COVID-19 and U.S. Apparel Imports (Updated: April 2020)

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The spread of the coronavirus (COVID-19) has already resulted in a plummet of U.S. apparel imports that we have never seen in history. According to latest statistics from the Office of Textiles and Apparel (OTEXA) under the U.S. Department of Commerce, as of February 2020:

  • The value of U.S. apparel imports sharply decreased by 11.2% in February 2020 from a year earlier. Between January and February 2020, the amount of U.S. apparel imports decreased by 10.9% year over year, which is nearly the same loss as in the 2008-2009 global financial crisis.

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  • As the first country took a hit by COVID-19, China’s apparel exports to the United States nearly collapsed in February 2020–down as much as 46.1% compared with a year ago (and -40.6% drop YTD). This result is also worse than the official Chinese statistics, which reported an overall 20% drop in China’s apparel exports in the first two months of 2020).

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  • China’s market shares in the U.S. apparel import market dropped to 21.3% in February 2020, a new record low in history (was 30% in 2019 and 23.9% in January 2020). However, it is important to note that such a downward trend started in October 2019, as U.S. fashion brands and retailers were eager to reduce their exposure to sourcing from China.
  • China’s lost market shares have been picked up mostly by other Asian suppliers, particularly Vietnam (18.8% YTD in 2020 vs. 16.2% in 2019) and Bangladesh (9.1% YTD in 2020 vs.7.1% in 2019). However, there is no clear evidence suggesting that U.S. fashion brands and retailers are giving more apparel sourcing orders to suppliers from the Western Hemisphere. In the first two months of 2020, only 9.5% of U.S. apparel imports came from CAFTA-DR members (down from 10.3% in 2019) and 4.2% from NAFTA members (down from 4.5% in 2019).

Author: Sheng Lu

Professor @ University of Delaware

13 thoughts on “COVID-19 and U.S. Apparel Imports (Updated: April 2020)”

  1. The spread of COVID-19 has greatly impacted the fashion and apparel industry and the effects of this disruption will certainly be long-lasting. Retailers have had to reevaluate their production and sourcing strategies in order to cope and recover. The virus has interrupted production and therefore negatively impacted U.S. apparel imports especially from China. However, I thought it was interesting and important that you noted the fact that “such a downward trend started in October 2019.” Many fashion retailers have been diversifying their sourcing and turning to countries other than China for production and imports. I thought it was interesting that you then mentioned that “there is no clear evidence suggesting that U.S. fashion brands and retailers are giving more apparel sourcing orders to suppliers from the Western Hemisphere.” Do you think that retailers are going to continue to diversify by working with other Asian suppliers like the growing industry in Bangladesh or will there be an eventual shift to more Western Hemisphere suppliers?

  2. One thing that I thought about when reading this article is if after everything returns to normal, will retailers will begin to use suppliers from multiple countries or even from the United States. The spread of COVID in China heavily impacted the apparel supply chain all over the world. According to the article, China’s apparel exports to the United States dropped by 46.1% which could have huge impacts on some companies, especially the smaller companies. It will be interesting to see how retailers change their supply chains after this experience. I personally think that companies should continue to use suppliers from all over China, Bangladesh, Vietnam, etc. It is important for them to use multiple suppliers incase something like this does happen again. Also, another thing I was curious about is how long is is going to take for retailers to return to normal after this is all over? Imports and exports for the United States and all over the world have been extremely low that it will be interesting to see how long companies take to recover.

    1. very thoughtful comments! I agree that us fashion brands and retailers are most likely to continue reducing their “China exposure” in the post-covid19 era. The bigger picture is the “disengagement” or “decoupling” of the us-china economic relations https://www.wsj.com/articles/pandemic-makes-u-s-china-economic-breakup-more-likely-u-s-businesses-in-china-say-11587113926

      Meanwhile, it is concerning that many small and medium sized textile and apparel suppliers may not survive this time… this will result in a shortage of production capacity worldwide. Nevertheless, there remain many uncertainties about the impact of Covid-19… in March 2020, the value of us clothing sales decreased by more than 50%…

    2. Emma, I totally agree with you that companies should continue to diversify among suppliers. Having diversity among suppliers only creates better relationships for those suppliers globalizing and when things like this pandemic happens it helps have a back to a back up plan.I think even having suppliers in Western Hemisphere and Asian would be best to have suppliers all over, this could lead to many opportunities. Honestly I feel like with your thought on how long will it take retailers to go back to “normal”. I think as least a year for companies to try to get back on track after this huge drop. I feel like the only retailer that will be able to bounce back the quickest are off-price retailers. As for others my guess is a year to get back on good standing ground.

