Category: Apparel industry

State of U.S. Textile and Apparel Manufacturing, Employment and Trade (updated April 2025)

Textile and apparel manufacturing in the U.S. has significantly decreased over the past decades due to factors such as automation, import competition, and the changing U.S. comparative advantages for related products. However, thanks to companies’ ongoing restructuring strategies and their strategic use of globalization, the U.S. textile and apparel manufacturing sector has stayed relatively stable in recent years. For example, the value of U.S. yarns and fabrics manufacturing (NAICS 313) totaled $24 billion in 2023 (the latest data available), up from $23.3 billion in 2018 (or up 2.8%). Over the same period, U.S. made-up textiles (NAICS 314) and apparel production (NAICS 315) moderately declined by only 1.8% and 1.6%.

More importantly, the U.S. textile and apparel manufacturing sector is evolving. Several important trends are worth watching:

First, “Made in the USA” increasingly focuses on textile products, particularly high-tech industrial textiles that are not intended for apparel manufacturing purposes.  Specifically, textile products (NAICS 313+314) accounted for over 83% of the total output of the U.S. textile and apparel industry as of 2023, much higher than only 56% in 1998 (U.S. Census, 2025). Textiles and apparel “Made in the USA” are growing particularly fast in some product categories that are high-tech driven, such as medical textiles, protective clothing, specialty and industrial fabrics, and non-woven. These products are also becoming the new growth engine of U.S. textile exports. Notably, between 2019 and 2022, the value of U.S. “nonwoven fabric” (NAICS 31323) production increased by 12.32%, much higher than the 1.15% average growth of the textile industry (NAICS 313). Similarly, while U.S. textile exports decreased by 13.75% between 2019 and 2024, “nonwoven fabric” exports surged by 10.48%--including nearly 40% that went to market outside the Western Hemisphere (U.S. International Trade Commission, 2025).

Second, U.S. apparel manufacturers today are primarily micro-factories, and they supplement but are not in a position to replace imports. As of 2021 (the latest data available), over 76% of U.S.-based apparel mills (NAICS 315) had fewer than 10 employees, while only 0.7% had more than 500 employees. In comparison, contracted garment factories of U.S. fashion companies in Asia, particularly in developing countries like Bangladesh, typically employ over 1,000 or even 5,000 workers.

Instead of making garments in large volumes, most U.S.-based apparel factories are used to produce samples or prototypes for brands and retailers.  In other words, replacing global sourcing with domestic production is not a realistic option for U.S. fashion brands and retailers in the 21st-century global economy. Nor are U.S. fashion companies showing interest in shifting their business strategies from focusing on “designing + managing supply chain+ marketing” back to manufacturing.

Meanwhile, due to mergers and acquisitions (M&A) and to leverage economies of scale, approximately 5% of U.S. textile mills (NAICS313) had more than 500 employees as of 2021–this is a significant number, considering that textile manufacturing is a highly capital-intensive process.

Third, employment in the U.S. textile and apparel manufacturing sector continued to decline, with improved productivity and technology being critical drivers.  As of 2024, employment in the U.S. textile and apparel manufacturing sector (NAICS 313, 314, and 315) totaled 270,700, a decrease of 18.4% from 33,190 in 2019. Notably, U.S. textile and apparel workers had become more productive overall—the labor productivity index of U.S. textile mills (NAICS 313) increased from 89.7 in 2019 to 94.4 in 2023, and the index of U.S. apparel mills (NAICS 315) increased from 105.8 to 110.78 over the same period.

On the other hand, clothing retailers (NAICS 4481) accounted for over 75.7% of employment in the U.S. textile and apparel sector in 2024.

Fourth, international trade, BOTH import and export, supports textiles and apparel “Made in the USA.” On the one hand, U.S. textile and apparel exports exceeded $12.5 billion in 2024, accounting for more than 30% of domestic production as of 2023 (NAICS 313, 314 and 315). Thanks to regional free trade agreements, particularly the U.S.-Mexico-Canada Agreement (USMCA) and the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), the Western Hemisphere stably accounted for over 70% of U.S. textile and apparel exports over the past decades. However, for specific products such as industrial textiles, markets in the rest of the world, especially Asia and Europe, also become increasingly important. Thus, lowering trade barriers for U.S. products in strategically significant export markets serves the interest of the U.S. textile and apparel industry.

On the other hand, imports support textiles and apparel “Made in the USA” as well. A 2023 study found that among the manufacturers in the “Made in the USA” database managed by the U.S. Department of Commerce Office of Textile and Apparel, nearly 20% of apparel and fabric mills explicitly say they utilized imported components. Partially, smaller U.S. textile and apparel manufacturers appear to be more likely to use imported components–whereas 20% of manufacturers with less than 50 employees used imported input, only 10.2% of those with 50-499 employees and 7.7% with 500 or more employees did so. The results indicate the necessity of supporting small and medium-sized (SME) U.S. textile and apparel manufacturers to more easily access their needed textile materials by lowering trade barriers like tariffs.

