Explore Canada’s Apparel Sourcing Patterns

Presenter: Mikayla Dubreuil  (MS 2020, Fashion and Apparel Studies)

Canada is one of the world’s top ten largest apparel consumption markets, with retail sales totaling USD$28.04bn in 2019 (Euromonitor, 2020). Similar to other developed nations, clothing sold in Canada is predominately imported, making Canada a significant market access opportunity for clothing manufacturers, wholesalers, fashion brands, and retailers around the world. Based on the latest market and trade data, this study intends to provide an in-depth analysis of the Canadian apparel sourcing patterns.

Key findings:


First, the volume of Canada’s apparel imports mirrors its economic growth. As the apparel business is buyer-driven, the performance of Canada’s national economy has a huge impact on its apparel imports. Canada’s GDP growth is an important predictor for its growth in apparel imports.  When Canada’s national economy boomed, its apparel imports also enjoyed a proportional expansion thanks to consumers’ higher income and purchasing power. Such a strong correlation, however, also suggests a likely sharp decline in Canada’s apparel imports in 2020 due to its national economy took a hard hit by the Covid-19 pandemic. [Note: with a 6.2% drop in GDP growth as forecasted by IMF, Canada’s apparel imports in 2020 could decrease by 16.4% from 2019. At the 95% confidence level, the worst case in 2020 will be a 29% decline of apparel imports from a year earlier and the most optimistic case will be a 4% decline.]


Second, although China remains the top apparel supplier for Canada, Canadian fashion companies are increasingly sourcing from South Asia. Three trends to note: 1) China’s market share in Canada has been declining steadily from its peak in the 2010s. 2) Meanwhile. Canada is moving more sourcing orders to other Asian countries, particularly Vietnam and Bangladesh. 3) Additionally, thanks to the EU-Canada Free Trade Agreement (CETA), which provisionally entered into force in 2017, Canada’s apparel imports from the European Union (EU) has been rising steadily. In 2019, EU members altogether accounted for 6% of Canada’s apparel imports, an increase from 4% in 2010. Around half of Canada’s apparel imports from the EU are made in Italy, whose high-end luxury apparel exports could be among the biggest beneficiaries of the duty-saving opportunities provided by CETA.

Third, near sourcing from the Americas remains an essential component of Canadian fashion companies’ sourcing portfolio; However, sourcing from the NAFTA regions is in decline.  Approximately 9% of Canada’s apparel imports come from North, Central, and South Americas altogether, a pattern that has stayed relatively stable since 2010. As consumers in Canada are seeking “faster fashion”, Canadian fashion companies are attaching even greater importance to leveraging near sourcing from the Americas and improving their speed to market. For example, Lululemon placed around 8% of its sourcing orders with factories in the Americas in 2018, higher than 3%-5% five years ago.


Canada’s apparel imports from members of the North American Free Trade Agreement (NAFTA), however, has suffered a notable drop from 12.3% back in 2005 to the record low of 5.4% in 2019. As President Trump repeatedly threatened to withdraw the United States from NAFTA since he took office in 2017, the mounting uncertainty had caused Canadian fashion companies to cut sourcing from the region. For years, many Canadian fashion companies have been actively using the tariff preference level (TPL) mechanism to import apparel from the NAFTA region, although only a limited amount of TPL quota is allowed each year. While the TPL utilization rate for Canada’s cotton and man-made fiber apparel imports from the United States always reached 100%, the utilization rate slipped to a record low of 84% in 2019.

The upcoming implementation of the U.S.-Mexico-Canada Free Trade Agreement (USMCA or NAFTA2.0) on July 1, 2020 could help create a more stable environment for Canadian fashion companies interested in sourcing from the United States and Mexico. However, as USMCA fails to add any significant flexibility to the NAFTA apparel-specific rules of origin, whether the new agreement will improve the attractiveness of sourcing from North America for Canadian fashion companies remains to be seen.

by Mikayla DuBreuil and Sheng Lu

Additional Reading: Mikayla DuBreuil and Sheng Lu (2020). Canada’s clothing market – Top selling and sourcing trendsJust-Style.

