Discussion instructions:
The following two scenarios are generated by ChatGPT using input from FASH455 students’ proposed discussion questions*. Based on what we learned in class and additional information you collected online (not from ChatGPT or any AI tools), please critique the scenarios presented, including the strengths and weaknesses of the argument, any viewpoints you agree or disagree with, and any additional factors that could be considered. In your response, please share the link to any further resources you consulted.
Scenario 1: US apparel import from Guatemala would increase in 2025
In 2025, U.S. apparel imports from Guatemala are projected to experience a significant increase, driven by a confluence of favorable economic conditions, strategic supply chain shifts, and improvements in local manufacturing capabilities. The U.S. economy is expected to grow at a rate of 2.2%, which, coupled with rising consumer confidence, is likely to sustain robust demand for apparel. Guatemala’s geographic proximity to the U.S. presents a logistical advantage, allowing for shorter shipping times and reduced transportation costs compared to Asian suppliers. Moreover, U.S. apparel imports from Guatemala, which have historically averaged around $1.5 billion, could see a notable increase around 2-5%. This increase is further supported by Guatemala’s investments in modernizing its textile industry, including advancements in sustainable practices and technology adoption that align with growing consumer preferences for ethically sourced and environmentally friendly products.
Additionally, the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) has enabled duty-free access for certain apparel products, encouraging more U.S. brands to explore sourcing options in Guatemala. With a utilization rate of around 70% under CAFTA-DR, brands are beginning to leverage the agreement more effectively, which could lead to a higher volume of apparel imports as they seek to optimize their supply chains. In this context, the increasing trend toward sustainable fashion could further elevate Guatemala’s status as a preferred sourcing location, particularly for companies looking to enhance their corporate social responsibility profiles. As a result, the combination of economic growth, logistical advantages, and strategic shifts in sourcing could lead to a substantial increase in U.S. apparel imports from Guatemala in 2025.
Scenario 2: US apparel import from Guatemala would remain stagnant in 2025
U.S. apparel imports from Guatemala are poised to remain stagnant in 2025, continuing a troubling trend that has characterized the market for over a decade. Despite a projected U.S. GDP growth of 2.2%, the apparel market faces significant challenges that hinder any potential growth in trade volume. Historical data illustrates that U.S. imports from Guatemala have stagnated around $1.5 billion, primarily due to intense competition from Asian manufacturers who can offer lower prices and greater production capacity. With the global supply chain still recovering from disruptions and high inflation pressure, U.S. companies may prioritize sourcing from countries that can provide more cost-effective solutions, further sidelining Guatemala.
Moreover, Guatemala’s textile sector grapples with persistent capacity constraints and labor shortages, limiting its ability to scale operations effectively in response to market demands. The country’s utilization of CAFTA-DR benefits remains suboptimal, hovering around 70%, and many brands have yet to fully exploit the agreement to its potential. This underutilization could be a significant barrier to increasing trade volume, as companies may prefer sourcing from countries that can more efficiently navigate trade agreements and provide better pricing structures. Additionally, the growing trend toward fast fashion and quick turnaround times poses a challenge for Guatemalan manufacturers, who may struggle to compete with the rapid production cycles of Asian suppliers. Given these persistent issues, U.S. apparel imports from Guatemala are likely to remain stagnant at approximately $1.5 billion in 2025, as the country continues to face formidable obstacles in enhancing its role in the global apparel supply chain.
*Questions FASH455 students proposed to generate initial information. Read the ChatGPT responses here.
- Compare the most likely scenario of Trump or Harris becoming the next U.S. president and its impact on US apparel sourcing from Guatemala.
- Here is the latest US GDP growth and forecast: 2.9% in 2023, 2.8% in 2024 and 2.2% in 2025. Analyze the historical data you have access to and predict US apparel imports from Guatemala in 2025. Ideally, please provide numerical results
- US apparel imports from Guatemala have stagnated over the past decade. What are the critical reasons for the lack of growth? Will any factors likely change in 2025, or will they remain mostly the same?
- Does Guatemala have the capacity to handle increased US apparel sourcing demand in 2025 from 2024? Say 5% increase or 10% increase? Please use data to justify your viewpoint.
- What factors would impact US fashion companies sourcing with Guatemala in the future? Will any factors change in 2025, and why?
- What is the relationship between CAFTA-DR’s utilization and the value of US apparel imports from Guatemala? Based on historical data, will the utilization rate significantly affect the trade volume?
