Is the Western Hemisphere Textile and Apparel Supply Chain in Trouble?

Within the Western-Hemisphere (WH) textile and apparel supply chain, the United States serves as the leading textile supplier, whereas developing countries in North, Central, and South America (such as Mexico and countries in the Caribbean region) assemble imported textiles from the United States or elsewhere into apparel. The majority of clothing produced in the area is eventually exported to the United States or Canada.

WH countries still form a close supply chain partnership in textile and apparel production. For example, close to 70% of US textile exports went to WH members in 2020, a pattern that has stayed stable over the past decades (OTEXA, 2021). Meanwhile, the United States serves as the single largest export market for most apparel exporting countries in the WH For example, in 2019, close to 89% of apparel exports from CAFTA-DR and USMCA (NAFTA) members went to the US.

However, the WH textile and apparel supply chain is not without significant challenges. For example, CAFTA-DR and Mexico are increasingly using textiles inputs from outside the WH region, which weakens the US role as a dominant textile supplier. Notably, most of the market shares lost by US textile suppliers are fulfilled by Asian countries, including China and other members of the RCEP (Regional Comprehensive Economic Partnership). Theoretically, using cheaper textile inputs from Asia may help apparel producing countries in the WH improve the price competitiveness of their finished garments and diversify their export markets beyond the US.

Meanwhile, despite the apparent popularity of “near-sourcing”, no evidence suggests that US fashion brands and retailers are sourcing more from WH countries, including CAFTA-DR and USMCA (NAFTA) members. Neither the US-China trade war nor COVID-19 seems to have shifted the trends. Instead, close to 75%-80% of US apparel imports still come from Asian countries (OTEXA, 2021). Studies further show that a vast majority of US apparel imports from WH concentrate on a limited category of products, such as tops and bottoms, which is far from sufficient to meet retailers’ sourcing needs.

On the other hand, technical textiles and industrial textiles account for a growing share in the total US textile exports, and Asia is a particularly fast-growing market. However, there is few US free trade agreement with Asian countries, making it a disadvantage to promote “Made in the USA” products in these markets. It is debatable what should be the priority for the US textile and apparel trade policy: to continue to protect the exports of yarn and fabrics to the WH or open new export markets for technical and industrial textiles outside the WH region?

by Sheng Lu

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Author: Sheng Lu

Professor @ University of Delaware

27 thoughts on “Is the Western Hemisphere Textile and Apparel Supply Chain in Trouble?”

  1. I think that the US needs to focus on protecting its exports of yarn and fabrics while taking steps to complete the WH supply chain. A big reason developing countries in the WH source from Asian countries is because not all yarns and textiles are accessible in this region, such as silk which is primarily produced in China. These developing countries are also more than likely to source from the least expensive destinations to reduce their overall cost and keep their product prices competitive. If the US and surrounding countries can further develop the WH supply chain to better satisfy the needs of brands and retailers while still being beneficial for the US, they may overcome some of the current challenges. For example, the EU has an almost complete supply chain, all of their sourcing is done within the region and the finished products are exported internationally and imported to the various countries. The US needs to bolster its regional markets for technical and industrial textiles however it could be beneficial for them to enter markets outside the WH.

  2. Some of my key takeaways from this article were that even though there is a trade agreement, CAFTA – DR, U.S. fashion companies are still trying to source their textiles from cheaper regions such as Asian countries. This ultimately hurts the U.S. textile market as it prevents them from keeping their market so lucrative. Another point I have seen and still surprised about is how there is no key evidence supporting that U.S. fashion companies are switching to near-shoring. This may be on a small scale but not large. This ultimately shows that U.S. fashion companies are keeping their trading practices while disregarding what happened to them during COVID-19 and the China tariffs.

