COVID-19 and U.S. Apparel Imports: Key Trends (Updated: April 2021)

First, thanks to consumers’ resumed demand and a more optimistic outlook for the U.S. economy, US apparel imports went back to the robust recovery trajectory in February 2021.  Specifically, the value of U.S. apparel imports in February 2021 went up by 4.5% from January 2021 (seasonally adjusted) after a straight three-month drop. Even though the absolute value of U.S. apparel imports in February 2021 was still 8.7% lower than last year, it was the best performance since December 2020.

The Auto Regressive Integrated Moving Average (ARIMA) model forecasts that at the current speed of recovery, the value of U.S. apparel imports (seasonally adjusted) may start to enjoy a positive year over year (YoY) growth by April 2021. Euromonitor also forecasts that U.S. apparel retail sales in 2021 may enjoy a 3.6%-6.7% growth from 2020 (in value).

Second, data indicates that China remains the top apparel supplier for the U.S. market both in quantity (36%) and value (22.5%) in 2021 (Jan-Feb). Meanwhile, U.S. fashion brands and retailers continue to reduce their “China exposure” amid the pandemic. For example, both the HHI index and market concentration ratios (CR3 and CR5) suggest that apparel sourcing orders are gradually moving from China to other Asian countries.

The constant market share (CMS) model also shows that before the tariff war and COVID-19, the competitiveness of apparel “Made in China” has weakened in the U.S. market. While the increased U.S. import demand partially mitigated the impact of negative factors (such as the tariff war) on China’s apparel exports to the U.S. market from 2018 to 2019, the demand collapsed during the pandemic. On the other side, while China gained an additional $202 million in exports by adjusting its apparel export product structure during the pandemic, it continued to lose market shares in many regular product categories (especially cotton and wool products).

Further, the latest data confirms that some non-economic factors negatively affect China’s prospect as an apparel sourcing destination. For example, the alleged forced labor issue related to Xinjiang, China, and a series of actions taken by the U.S. government (such as the CBP withhold release orders) have significantly affected U.S. cotton apparel imports from China. Measured by value, only 15.4% of U.S. cotton apparel came from China in 2020 (and 15.6% in the most recent 12 months), a significant drop from 27% back in 2018. While China’s total textile and apparel exports to the US decreased by 26% in the most recent 12 months (i.e., March 2020-February 2021), China’s cotton textiles and cotton apparel exports to the US went down by over 40%.

Third, Asia as a whole remains the single largest source of apparel for the U.S. market amid the pandemic, stably accounting for around 75% of the import value. Other than China, Vietnam, ASEAN, Bangladesh, and Cambodia ALL gain additional market shares both from 2019 to 2020 and during the most recent 12 months (i.e., March 2020-February 2021 vs. March 2019-February 2020).

Fourth, while U.S. apparel imports from the Western Hemisphere stay stable overall, sourcing from CAFTA-DR members seems to gain new momentum. For example, 16.5% of U.S. apparel imports came from the Western Hemisphere in 2021 (Jan-Feb), slightly up from 15.9% in 2020 (Jan-Feb). Notably, CAFTA-DR members’ market shares increased to 10.1% in 2021 (Jan-Feb) from 9.5% in 2020 (Jan-Feb), compared with USMCA members’ loss of 0.2% market shares over the same period. CAFTA-DR and USMCA members currently account for around 60% and 25% of U.S. apparel imports from the Western Hemisphere. They are also the single largest export market for U.S. textile products (around 70% in value). Strengthening the western hemisphere textile and apparel production will remain a hot topic in the Biden administration.

by Sheng Lu

Author: Sheng Lu

Professor @ University of Delaware

12 thoughts on “COVID-19 and U.S. Apparel Imports: Key Trends (Updated: April 2021)”

  1. What is interesting about the article is how big Asia’s production is overall. Asia as a whole remains the single largest source of apparel for the U.S. market amid the pandemic even with the trade barriers available. Furthermore, the data indicates that China remains the top apparel supplier for the U.S. market even with companies shifting. It just shows how just how massive apparel suppliers are in these nations, and how China is able to use massive economies of scale to its advantage.

