How tariffs on new machinery affect reshoring goals
The opinions expressed here by Trellis expert contributors are their own, not those of Trellis.
Tariffs have affected global trade in textiles and apparel in many ways, some obvious, some less so. But one important aspect that’s often overlooked is what tariffs are doing to new machinery. It’s a dire problem that risks derailing the industry’s reshoring goals and the aspirations of the current administration.
Tariffs on new machinery don’t just add cost — they slow the modernization that U.S. mills and clothing manufacturers desperately need to compete. It’s ironic: companies may want resilient, clean manufacturing at home, but then the government taxes the very capital equipment required to make plants faster, leaner and greener. Bluntly put, you don’t win a race by charging admission to the pit lane.
Over the past year, Washington has layered new import duties on top of existing most-favored nation rates. For many machines, the base harmonized tariff schedule rate was already low or zero; now the add-ons bite anyway at it. If the equipment originates in China, for example, tariffs still apply unless a U.S. company can secure an exclusion. In short, costing made last season for garments delivered this season can blow up, even if the machine itself didn’t change. The invoice did.
This matters because textiles is a throughput business. Productivity isn’t a nice-to-have; it’s the business model. Modern weaving, high-efficiency knitting, automated cutting and other steps to making apparel closes the gap with lower-cost geographies by pushing more good units through with fewer people, fewer kilowatts and fewer mistakes. Simply put, if more products are produced at less cost, efficiency falls to the bottom-line of manufacturers and buyers.
When tariffs lift the sticker price 10 to 25 percent, projects slide. When projects slide, quality, yields and energy intensity stay stuck. That’s the quiet tax companies pay every month on the shop floor: lost efficiency, diminished profitability and higher prices.
Sustainability suffers, and then some
There’s also the hit to sustainability. Newer machines cut power usage per unit, reduce water and curb rework because quality is better and efficiency is higher. The technological benefits of new equipment directly affect sustainability goals. Delay upgrades and some brands and retailers lock in yesterday’s inefficiency while their competitors raise the bar on verified progress. Firms can’t spreadsheet their way to lower emissions with legacy equipment that burns too much energy and generates too much heat. If tariff policy nudges mills to keep older equipment in service longer, because of higher costs for new imported machinery, it nudges them toward higher Scope 1 and 2, no matter the slogans.
Some professionals will argue higher duties on finished apparel help U.S. producers by lifting import prices. That’s only half the math. If the government also taxes the spindles, dye ranges, cutters and sewing lines that drive productivity, it undermines the offsets companies have created.
Think about it: U.S. wages are higher. Compliance is stricter. Utilities aren’t cheap. The counterweight to all this is world-class machinery. If the government makes it harder to buy, that reduces the very productivity that justifies manufacturing in the U.S. in the first place. Policy talks about reshoring while taxing the tools that reshoring requires it’s just hypocritical — it represents poor policy.
There’s a structural wrinkle, too. The U.S. doesn’t build the most state-of-the-art textile machinery. The leading suppliers are in Europe and Asia. Taxing those tools doesn’t protect a domestic machine base; it just makes our upgrades more expensive than theirs. Plants overseas can adopt the latest technology at list price, while U.S. firms pay a surcharge for the same machine. Guess who moves faster.
There are exemptions, but good luck
None of this means operators are powerless. If a machine originated in China, they can pursue a special exclusion, which would involve making a private petition to the Trump Administration. Examples include exemptions for electronic goods like smartphones, computers, and semiconductors. Sure, it’s paperwork, but a granted request changes profitability overnight. It’s also important to shop around by country for better tariff deals, as some countries may have better tariff rates than others. For instance, the tariff rates on textile machinery varies between, say, Italy, Germany, Japan, Korea and Taiwan.
If exemptions aren’t in your company’s playbook, you can also stage modernization for energy efficiency. Prioritize steps necessary to maximize the greatest kilowatt and water savings per dollar with dyeing/finishing, dryers, compressors and high-load motors. Companies can also explore domestic secondary markets for interim capacity by using equipment already here to avoid import duties.
Companies can also leverage the tax code fully with accelerated expensing and bonus depreciation to mitigate upfront capital costs (as provided under the recently passed “Big Beautiful Bill”). Previous depreciation requirements could allow tax benefits for capital depreciation for 5 to 20 years depending on the type of machinery. Now the write-offs are in part front-loaded.
Still, there’s only so much domestic mills can do if policy keeps taxing capital goods. If the objective is a cleaner, more competitive industrial base, companies can try to treat advanced manufacturing equipment as a strategic play and exclude it from the new tariffs.
It’s a good idea to keep the tariff machinery-exclusion lane open and predictable where no domestic source exists by requesting an exemption from the government. Leverage targeted state and local incentives tied to measurable efficiency gains — energy, water and waste — so the public buys progress, not press releases. This isn’t special pleading for textiles; it’s basic alignment between goals and tools.
Say one thing, affect another
The irony writes itself. The Trump Administration says it wants more domestic factories, more investment and more good jobs, but then it raises the toll on the machines that deliver those outcomes. Meanwhile, competitors abroad buy the same equipment without the surcharge and pull further ahead on cost and sustainability. If we’re serious about rebuilding U.S. manufacturing, the government must stop taxing modernization and start rewarding it.
Here’s the simple test. When a U.S. mill runs the numbers on a new line, do the rules push profitability up or down? If they push it up, through exclusions, sensible tariff design and investment incentives, orders get placed, installers show up and the P&L improves. If they push it down, projects stall. Nothing else matters. Investment either happens or it doesn’t.
Tariffs on garments may or may not affect demand. Tariffs on machines absolutely move investment decisions. Right now, tariffs are nudging things in the wrong direction. If that gets fixed, American operators will do what they’ve always done when given a fair shot: buy the best tools in the world, run them hard and compete on speed, quality and ingenuity. That’s the path to a stronger industry and a smaller footprint. No irony required.
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