By Sheng Lu

Textile and Apparel Industry Stakeholders Comment on Trump’s “Reciprocal Tariffs”

Background: Pursuant to the America First Trade Policy Presidential Memorandum and the Presidential Memorandum on Reciprocal Trade and Tariffs, the Office of the U.S. Trade Representative (USTR) solicited public comments on the proposed “Reciprocal Tariffs” from February to March 2025. Below is a summary of comments submitted by stakeholders in the textile and apparel industry.

The United States Fashion Industry Association (USFIA), whose members include many leading U.S. fashion brands and retailers, opposes raising tariffs and argues for lowering tariffs on textile and apparel products where the U.S. imposes a higher tariff rate than its trading partners. According to USFIA, higher tariffs on apparel and textiles would disproportionately impact lower-income U.S. consumers:

  • “A true ‘reciprocal’ trade policy would lower tariffs on the products of trading partners that maintain lower tariffs than the United States.”
  • “We recommend that the most successful policy to achieve trade reciprocity would be for the United States to lower the tariff rates of products for which our trading partners apply lower tariff rates. For consumer products such as textiles and apparel, this would help combat inflation and assist consumers who struggle to afford basic necessities.”​

The American Apparel and Footwear Association (AAFA), representing U.S.-based “apparel, footwear and other sewn products companies”, opposes broad tariffs on apparel, footwear, and textiles. It is of concern to AAFA that the apparel and footwear sector already faces some of the highest tariffs in the U.S., and tariffs are a “hidden, regressive tax that falls harder on lower-income Americans.” Even worse, AAFA worries that higher tariffs would benefit “Illicit traders” and tariff threats would undermine the regional textile and apparel supply chain in the Western Hemisphere:

  • “Illicit traders are better positioned to escape paying proper duties or any duties at all. Higher tariffs end up maximizing the profit and market access they can gain at the expense of legitimate shippers.”
  • “Recent tariff threats particularly on our neighbors, Canada and Mexico, are especially concerning as the U.S.-Mexico-Canada Agreement (USMCA) review is about to begin. Canada is a key export market for U.S. made apparel and footwear while Mexico is a major source of a wide variety of apparel, including denim imports. Not only does the threat of tariffs cast uncertainty but it also undermines future investment and nearshoring opportunities.”

National Council of Textile Organizations (NCTO), representing U.S. textile mills, supports targeted tariffs against “unfair trade” but opposes penalties on Western Hemisphere trading partners:

  • “We strongly recommend that the Trump administration take a targeted approach to raise tariffs on specific countries that disrupt markets through the use of blatantly unfair and often illegal trade practices, while simultaneously operating in home markets that remain mostly closed to our products.”
  • “We must preserve and strengthen existing trade relationships with U.S. free trade agreement (FTA) countries in the Western Hemisphere that offer valuable markets for U.S.-made textiles.”
  • “We strongly believe that reciprocity should not mean a race to the bottom with lower tariffs on imports from other countries into our market. Rather, reciprocity should hold bad actors accountable for systemic unfair trade practices that have hurt domestic manufacturers.”
  • “We urge the Trump administration to take several actions immediately to make textile and apparel trade more reciprocal and to support the domestic industry…Aggressively raise tariffs on imports of textile and apparel products from China and other trade predators in Asia…Close the de minimis loophole for all countries…”

SMART (Secondary Materials and Recycled Textiles Association), representing businesses engaged in the collection, reuse, conversion, and recycling of textiles and other secondary materials, advocates for addressing trade barriers that affect U.S. secondhand clothing exports. SMART also opposes CAFTA-DR members using the “yarn-forward” rules of origin for imports of secondhand clothing (HTS 6309) from the U.S. under the agreement.

National Retail Federation (NRF), generally representing all types of U.S. retailers, opposes broad-based tariffs, arguing that they increase consumer costs, disrupt supply chains, and hurt retailers. NRF supports targeted measures against unfair trade practices but warns against policies that could lead to unnecessary retaliation from U.S. trading partners.

  • “We believe that high, across-the-board tariffs will undermine the economic growth signaled by the other features of the president’s agenda and have lasting negative consequences for consumers and workers. If the goal of reciprocal tariffs is to enter into negotiations to remove barriers to trade, this will unlock economic growth and reduce prices for consumers. However, if the goal is primarily to raise tariffs, then the opposite is true.”
  • “There are plenty of areas where U.S. tariffs are actually much higher than our trading partners, for example, especially when you look at U.S. tariffs on low value apparel and footwear. These regressive tariffs hurt low- and middle-income consumers the most.”
  • “The administration should also consider the potential for retaliation from our trading partners on any reciprocal tariffs that are established. We are already witnessing our trading partners respond to strong tariff actions by the administration. This will further impact our farmers and manufacturers who are looking to gain access to those foreign markets.”
  • “We need to focus on key high-priority sectors where it makes sense to return manufacturing home or areas where there is strategic competition. High tariffs on everyday household goods, which could raise consumer prices, should not be the focus of such a policy.”