    1. I agree with your response on the article. I just want to add to your comment about economies of scale. Yes, China is using massive economies of scale to its advantage, especially after we see what the RCEP has done. The RCEP has made a trade agreement between Asia’s top trading competitors, China, Japan, and South Korea. Thus, now all of these powerhouses are cohesively working together, ultimately becoming unstoppable in the apparel and textile production and trading sector.

    2. I agree that China will proceed with leading soucing for U.S. fashion brands; non-economic factors, such as forced labor in Xinjiang, have yet to elicit the reduction of “China exposure” and the start of vertical integration. However, I expect China to lose its overall share as apparel companies offshore production to Vietnam and Bangladesh.

  2. I am still overall surprised with how much apparel sourcing is being done after the pandemic. I would have thought it was a done deal to instantly start near shoring. Although it is known how difficult and timely it is to create new trading partners and relationships, I just wasn’t expecting how much sourcing is still being done even after a year we have endured the pandemic. I do agree with the Biden administration to start moving our sourcing to the Western Hemisphere. I think we can benefit a lot from that, especially in having a protected and lucrative market in exporting textiles. Furthermore, it is extremely hard to compete with China and we just seem to keep being the losers from their trade deals. My opinion is we have to stop relying on them and cut off a lot of trading deals with them.

  3. I think that it is impressive and interesting to see how China’s cotton textiles and cotton apparel exports have dropped by 40% to the US. It is also important to note that sourcing from CAFTA-DR members are gaining momentum. This is extremely important because this shows that the trade agreements/incentives are working. 16.5% of apparel imports to the US has come from the western hemisphere in 2021. As hard as it is to compete with China, the western hemisphere is doing a good job in trying to keep production nearshore and support countries within the western hemisphere. Using these trade agreements are already strengthening the US textile industry, but we want to increase that strength even further. Even though there is proof that the agreements are working, the US needs to decrease their overall dependency on China and other Asian countries. This can only happen if we continue to support trade within the western hemisphere.

  4. I’m surprised that data indicates China remaining the top apparel supplier for the U.S. market, albeit losing market share in product categories and facing scrutiny as an apparel sourcing destination. I anticipate further diversification throughout Asia and for global retailers with multinational supply chains to take advantage of the RCEP – which offers an incentive for brands to enter signatory countries other than China. The strengthening of the Asian market may disrupt the threat of cheap apparel “Made in China,” presenting a narrow opportunity for the Western Hemisphere to remain competitive and reduce its “China exposure.”

  5. I am somewhat surprised that data still indicates China remains as the top apparel supplier for the U.S. market, even though the U.S. market has made attempts to diversify their sourcing strategy. I think within the next few years we will see the U.S. start to move away from China because of several reasons. One reason including the alleged forced labor issue related to Xinjiang, China. Another reason is the US-China tariff war, and as brands have more time to develop new sourcing strategies that don’t include such high tariff rates, they will move away from China. I agree with Sarah and her statement that the strengthening of the Asian market may disseminate the cheap apparel benefits that are usually associated with China. I specifically think we will see the U.S. start to increase sourcing from Vietnam and Bangladesh.

  6. I find it interesting that so much sourcing is still being done from china following the pandemic and the tariff war I anticipated more companies moving out of China to quickly growing production markets such as Vietnam or Bangladesh. Additionally, because of COVIDs impact to supply chains, I’m surprised more companies did not near shore to increase their efficiency and flexibility.

  7. Im shocked to see China as the top apparel supplier for the United States considering that fashion brands and retailers started reducing their exposure to the China market amid the pandemic. It seems as if some companies have started to move their production into other markets, but I would have expected more of a ripple effect for more companies to do so. I think it will be easy for companies to reduce dependency on China, however it takes a lot to change suppliers involving many different logistic strategies. These may be too timely and costly to take on during an uncertain time.

    1. I have to say, because of the recent covid surge in India & southeast Asia, US fashion brands may have no choice but to switch to source from China. Even though it could be a minority view, I still think it make sense to continue sourcing from China from the economic perspective

  8. It’s mind-blowing how massive China’s production currently is for the U.S. market, even with the trade barriers it must endure. Data shows that it remains the number-one place for apparel suppliers even with a pandemic and companies changing their business plans. If the Biden administration were to move the US’s sourcing to the western hemisphere, a lot of good could come from that especially since we have a protected and lucrative market for textiles. It’s also important to note that this could help us to become less dependent on other countries.

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