    In my opinion, I think we should prioritize the U.S. textile and apparel trade policy to continue to protect the exports of yarn and fabrics to the WH. This can generate a lot of revenue for the U.S. as well as continue to have sourcing partners who are closer to us. Although they are more expensive than Asian countries, it will allow us to become less dependent on over seas sourcing regions. However, I do see a flaw with this trade agreement. It does allow U.S. fashion companies to have the option to source from cheaper regions. I think if you are a partner within this agreement the rules need to be more strict. If U.S. fashion companies have the option of sourcing from Asian countries anyway, why even join the trade agreement? There needs to be bigger benefits and punishments in order for U.S. fashion companies to stay in the agreement.

    1. The point that U.S. companies are still trying to source their textiles from cheaper regions such as Asian countries also really shocked me a bit. I have a feeling that Asian economies are so labor-intensive and cheap that switching to near-shoring at the moment is not worth it. Plus, Asia has massive mega factories that are difficult to replicate in Latin America (older populations, low birth rates, smaller working-age populations in comparison)

      Also, I agree that trade policy to continue to protect the exports of yarn and fabrics to the WH. It’s important to focus on what the US is much better at. However, it seems that other factors are in play here too. American goods aren’t necessarily catered to high-end materials or things that are exclusive like European goods. Asia has taken over in that segment because they can produce things very cheaply. American firms have to either produce textiles at really cheap rates or compete with higher-end textile manufacturers, or may be create new textile markets that have a well-established customer base.

      1. It is interesting what you said about how it would be hard for Latin America to replicate the factories in Asia because of older populations, low birth rates, etc. These are factors that I have not really thought about and would definitely affect the capability of WH supply chains. I was going to propose that the U.S. should focus on supporting CAFTA members’ factories so that they can produce more fashion-related products instead of just basic garments so that U.S. fashion brands and retailers will not have to rely so heavily on Asian apparel imports. However, that does seem more costly and probably less probable when considering the factors you mentioned.

    2. I agree. I also asked the same question of why even join the trade agreement? I think there are some flaws within this agreement that do more harm than good for the United States. I think the US needs to prioritize themselves and be able to explore other options for trade within other countries.

      1. Yes the United States is a powerhouse and can do great things on its own, however its necessary to utilize other countries in the areas where we are not at absolute advantage. I agree that the U.S. should prioritize, but I feel that the flaws can be fixed with trial and error.

  3. Something I noticed after reading this article was that the concept of near-shoring was not mentioned. In class, we have learned that after the current pandemic, this concept has been heavily considered. After the outbreak U.S. brands began to look to bring products closer to shore so as problems came about abruptly or not they would not feel so unprepared as people did during the pandemic. The lack of mentioning this makes me think that companies are starting to forget this helpless feeling they had when they were not prepared by keeping the same business and trade practices they have had prior to the outbreak.

  4. After reading this article, I believe that the US needs to protect themselves in this situation and keep making their own textiles. It creates a lot of revenue and jobs for our country and we would be hurt without it. The problem with this is it is hard to stop the US fashion companies from getting their textiles from China because the companies want to buy from their cheapest options. This is weakening the US’s position as one of the strongest textile suppliers. In my opinion, there might need to be a more strict agreement or else the US textile business will continue to go down hill because it is more expensive compared to others. Other countries will continue to grow and take over the textile business.

  5. After reading this article, I wonder how other countries see us as we are the largest export market for most apparel. 70% is a big jump when talking about the United States exports going to WH members in 2020. Going off of the theory that using cheaper textile inputs from Asia may help apparel producing countries in the WH improve the price competitiveness of their finished garments and diversify their export markets beyond the United States, I think we should really focus on the United States textile to ensure that the exports of yarn and fabrics to the WH are getting to where they need to be. That is because the United States would make more money that way rather than relying on oversea transactions.

  6. There are many takeaways from this article. I realized that fashion companies are trying to source from Asian countries. These are much more affordable than US alternatives which is greatly impacting the US textile and apparel trade. The United States needs to decipher solutions to this problem by solely focus on maintaining exports of yarn and fabrics within the WH. Less developed countries are looking for the most affordable option on exports. In order for the United States to maintain their dominant reputation, surrounding countries must improve the supply chain by keeping trade from expanding over seas. On the other hand, I think the United States would also benefit if they entered into markets outside of the WH. I think that instead of restricting themselves within this agreement why not explore cheaper options as well. If other countries are able to join this trade agreement but explore other options, why are they in this trade agreement at all? All countries should either be limited to the locations within the agreement or be able to explore other alternatives.