Author: Sheng Lu

Professor @ University of Delaware

30 thoughts on “Explore Canada’s Apparel Sourcing Patterns”

  1. I enjoyed reading this article, especially because I feel like Canada is not often at the forefront of discussions regarding the fashion and apparel industry. I thought you made a very compelling point when you stated that Canada’s apparel imports increase when its economy booms which unfortunately means that these imports will likely decline as a result of the negative impact COVID-19 has had on Canada’s economy. You also stated that, “Around half of Canada’s apparel imports from the EU are made in Italy.” Do you think that this percentage will change since Italy was also heavily impacted by COVID-19?

    1. I agree with you that despite the fact that we share a border with Canada, I know little to nothing about the country, especially in terms of the fashion and apparel industry. The first time I even gave more than a thought to Canada was when reading the assignments related to the NAFTA agreement. It’s incredible that Canada’s apparel imports are forecasted by the IMF to could decrease in 2020 by 16.4% from 2019, and it’s only been 4 months. Canada’s trade agreement with the EU region is seeing an increase, meanwhile Canada’s trade agreement with the United States is seeing a decline. China outranks the United States significantly in terms of supplying apparel to Canada. This makes me wonder just how much NAFTA needs to be reworked, which I know has been a constant battle, but has been at stalemate for the most part. Mexico, the US, and Canada share borders, they should be able to work together in a more effective manner.

      1. These are really good points! I agree that NAFTA needs to be reworked because it really has not been that beneficial for retailers in recent years. Free trade is very important so there should be an emphasis on making sure that countries can work together in a more effective manner as you said.

      2. I was thinking exactly the same thing! Canada is a very important player within globalization and trade, yet they are barely talked about. I also thought it was interesting that Canada has a very positive relationship when it comes to trade. Whenever the economy is booming, Canada’s market is also excelling and vice versa. COVID-19 is definitely going to have a negative impacts on their economy. I’m wondering how the country is currently finding ways to deal with the economy due to the pandemic? I am also interested to see how the apparel market is going to be affected after the virus is over as well.

  2. I found it interesting that Canada’s sourcing from China and the NAFTA region has declined. Although products from these areas can tend to be more expensive, higher labor costs can be a good thing. I wonder if retailers will start to care more about their image regarding sustainability, rather than purchasing cheap apparel products and saving money. Since the Rana plaza incident happened years ago, many initiatives have sprung up to bring more light to the atrocities of manufacturing in countries where the wages are extremely low (primarily Bangladesh and Vietnam). It will be interesting to see if sourcing patterns also change after the Covid-19 pandemic, as many headlines have been detailing the injustices that garment workers are facing especially right now. The sourcing patterns of Canada and other developed nations bring about an important discussion- are lower costs more important to retailers than the value of human life?

    1. Great thoughts! surely we can explore more why did Canda’s apparel import from the US (or US apparel export to Canada) decline since 2018. One anecdotal explanation is American Apparel (https://americanapparel.com/), which went bankrupt in 2018. American apparel used to be one of the leading exporters to Canada (they imported lots of cotton raw material from Asia and cut and sew in the US and exported to Canada through TPL).

    2. Personally, I had no idea that Canada was experiencing sourcing declines from China and NAFTA. To answer your question, unfortunately I think that cheap prices are always going to be a priority for companies. I think this because companies are constantly trying to get more out of their business than what they put in. Therefore, companies are always going to be concerned with profit because ultimately that is what makes their business stay alive especially during hard times like these. However, I do think that with sustainability efforts that companies are going to realize that while cost is important to consumers so is quality. A lot of the times, consumers are willing to pay more for a brand that produces high quality goods that last longer. This could further the “death of fast fashion” that was discussed in one of the other articles.