- Will offering more flexibility in CAFTA-DR’s apparel rules of origin encourage more apparel imports from Guatemala, and why?
- Will recycled textiles significantly boost US apparel sourcing in 2025 vs 2024? or instead, this is a niche product and won’t affect the sourcing volume much
- Is Guatemala a preferred sourcing base among fashion companies for fast fashion items? Can Guantema compete with Asian countries for such orders in 2025?
FASH455 Global Apparel & Textile Trade and Sourcing 
I believe fashion companies are very likely to move more sourcing to Guatemala within the next year. There are opportunities there and they are part of caftadr meaning that trade has no tariffs. These two factors alone are great for fashion companies. There are also new textile recycling projects taking place in Guatemala which seem promising to investors and buyers alike.
Why is that? CAFTA-DR is not a new trade agreement but has been implemented since 2006. What makes you think the current trade pattern will change in 2025? Likewise, textile recycling is only at its nascent stage and the production scale remains pretty small. what evidence suggests Guatemala will be a leading producer of recycled textiles in the world?
I think that Scenario 1 presents a strong case for a rise in Guatemalan clothing imports into the United States by highlighting advantages in logistics, sustainability initiatives, and CAFTA-DR. Although the analysis highlights important developments, its optimism might exaggerate Guatemala’s capacity to take advantage of these chances. The current utilization rate of 70% shows unused potential, and businesses that improve their supply chains may actually promote growth. Scenario 2 offers a more cautious perspective, focusing on Guatemala’s long-standing challenges. While the argument is well-grounded, it could benefit from considering potential shifts that could spur growth.
Both arguments presented a strong case regarding the likelihood of increased sourcing from Guatemala in 2025. I liked that argument 1 brought up the country’s improved and evolving sustainability efforts. Consumers in the United States are increasingly concerned about the footprint of their clothing, forcing companies to align in order to remain competitive in the market. This presents Guatemala as a very appealing manufacturing option to the United States. The major weakness of the article is its discussion of proximity to the United States. While this is a benefit, other countries in the CAFTA-DR, such as Mexico, have this benefit as well, so Guatemala doesn’t necessarily stand out because of this. On the other hand, argument 2 had plausible implications supporting the stagnation of trade between the U.S and Guatemala in 2025. First of all, the article highlights the U.S. GDP growth, global supply chain recovery, and inflation pressure, explaining why U.S. companies may not prioritize Guatemala as an option. I think it was extremely wise to discuss the underutilization of CAFTA-DR in the argument as well. This concern suggests that Guatemala has not fully leveraged its trade advantages, which explains why imports might not grow. Lastly, the argument states that competition from lower-cost Asian manufacturers, supply chain disruptions, and labor shortages in Guatemala will all contribute to the lack of import growth. Overall, I agree with argument 2 the most. Guatemala needs to make much more significant changes before there is an increase of imports to the U.S. Additionally, as we discussed in class, a vast majority of tops manufactured within the CAFTA-DR are plain and basic T-shirts. United States’ retailers will have access to more diverse product assortments elsewhere, like in China or Vietnam, so I believe it is more likely that there is growth in imports from these areas rather than Guatemala.
Due to the recent emphasis on nearshoring, I think it is an extremely valid argument that Guatemala would be a beneficial trade partner to the US. Between both proximity and duty-free benefits between the United States and a country like Guatemala under CAFTA-DR, it is likely that these arrangements would benefit both parties. However, I question if the benefits would be great enough for this trade agreement to truly allow for the United States to invest fully in Guatemala. As stated above, there is only a 2-5% projected increase in imports, so the question becomes would this small percentage be enough to completely turn the United States away from other Central American countries or Asian nations that still provide a competitive advantage cost-wise. In my opinion, Guatemala does not provide enough positive benefits to more developed countries like the United States in order for them to pour significant business into their economy, and the little that they do trade with each other would not be enough to sustain their textile and apparel industry.