  7. This article was very informative on the trouble Western Hemisphere Textile and Apparel Supply chains are facing. I knew that the U.S. was a major exporter for the Western Hemisphere. However, I was surprised to learn how many countries still choose to source in Asian countries. The article stated that close to 75%-80% of US apparel imports still come from Asian countries (OTEXA, 2021). This was extremely shocking to me because I felt like we have learned a lot about how fashion brands are trying to pull away from manufacturing in Asian countries. With the COVID-19 pandemic and the US-China trade deal I thought many brands would be shifting out of these countries and focusing more on “near-shoring” and manufacturing in the Western Hemisphere. However, these numbers show no evidence to believe that is true. I definitely believe that the biggest threat to the U.S being a dominant textile supplier is the cheap, efficient manufacturing that Asian countries can produce.

  8. From reading this article, it’s evident that the US needs to protect its exports of yarn and fabrics while taking steps to complete the WH supply chain. Many developing countries in the WH are dependent on imports of raw materials like silk, which is typically produced in China. This correlates directly with fashion companies in the US as they are sourcing from Asian countries due to the products being cheaper than US alternatives which greatly impacts the US textile and apparel business. At the end of the day, the United States needs to come up with solutions to this issue to both increase revenue and become a country less reliant on other nations.

  9. The U.S. apparel and textile industry continues to source textiles from Asia, where prices are cheaper. In fact, this is not beneficial to the U.S. textile industry. The U.S. needs to reconsider new trade strategies to improve its own textile industry profits and to be able to export textiles to the WH.

  10. I knew and am not surprised that the US is still the leading textile exporter for most countries. However, after reading this article it seems as though that the US needs to start protecting themselves and their top spot as the textile provider within the WH. CAFTA-DR and Mexico are starting to source outside of the WH region being one of the reasons the WH textile and apparel supply chain is facing challenges. Less developed countries and others are definitely trying to source from more affordable places, which is a reason why the US needs to figure out a way to hold their dominant position.

  11. Something to take note here is that close to 70% of the US textile exports went to WH members in 2020. On the contrary, the United States continues to serve as the single largest apparel exporting market for countries within the WH as well. Even though this has proven to be quite successful, there are still consistent challenges in that the CAFTA-DR and Mexico are still using textile inputs from outside the WH region. This then goes to say that the option to have clothing be “Made in the USA” is trending downward as Asian countries are fulfilling more of the textile orders for the WH region. Not only is that interesting but also the fact that there has not been any evidence to suggest that the US fashion brands and retailers are near sourcing more as a result of the WH. There has only been a limited category of products that has been near sourced from the WH. I feel that as a result of this the United states should not continue to protect the exports of yarn and fabrics to the Western Hemisphere. I feel that given that the Western Hemisphere is continuing to source their textiles from outside the bounds of the US, the US should open new export markets for textiles.

  12. After reading this article, I wonder how other countries see us as we are the largest export market for most apparel. 70% is a big jump when talking about the United States exports going to WH members in 2020. Going off of the theory that using cheaper textile inputs from Asia may help apparel producing countries in the WH improve the price competitiveness of their finished garments and diversify their export markets beyond the United States, I think we should really focus on the United States textile to ensure that the exports of yarn and fabrics to the WH are getting to where they need to be. That is because the United States would make more money that way rather than relying on oversea transactions.

  13. A key U.S T&A industry issue highlighted in this article is the fact that while the U.S may have a stronger advantage in textile over apparel internally that does not mean that they have a textile competitive advantage over other countries. While their technology and capital intensiveness may allow them to create textiles quickly, they still do not have the low labor costs that other countries offer. I believe that the only way for the U.S t&a industry to survive is for it to tap into a niche market, and the integration between technology and textiles could be the perfect one. The US has some amazing technology companies and it’s time to start integrating them into our t&a. This summer I’ll be interning at Under Armour, and from my understanding, they’re starting to do just that. They’re creating new textiles that allow you to breathe better while working out, along with apparel that can track your heart rate and more. The key here is that this t&a won’t stand out simply because of it made in the US label, but because it uses new forms of technology that haven’t been seen before.

