The US is aiming to reduce its reliance on Chinese manufacturing and support domestic industry. The nascent circular fashion sector may prove an unlikely beneficiary.

A new trade bill that aims to boost economic ties between the US and countries in Latin America includes billions of dollars of incentives for companies involved in circular fashion, from resale platforms to textile waste sorting facilities and recyclers.

The Americas Trade and Investment Act, or Americas Act, seeks to encourage the reshoring and near-shoring of manufacturing supply chains with a heavy footprint in China. It also aims to close a tax loophole that allows e-commerce giants like Shein and Temu to ship millions of packages to the US each year without paying any duty.

Among the measures the bill contains are more than $14 billion in federal incentives for businesses involved in the circular fashion space. The idea is to support an entirely new industry in America focused on textile recycling, Senator Bill Cassidy said in an emailed comment.

If passed the bill would “give a shot in the arm” to the circular fashion economy, said Rachel Kibbe, CEO of consulting and advocacy firm Circular Services Group and executive director of trade lobby group American Circular Textiles. “It’s the first bipartisan bill to contemplate fashion and the first time in history [textile] circularity has been contemplated at all at a federal level,” she said.

The proposed legislation includes a 15 percent tax reduction for businesses involved in collection, reusing, renting, repairing, sorting, processing or recycling textiles, as well as $10 billion in loans and $3 billion in grants to support manufacturing and reuse and recycling programmes. Another $1 billion has been earmarked for research and development.

Though it has support in both major US political parties, getting any bill passed is a long and complicated process, especially in a fraught election year. Now that it’s been introduced, the proposed legislation will be sent to the finance committee for further consideration.

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