The contrast between scenarios 1 and 2 is stark. Scenario 1 presents us with an optimistic outlook on Guatamala’s projected future as an established textile hub, making CAFTA-DR more attractive to fashion brands looking to leverage duty free imports and quick shipping. However, it would take a long time for Guatamala to catch up with Asian textile manufacturers, this could not be done in a year. And how would this be funded? While utilizing CAFTA-DR may benefit certain fashion companies, Guatamala’s current textiles are not diverse enough to generate substancial wealth needed to compete with foreign markets, and while their location provides efficient shipping, it takes longer for them to produce the quantity of textiles needed for large scale production. In addition, the cost of labor is higher which levels out some of the benefits of duty free imports. However, Guatamala’s position in the fashion industry is not as hopeless as Scenario 2 makes it look. Scenario 2 paints a depressing image of zero expansion and advancements and stagnant orders. It seems a little pessimistic and argues that CAFTA-DR’s benefits are not enough to convince brands to do business with Guatamala. In reality, the future of Guatamala as a textile hub is not determined. If they continue to produce simple textiles for high costs, they will likely fall to the fate of Scenario 2. But it does not look like Guatamala is ready to go without a fight. In fact, through their experience to date they have learned where they need to invest earnings to see an increase in profits and sway new businesses to source from there. It seems as though the future of Guatamala is bright, it just won’t be as easy as Scenario 1 suggests.
In my opinion, I think it makes sense for the US to start using Guatemala and Central/South America more for textiles and trade purposes. It seems as though tariffs on Chinese products and more Asian countries are going to be rising a significant amount so it makes more sense for the US to branch out and use other countries as resources for the things that money will get spent on anyway. As we learned in class, Guatemala is also implementing more textile recycling purposes to work towards a more circular economy. I think that this is something that will be very appealing to buyers as recycled textiles are something that can be very appealing within the retail space and other spaces in current times. As for the rise in US apparel demand, with all of the tech and manufacturing advancements that are being made, I really think that this is something that will help Guatemala keep up with the demand.
I find both scenarios interesting and possible but perhaps I am a tad more pessimistic. When I asked chatgpt about the situation with the context of trump being president, it told me that since Trump plans for heavy tariffs on China, Guatemala is at more of an advantage. I don’t know if I’d necessarily agree because of Trump’s general anti-south american rhetoric. The situation above states that customers will have more buyer confidence, but I disagree as well. Because of racial tensions I think it will be interesting to see how people react to our economies attempted merging. I could be wrong of course, and there are far better experts in these fields, but it’s something to note
Both scenarios prevent drastically different outcomes, both with valid points. I think scenario 1 is a little too optimistic. There is only a projected growth of 2-5% of imports from Guatamala, and what about Guatamala makes them stand out from other Central American countries that would lead to America putting all their resources into sourcing there. On the other hand, I think scenario 2 is too pessimistic. Just because I do not think it is reasonable to make a complete switch does not mean there is no room for growth at all. It looks at the situation from a perspective that foresees no shifts or changes within the market. Although trade with Guatamala has grown stagnant over the past few years, I do believe since near-shoring is a practice that is on the rise, it is very possible that this can change in the near future. Especially since Trump is expected to raise tariffs on imports from China upwards of 60% and 20% elsewhere. In conclusion I think both arguments lean very far in opposite directions, and a middle ground between the two would be the most realistic outcome.
https://www.pbs.org/newshour/economy/trump-favors-huge-new-tariffs-how-do-they-work
Both scenarios have validity for the potential future of U.S. apparel imports from Guatemala, but a balanced perspective seems most realistic. Scenario 1 highlights Guatemala’s advantages, such as proximity, CAFTA-DR, and sustainability efforts, which are appealing in a market leaning toward nearshoring. However, it seems too optimistic given Guatemala’s current capacity challenges and competition from more cost-effective Asian suppliers. Scenario 2 may overlook the impact of shifting global dynamics, such as rising tariffs on Chinese imports and growing demand for sustainable products. Nearshoring trends could provide Guatemala with growth opportunities. However diversifying products, and utilizing trade agreements fully is necessary for this to come together. While Guatemala might not see dramatic growth, gradual improvements fueled by strategic investments and policy shifts could position it as a more competitive sourcing base by 2025.
I think, compared to 2024, the US will increase their apparel sourcing from Guatemala. I think this would be very beneficial because their textile mills are increasing, allowing them a quicker turnover. This also makes them a higher contender for trading against other Asian countries that have been producing more at a low cost. Scenario 1 states that the US economy is expected to grow by 2.2%, making it very necessary for them to promote free trade with other countries. Having this close proximity is also convenient for shipping times and transportation costs. It also states that Guatemala has committed to ethically sourcing their materials; this will positively impact the US’s social responsibility as they support environmentally friendly and sustainable practices. CAFTA-DR also ensures the most optimal and cost-effective trading process and benefits between the US and Guatemala. There will be more freedom and opportunity for US brands to source from Guatemala due to the duty-free processes of CAFTA. Although Asian countries can offer lower costs than Guatemala, Guatemala still has the lowest available costs within the closest proximity, which is just as beneficial as spending less money but having a longer transportation time. Fast fashion is a concept that might be challenging for Guatemala’s manufacturing process; however, this also somewhat indicates that they have a more ethical production process, which continues to increase social responsibility.