  14. I found this article very informative about the Western Hemisphere Textile and Apparel Supply Chains and the challenges it has recently been facing, especially in the US. In my opinion, I think the US needs to focus on staying as a leading exporting of textiles. In order to maintain this spot, the US should attempt to complete the WH supply chain. It is in the US’s best interest to maintain a strong relationship with other Western Hemisphere regions due to the fact that almost 70% of US textile exports went to WH members in 2020. As the article stated, the US is the single largest exporting market for countries in the WH and I think the US should look out for our own best interests and protect that spot. Along with that, I was surprised that the US imports so much apparel from China and Asian countries when there are so many benefits within the trade agreement with the Western Hemisphere. I was shocked to learn that up to 80% of US imports come from Asian countries, and thought more would come from other Western Hemisphere countries. It seems as if the benefits that come from sourcing from Asian countries, such as cheap labor, outweigh the benefits of sourcing from western hemisphere countries, such as fewer tariffs and a shorter lead time. Overall, it seems as if the US is focusing on how to import apparel as cheaply as possible while maintaining a strong textile exporting market.

  15. I agree with what a lot of my peers mentioned that the United States should try to complete the WH supply chain. A main goal of the US right now should definitely be to stay as a leading exporter of textiles. Completing this supply chain would be a very strong step in this direction as it would keep this process moving in that direction. The US relies heavily on Asian countries at the moment which is not the most positive thing because the biggest factor in choosing to work with Asian countries is the cheap labor costs that come with it. Wester Hemisphere countries offer other benefits which even includes shorter lead times which is such an important factor in the industry today. I think it is important to look at this situation in this way because it says a lot regarding what is important to countries. Even though the United States is very adamant about sustainability and helping our environment, it does not seem that the choices we make represent that. In conclusion, I would not necessarily say the WH supply chain is in trouble, but I would argue that it can be if changes are not made and the situation is not monitored. This is all possible if small changes are made.

  16. This article poses a lot of interesting question when it comes to trade within the WH. I do begin to wonder how the US shift in apparel consumption will impact their relationships with other countries. I believe that it is important to continue supporting other countries because the US is a huge importer globally. I do not necessarily think it is in our best interest to dismantle those relationships. In my opinion the most important thing that should be the main focus is the quality and ethicality of the factories we source from. I think the US can find a good balance between sourcing locations that include both WH and other regions as well!

  17. I thought this article was extremely interesting and informative. This article states that the US is the leading textile supplier for many countries and they export textiles to lots of countries like Mexico, some countries in Central and South America. These are the developing countries that create and assemble the clothing with the imported textiles. Then these countries will export the assembled clothing and the US will import it. There is a current trade agreement CAFTA but the US still tries to find loop holes and source textiles from cheaper regions like other Asian Countries. The US should be a main priority and we need to come up with a way to protect the yarn and fabrics. This will be a great opportunity for the US to make lots of revenue. I know the US is more expensive the sourcing from asian countries but in the end it will create us to be less dependent on other countries. The US along with other surrounding countries need to develop the WH supply chain while also being beneficial to the US. Europe has been able to come up with a way for almost all sourcing to be done in one region and then there products are all exported from one place.

  18. Since Asian economies are so cheap and labor intensive it makes sense, economically, why the U.S. insists on sourcing from them. Even though the U.S. has high quality technology we do not have low labor costs which is hard to compete with other countries. In regards to the article I believe that the US needs to protect themselves in this situation and keep making their own textiles. I think it is in the U.S.’s favor to continue with what they have an advantage at. This will help from adding another thing to the list that will be produced elsewhere. The EU has a near full circle supply chain and I think that is something the U.S. should be inspired by.