      1. Excellent comments! From my observation, the sourcing cost still matters; however, apparel sourcing is far more than just about chasing for the cheapest labor. Here is one of the most popular posts on our blog site: https://shenglufashion.com/2018/03/04/wage-level-for-garment-workers-in-the-world-updated-in-2017/
        You can see the labor cost in China is already one of the highest in Asia, yet China remains the no. 1 supplier and few fashion brands and retailers plan to totally give up sourcing from China. Likewise, the wage level in Bangladesh is one of the lowest in the world. But a fashion company typically places less than 10% of its sourcing orders from Bangladesh–largely because of concerns for social responsibility and production capacity.

        Regarding sustainability, I think it is turning from a marketing slogan to specific actions adopted by fashion companies. The key issue is not whether companies attach importance to sustainability, but how to achieve it. The issue is also becoming more technical, from the design of the clothing, selection of specific raw material, packaging to building a circular economy.

    3. I agree with the point you’ve made! I think Canada’s sourcing from China and NAFTA regions have declined. I also agree that products have begun to increase in price as the cost of labor begins to increase as well.

    4. That’s a really interesting discussion topic. When it comes to business, all they want is maximizing their profit by keeping the production costs as low as possible while making the retail prices as high as possible. It’s never wrong to do this from the perspective of Entrepreneur. However, when people nowadays care more and more about how sustainable a fashion brand can be, the conflict starts to appear. To me, the value of human life always comes first than the lower costs as I see it as the core value of human being. But it will be better if fashion brands can strike a better balance between these two to protect their employees and the reputation of their companies.

  3. I thought this article was really interesting because Canada is often forgotten about in the news compared to other countries like the United States and China. Yet, Canada does offer a variety of apparel and garment options and has had much success within the industry. Many people may not know that some of the most popular fashion brands right now are Canadian like Lululemon, Aritzia, Canada Goose, etc. I love how this article brings attention to the U.S.-Mexico-Canada trade agreement because so many people are concentrated on the decline of NAFTA instead. Meanwhile, the U.S.-Mexico-Canada trade agreement in vital in shifting production and supply chains from overseas back to the Americas. This will be vital in increasing the appeal of sourcing within the Americas and furthermore, “Made in USA” products. The trade agreement will not only help to advance American-made jobs, but it will also allow America and other countries to become less dependent on South Asia sourcing operations. I also think it will help to balance out globalization and world trade all together.

    1. Without reading this article I think its fair to say that many of us wouldn’t have known about Canada and their sourcing declines from China and NAFTA. Canada is often forgotten about in the news and even in some of our classes as we rarely discuss them as apart of the industry compared to other countries like the United States and China. I think your point of brining up how Canada produces some of the popular brands that we wear on a regular basis was a great one as not many people know that some of our favorite brands come from Canada.

  4. I really enjoyed reading this article because I was not aware that Canada is one of the top ten apparel consumption markets. This makes them a very crucial player when it comes to manufacturing, retailing, and wholesaling. I found it very interesting that Canada is beginning to veer away form sourcing from China because their sourcing power and superiority to other countries has been a large theme throughout this class. It seems as though many fashion companies are beginning to rethink their supply chain due to trade agreements and the current consumer trends. This relates to article 10-1 which showed that without the TPL in place Canada would not be able to export wool suits to the U.S., and the U.S. would not be able to export cotton to Canada. However, since the TPL utilization rate for Canada’s cotton and man-made fiber apparel imports from the US slipped to a record low of 84%, and the USMCA failed to add any significant flexibility to the NAFTA, it will be very interesting to see if Canada will continue to source from North America. It is very clear how much NAFTA needs to be reworked, but is the upside of quick delivery a good enough reason for them to ignore these issues?