  3. While reading the article I saw that COVID-19 has greatly affected all industries, but with the apparel trade between the US and China the fashion industry has taken a major hit. China being the country that had the first cases of COVID-19 has dramatically affected the trade relationship. We see China reopening things and taking down quarantine rules, but how will this affect the fashion and apparel industry when things go back to ‘normal’ everywhere. Having almost the same loss as the global financial crisis in 2008-2009 will we use the same sequence as we did then? Will this pandemic be the push to get fashion and apparel brands to go back and manufacture in the US?

    1. I feel that you are asking important questions here. In some respect, I am sure than many wish we could just go back to the “normal” we knew before all of this happened, simply because it was all we knew, but in order to create a better, safer, and more efficient future, it is likely that changes will need to occur beyond first resolving this pandemic. We rely so heavily on each other in this world and specifically in this industry, it would be silly, in my opinion, to not think about how we can be more considerate and protective of one another. My hope out of this is to see companies not putting as much pressure on factories, thus forcing workers into unsafe conditions that may place them at unnecessary risk, but it will be interesting to see what actually unfolds once this begins to settle.

  4. I think the biggest takeaway from COVID-19 is what retailers are going to take away from this? It is no surprise how hard this has taken a hit on the fashion industry and seeing the significant decreases of market shares is not surprising given the circumstances our world is facing. The statistics above just go to show how much each country relies on one another when it comes to the supply chain. Having the same dramatic changes in the industry as the financial crisis in 2008-2009 could be a guide on how the industry can recover and get back on our feet.

  5. One thing that surprised me in this article was that fact that despite the sharp decline in U.S. apparel imports from Asia, there was no indication of apparel imports now coming from the Western Hemisphere. Despite the corona-virus, U.S. apparel companies still continue to source from Asia to cut costs. In light of this information, it is clear that Trump’s efforts to move apparel production back to the U.S. will not prevail. Companies are still driven by high profit margins and the cost of labor is too high in the Western Hemisphere. If a global pandemic will not localize sourcing in the apparel industry, then I doubt the China 301 Tariff debate will either. U.S. apparel companies will always find a way around the tariffs to save money.

  6. I found it interesting when reading the article where it states that companies in the U.S. have not increased their imports from the Western Hemisphere, even though the imports from Asia are showing a sharp decline. I believe that companies will have to start up slowly after COVID diffuses and life returns to “normal” as consumers will still be hesitant to spend their income on items that are not essential. I believe that retailers will start to play with the idea of having to manufacture in the U.S. after the pandemic. The globalization of producing products is on hold and I believe that overseas manufacturing will not be the same at the end of this crisis.

    1. I agree with your point that consumers will likely be hesitant to purchase non-essentials. Many people have been left without work or pay during this pandemic, and thus will likely not be able to purchase luxury items as soon as this is over, even if they may want to or did before. I also agree that companies are likely going to have to alter their normal decision-making process to think about how the rest of the world is recovering and how they could be more careful about relying completely on one source of production, maybe by expanding to source from multiple countries.

  7. I was extremely to find that US companies are still hesitant to not source from countries in the Western Hemisphere and continue to source from Asia. This tells me that labor costs are still a high concern for US apparel and retailers and have no intention to move to the Western hemisphere and US soon. It makes me wonder if the longer the COVID-19 crisis lasts, if the concerns will change and sourcing will shift.

  8. While I do believe that COVID-19 has threatened the T&A supply chain as it has disrupted exports available from areas that have been greatly affected by the virus, I also see this as an opportunity for brands and retailers in the apparel industry to improve their practices. Like the saying goes, “don’t put all your eggs in one basket;” I feel that this is an opportunity for brands and retailers to look further into spreading out their sourcing. Instead of continuing to rely on China for most, if not all, of their sourcing needs, brands will hopefully source from various countries at once. This is likely to leave them better prepared for emergencies, such as what we are experiencing today, and leave them able to continue to run their business and have more time to resolve issues that arise, instead of just descending into a panic and having to lose all production and sales abilities.
    I also feel that this is an opportunity for businesses and manufacturers to take advantage of advancing technology. For example, having more automated machines carrying out certain tasks in factories could greatly decrease the need to have many working people in close proximity with one another, thus decreasing the likelihood of spreading disease or illness. Technology may also teach these businesses that not everything must take place in person; many meetings can take place over email, phone call, video call, etc. and can greatly reduce the need for travel–which costs money, time, energy, and places people at a greater risk.

  9. The article states that due to COVID-19, there has been a plummet of U.S. imports that has never been seen in history. As more cases are being reported daily, lockdown in states is continuing to be extended. Due to these shutdowns, apparel brands are suffering hard. I worked at Old Navy before the closure of non-essential businesses and I know that they have canceled their Spring and Fall orders from vendors. I am sure many stores are doing the same. Due to the cancellation of orders, many garment workers are losing their jobs. I can only imagine what the future holds and if a ‘normal’ apparel industry will ever exist again.

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