  19. I think the Western Hemisphere textile and supply chain is in trouble. Although the USMCA attempts to incentivize business to source from the Western Hemisphere, the cheap labor in Asian countries makes it very difficult for companies to not source from there. In the Western Hemisphere, the US is supposed to be the largest textile exporter, but according to some of these graphs, they countries like Mexico and the members of CAFTA-DR are not sourcing from the US as much with China and the RCEP on the rise. US imported apparels from China are also on the rise which shows that the US have an increasing demand for apparel manufactured in China. No country in the Western Hemisphere can compete with the cheap labor that Asian countries have to offer.

  20. After reading this article I found it very interesting how many countries sourced from Asian countries despite the United States being the leading textile supplier in the Western Hemisphere. The article stated, “close to 75%-80% of US apparel imports still come from Asian countries (OTEXA, 2021).” this quote was just something I found very interesting and surprising. The United States should continue to prioritize and protect the exports of yarn and fabrics rather than opening new export markets. I think this is specifically important due to the recent pandemic, it can lead to uncertainty if the country looks towards opening new export markets instead of focusing on the issues the industry already has.

  21. I think the Western Hemisphere Textile and Apparel Supply Chain is in trouble because, despite the US’s best efforts to keep countries like Mexico and Central American countries sourcing textiles from them using the NAFTA and CAFTA-DR trade agreements, these countries continue to source textiles and yarn from Asian countries so they can be more price competitive. Like we learned in class, the reality is Asian countries’ T&A supply chains are unbeatable because of their flexibility, agility, and price competitiveness. Asian countries just allow for more variety of products, more flexibility with changing orders, and cheaper products in general so I think the trend will continue and countries will continue to source from Asian countries (it is shifting from China to Vietnam and other countries but still predominantly staying in Asia). So the western hemisphere textile and apparel supply chain is in trouble. However, I think the best thing US can do is to continue to protect the exports of yarn and fabrics to the Western Hemisphere rather than diversifying because the reality is US’s textiles are not competitive compared to the Asian textiles so focusing on the western hemisphere supply chain gives them guaranteed export market. The fact that the US’s textiles are only competitive when they have guaranteed export sources and not when compared to other textiles industries makes me wonder if the US should be doing something to make their industry more competitive against the world. They cant be relying on Mexico and Central American countries to import their textiles. What happens when these countries no longer want US textiles? The US textile industry will collapse.

  22. I believe that there is a negative perspective towards U.S. apparel sourcing from the Western Hemisphere in 2021. Due to the increase in need of textile and apparel inputs, many regions including the United States are increasingly using inputs from outside of the Western Hemisphere region. This increase in sourcing from foreign suppliers is due to the availability of cheaper textile inputs from Asia. This allows countries in the western hemisphere to improve the price competitiveness of garments as well as provide more of a variety for the export markets beyond the United States. Additionally, it allows countries to source materials that are more cost effective. The U.S.-China trade war and Covid-19 did not shift these trends which leads me to believe that these trends will continue to rise. Covid was a major event that had a variety of influential impacts not only on the apparel and textile markets but on the fashion industry as a whole. For example, consumers are now beginning to do more research on where their garments are being made and how they are produced. Covid has caused a major shift from fast fashion to small, sustainable businesses. If this pandemic can cause this large of a shift in shopping patterns but did not affect these sourcing trends, and the market for textiles and apparel continues to grow, then these trends will most likely continue to grow in popularity and may eventually lead to other major developed countries to source from Asia as well.

  23. I believe that the United States focuses solely on finding the cheapest areas to source from and isn’t really looking at other factors that could potentially have an effect on the textile and apparel market in the long run. More now than ever, consumers are beginning to look into where their apparel is coming from and how exactly it is made. Sustainability and ethical practices are becoming more and more praised by consumers, and importing cheap textiles from China isn’t necessarily going to give consumers what they are looking for. Therefore, I think that focusing on completing the western hemisphere supply chain and sourcing from countries that are going to give quality materials would be in our best interest.

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