  5. Canada is rarely mentioned in discussions about the apparel market, so this article was very interesting to read! With regards to Canada’s effort in making more “fast fashion” items and sourcing more from the America’s due to the close proximity, do you think that COVID-19 will change that? As in, will the lack of labor and factories due to the stay-at-home orders effect the fast fashion that can be created? And will the Canadian market revert towards a more sustainable, slow-fashion take?

  6. I was surprised to find Canada as one of the top 10 largest apparel consumers in the world. Maybe in my mind I pictured thousands of miles of barren ice fields but looking at their territories it shouldn’t have surprised me, and they are not unlike the US in their consumer habits. Their apparel imports depend on their economy just like everyone else. When their economy is doing well, their apparel imports are doing well. Because of COVID-19 they also will be greatly affected. Canadian authorities are preparing for a drop in apparel imports anywhere from 16.4% to 29%. Like most countries Canada imports mostly from China but is diversifying to Vietnam and Bangladesh and also the European Union countries. Canada has relied less on the NAFTA agreement countries but if a new agreement is signed that is less restrictive Canada may look to the US and Mexico for textile sources. What I got out of this article is that Canada is like any other developed country and will be affected by the COVID-19 pandemic. Because of their relationships with the US, China and the EU, they may be better prepared to survive the COVID-19 crisis because they have the ability to source from Vietnam, Bangladesh, Mexico, the US and the EU.

  7. This was such a great article to read because there is barely ever any information on Canada in these courses, however, they are such a large market! I think they surprisingly they will be one of the more successful countries in the COVID 19 pandemic because it seems like they source from all over the world. It was interesting to read that Canada’s sourcing from China and the NAFTA region has declined. I was surprised that they were sourcing from South Asia and Europe. Since you say they source a lot from Italy, which is were most high-end goods are made, Does Canda have a big luxury market? Also, How do you think that NAFTA2.0 will affect where they source from?

  8. I really enjoyed this article due to the fact that this is the first time im really hearing about Canada in this market. It is shocking to me that they are one of the largest apparel consumption markets because this is something I had no knowledge on. COVID is obviously going to have a big impact on them, as well as many other countries but im curious to see how they handle it.

  9. I completely agree, with all these comments on the article. Frankly, I gave little to no thought about Canada when thinking of apparel and sourcing, however, they truly are such a big player, being one of the top ten apparel consumption markets. I would have had no way of knowing, aside from this article that Canada was experiencing sourcing declines from China and NAFTA. Cheap prices and cheap labor is constantly going to be a priority for companies as they are usually always concerned with profit. However, with everything that is going on in the world, that may change. Companies may look to source elsewhere and look to source better quality, more sustainable things, that last.

  10. This article and video were very informative! Before reading I had no idea that Canada was one of the world’s top ten largest apparel consumption markets. It was shocking to see the $28.04 billion sales they had in 2019 and made me think of the impact they could have on retail sectors. It would be interesting to forecast and study if this would be the same without NAFTA and how much influence that agreement has on the countries economy as a whole.

  11. I find this article really interesting. Often, I find myself only exploring the habits of countries like the U.S. and China, so it was nice to read and listen about how Canada contributes to the global trade industry. It really shocked me that Canada is one of the top ten apparel consumption markets in the world. Similar to what we have been learning about, I found it interesting that they are slowly diversifying their sourcing origins away from China, as are many other countries. Another point that I found interesting was how they utilized the NAFTA. How can we predict Canada’s sourcing culture will change if/when NAFTA is revised?

  12. When I immediately read the first line of the article I was surprised that Canada is in the top ten for apparel consuming markets. I never think about how valuable they are to manufacturers and retailers around the world and how much of an opportunity they provide. I also thought it was interesting how Canada mainly sources from Asian countries other than China and this makes me ask if the US saw Canada’s booming economy and if that is why they decided to start shifting from Chinese sourcing (before COVID-19).

