June 26, 2013 1:06 PM
The 'Made in USA' label is still coveted in many parts of the world. Some consumers, especially in Europe, will pay a high price for a pair of American-made designer jeans, many of them made in California. Now, the industry says it is being threatened by a new European tariff, which it says could cost California jobs and have an impact on other parts of the world. VOA's Elizabeth Lee has this report from Los Angeles, home of many designer jean companies.
Elizabeth Lee
— The “Made in USA” label is still coveted in many parts of the world. Some consumers, especially in Europe, will pay a high price for a pair of American-made designer jeans, many of them made in California.  Now, the industry says it is being threatened by a new European tariff, which it says could cost California jobs and have an impact on other parts of the world. 

From his second floor office Peter Kim, the founder of Hudson Jeans and a connoisseur of high-end American-made jeans, has a unique perspective on the racks of expensive jeans and bolts of Italian denim on the floor below.

"I look at denim kind of like wine," said Kim. "You know, you can have the same batch of grapes. How you treat, it how you process it, you can make completely different things."   

Like wine, the price of jeans varies widely.  A pair can cost anywhere from around $10 to more than $200. While most consumers cannot afford designer jeans, Kim says premium jeans set the style for the cheaper jeans most people can afford.  

"Like high fashion, you start in the runway, and there is almost nobody that wears these runway items," said Kim. "But what happens from there is that elements of that gets trickled down to contemporary fashion, mid fashion, and ultimately into mainstream fashion."

From the wash, to the fit and the fabric from Italy, every element figures into the price tag. And one more element makes premium jeans expensive.

“We produce in Los Angeles," he said. "So, as you can imagine, it’s not cheap to produce.”

Kim says consumers in Europe buy these jeans largely for the Made in USA label.  But, for some brands, that label may soon be extinct.

The EU recently imposed a 26 percent tariff on top of the existing 12 percent on imported American premium jeans for women.   

Three-quarters of the brands producing these jeans come from California.

Ilse Metchek, of the California Fashion Association, says the tariff could send jobs to other countries and impact the local economy.

"The companies will make their jeans in Mexico, in South America," Metchek said.
 
Peter Kim also warns the consequences could be dire. 

“It’s just trying to decimate all of our business out here," he said.

American manufacturers fear other countries may see this as a golden opportunity to get into the premium jeans market.

For now, Hudson Jeans says it will absorb the tariff so consumers won’t have to pay more for their jeans. It will also continue making jeans in Los Angeles.  

At the same time, U.S. manufacturers hope that in upcoming talks between the U.S. and the European Union, leaders will find a fix for the high tariff on premium jeans.

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