The decision for fashion companies to increase their sourcing from Guatemala would take a lot of thought to consider. They would have to consider the short term and long term factors that come in to play. For example, with the influx of supply demands from the US, Guatemala may not be able to produce apparel at as rapid of a pace as it may be needed. Although, as stated above, the close proximity of Guatemala to the US would allow for faster shipping times and reduced shipping costs compared to other regions of the world like Asia. It is also important to note that Guatemala is aware of their sustainability efforts and are actively trying to practice sustainability efforts. There are a few issues that would need to be addressed. The limited CAFTA-DR utilization and potential labor shortages can pose a threat to the US apparel market if they use Guatemala as one of their main suppliers. I believe that Guatemala is a great option for fashion companies. If Guatemala can produce apparel at the rate it is needed, and the proximity to the US I think that there can be a good outcome for both markets.
The two scenarios show the opportunities and challenges for Guatemala’s apparel exports to the U.S. in 2025. Scenario one highlights the benefits of being close to the U.S., using CAFTA-DR, and focusing on sustainability. Although, it could be more detailed in regards to how Guatemala can compete with Asia. Scenario two points out real problems such as limited capacity and not fully using trade agreements but misses chances in areas like near shoring and sustainable fashion. Guatemala needs to fix these issues and use its strengths to attract U.S. brands looking for quicker delivery and sustainable options for growth.
Scenario 1: The argument for growth is compelling. Essentially, Guatemala’s proximity to the U.S. reduces lead times and transportation costs, which is great for nearshoring. There are duty-free benefits that create a cost advantage for U.S. brands. Also, sustainable practices to align with consumer preferences. However, labor shortages and limited vertical integration in the supply chain may restrict Guatemala’s ability to scale up production. Scenario 2: This scenario presents a more cautious and realistic perspective. It shows how Asian manufacturers offer lower prices and higher capacity, which are significant competitive advantages. It shows Guatemala has had long-standing issues, such as capacity constraints and underutilization of CAFTA-DR. Both scenarios present valid points, highlighting both opportunities and challenges in Guatemala’s potential for increased apparel sourcing. I think that while Guatemala has challenges, its proximity and sustainability efforts could position it as a great nearshoring option.
The two scenarios are very different. In scenario 1 I think that it really takes into account the strengths that Guatemala has which is sustainability efforts and logistical/geographical benefits. The country’s proximity to the US offers a significant competitive advantage. However, I feel that this scenario may give too much power to the sustainability aspect that Guatemala has. Yes there is potential growth, however I am not sure that the country as it is currently, can compete against China or other suppliers in the area, but it certainly has potential.
I think that sustainability and recycled textiles could really take off, and this could influence the US to source from places like Guatemala or to manufacture in the US. However, I fear that this is a trend that will not last long. Though more consumers care about sustainability, there is still a majority of consumers and manufacturers that care more about cutting costs. If prices were to inflate greatly due to any social, political or environmental aspects, I fear that sustainability would be forgotten.
I think U.S. apparel sourcing from Guatemala could see an increase in 2025, but it’s definitely not going to be some huge surge. Scenario 1 makes a solid case with points about Guatemala’s proximity to the U.S, the push for faster lead times, and how sustainability is becoming more important to consumers and brands. But it kind of overhypes the growth without acknowledging Guatemala’s real limitations, like labor shortages and capacity issues. On the other hand, Scenario 2 is more realistic, since Guatemala’s exports to the U.S. have stayed pretty stagnant around $1.5 billion for over a decade, and they’re still up against lower cost Asian suppliers with way more production power. That said, with more U.S. companies wanting to nearshore and reduce risk, plus the added pressure to meet ESG goals, I could see a small bump in sourcing, maybe 2–3% if Guatemala continues to invest in modernizing its factories and using CAFTA-DR more efficiently. Either way, brands will need to weigh cost vs speed, and Guatemala’s growth will depend on how well they can actually deliver.