  13. An idea that provokes a question: Will trade with NAFTA progressively rise back up in Canada with the modern ideals surrounding eco-friendly and socially responsible production and sourcing? While steps are being made in the direction of sustainability and away from fast fashion, will Canada slowly up their imports from the United States, in turn creating more jobs for Americans? Over the last 15 years, Canada moved away from the U.S. for cheaper alternate sources, such as Bangladesh and other inexpensive Asian countries, but now that seemingly the world is progressing toward more well made, up cycled, recycled, etc. products.

    1. Great questions. Some personal thought:
      1) Will trade with NAFTA progressively rise back up in Canada with the modern ideals surrounding eco-friendly and socially responsible production and sourcing?
      Sustainability and social responsibility will simply become more important to all fashion apparel companies, including their sourcing decisions.

      2) will Canada slowly up their imports from the United States, in turn creating more jobs for Americans? No evidence has suggested this is happening. Notably, US is NOT a major apparel producing country and the utilization of TPL by Canadian companies for apparel sourcing from the US declined in 2019. That being said, in the post-covid19 world, near sourcing and regional supply chain could play a more important role in companies’ sourcing portfolio—as there is a need for shorter transportation, more flexibility in sourcing and the volume is down.

  14. Canada definitely has a strong handle on their apparel sector, as they are one of the strongest consumption markets in the world. Although they import a lot of their T&A industry, they are strategic about it. They are turning toward southern Asian countries for a lot of their sourcing as well as strongly utilizing their EU-Canada FTA. Canada is being cautious when engaging in trade activity with the U.S. while they are in the process of renegotiating trade agreements, which is a wise choice; they should be using all of their trade agreements to their advantage and avoiding trade with countries that they are not engaged in an agreement with. Ultimately, do you think it is beneficial for Canada to establish the new USMCA agreement, or are they better off focusing on their other current trade agreements? Why or why not?

    1. I do believe that Canada would benefit from the new USMCA agreement, especially during this pandemic. There is a shift to near sourcing which means surrounding countries so that consumers can still enjoy the fast in fast fashion, but not in the old way. Fast fashion has been identified with cheap costs and fast turn overs from sourcing to poor countries and creating more harm than good. Instead near sourcing can offer the fast service as the production of the product can stay in a general region rather than surfing the world. The americas are important partners for Canada near shoring, therefore I believe it is smart for Canada to stay involve.

  15. I personally find it very fascinating to learn how the T&A industries in Canada are, and the ways in which they operate, especially with them being one of our neighboring countries. I’m surprised to hear that the NAFTA regions involved with Canada and their counterparts are not doing well, as we’ve learned about how well the EU does their trading, specifically because they rely on their inner-relationships with neighboring countries. Another interesting fact that this article brought to my attention is how close the relationship is between Canada’s T&A industry and their economy. They follow similar patterns, which makes complete sense in my mind, as when they are doing well economically, there are more opportunities presented. Overall, this article was interesting to read and it gives me a broader understanding of the T&A industries, globally.

  16. The shape of the Canada economy is similar to the US, both developed countries that mainly export apparel. I have done some research on Canada for past projects, and the consumer preferences also mimic American consumer shopping habits. The close geographical location of the two make it ideal for trading, yet the instability frightens and keeps Canada an arm length away. I think there needs to be an agreement between the two countries to promote stable fair trade. The perks will benefit both sides.

    1. The two can create a trade system where each works on what they have the comparative advantage of. Although both are developed and have advanced technology, if one sector focuses on production of a particular textile while the other sector works a different textile functionality. By dividing the work they can create a bigger output of products and enjoy free trade and prosperity.

  17. I like this article because I feel like I never hear anything in the news or media about the effects of COVID-19 on Canada nor do I ever see anything about their apparel and textile industry. This article helped me realize that Canada is one of the biggest importers in the Textile industry worldwide and also that COVID really affected the economy of Canada. I also thought it was important to note that the Canadian Consumer’s are looking for “faster Fashion” and they are using this to leverage imports from America. I also agree that NAFTA 2.0 can be of help for the Canadian apparel sector.

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