Parkdale Mills, a leading producer of spun yarns based in North Carolina, expressed concerns about “unfair trade practices” from its Asian competitors. Parkadel also calls for closing the “De minimis” loophole.

  • “Each week millions of pounds of product move through our free trade agreement partner countries illegally causing significant damage to the domestic textile industry. Non qualifying goods are shipped using false HTS codes, False Certificates of Origin, and illegal inputs to circumvent the required duty for US entry.”
  • “Section 321 De Minimis (imports)…are shipped into the US each day without inspection or any type of customs enforcement causing millions in lost revenue and again, thousands of lost jobs. This loophole must be closed.”

FASH455 Exclusive Interview with Ally Botwinick, Textile Assistant at The Kasper Group, about Textile Raw material Sourcing and Management

About Ally Botwinick

Hi! My name is Ally Botwinick, and I am a University of Delaware alum who studied Fashion Merchandising and completed the 4+1 master’s program in Fashion and Apparel Studies. I am currently working as a Textile Assistant at The Kasper Group in NYC. The Kasper Group is a portfolio of global fashion brands such as Nine West, Anne Klein, Kasper, Le Suit, and Jones New York. I work on fabric sourcing and production for the Jones New York brand as well as denim fabrics for all brands within the Kasper Group.

Note: During her studies in the FASH 4+1 program, Ally participated in several research and experiential learning projects. She co-authored Explore PVH Corporation’s Evolving Apparel Sourcing Strategies, published in Just-style, a leading industry publication focusing on apparel trade and sourcing. Her master’s thesis, which examined US retailers’ merchandising strategies for clothing made from recycled textile materials, was published in the International Journal of Fashion Design, Technology, and Education. Ally was also a UD summer scholar and a key member of the FASH students team that helped Macy’s develop a vision of its sustainable apparel sourcing strategy (see featured UDaily story and Yahoo).  Additionally,  Ally was a policy intern for the American Apparel and Footwear Association (AAFA) in Washington, D.C. in the summer of 2022.

Disclaimer: The views expressed in this interview are those of Ally Botwinick and do not reflect the views or positions of her employer or any affiliated organizations.

Sheng: What are your main responsibilities as a textile assistant? What does a typical day look like? What aspects of the job do you find particularly interesting or unexpected before taking on the role?

Ally: My main responsibility as a Textile Assistant is to help buy and keep track of all fabric orders for Jones New York as well as denim for multiple brands within the Kasper Group. Jones New York has both a mainline division, which is sold at retailers such as Macy’s and Dillard’s, as well as an off-price division called Jones New York Signature which is sold at off-price retailers such as TJ Maxx, Marshall’s, Burlington, Ross, etc..

During a typical day, I communicate with textile mills/factories overseas about fabric approvals or rejections based on fabric color, quality, and hand feel. For each fabric order that we place, we have the mills submit fabric references to our New York office for review. Each morning, I process these submissions and work with my team to release comments to the mills. The color must match the color standard we send them at the beginning of production. The fabric quality must match the fabric standard that we approved upon booking the fabric.

We keep track of all these approvals and rejections in what is called a fabric WIP (work in progress) chart, where we keep track of each order for each season and division. This WIP chart includes key fabric information, price, production timelines, and fabric submit status, among other order details. Creating and updating these fabric WIPs is something I do continuously throughout the day as I receive updates from mills and factories.

I frequently work with cross-functional partners, like members of the design, production, costing, and color teams, and touch base about any changes to design boards, production schedules, costing, or color issues that may arise.

One of the most interesting aspects of the job is the number of teams that collaborate on a daily basis, especially when there are updates made to the fashion collection, such as changes to color names, production units, production schedules, fabric details, and costs.

Sheng: In general, what factors should be considered when selecting textile raw materials, such as fabrics, in product development and sourcing?

Ally:Some important factors to consider when selecting fabrics are hand feel (whether the fabric feels soft, dry, smooth, rough, etc…) and price.  We want to ensure the fabric provides comfort to the consumer and that it will drape well according to the garment design. We work very closely with the design and costing teams when sourcing fabrics as we must ensure fabrics are functional, stylish, on-brand, and meet margin goals.

We highly consider the fiber content as well. Fiber costs can be influenced by a multitude of factors, even including the weather or occurrence of natural disasters which can affect supply and demand. We also closely monitor cotton traceability as there are forced labor concerns with cotton grown in parts of China. We require each mill supplying fabrics made with cotton to submit a cotton traceability certificate for us to track the cotton’s origins. This way, we can ensure no cotton is being produced in association with forced labor.

Sheng: What are the main processes involved in selecting and sourcing textile raw materials like fabrics?

Ally:At my company, the Fabric Research & Development team is more involved in finding new fabrics, whereas my team is more involved in fabric buying and production. The design and R&D team usually hand off the desired fabrics to us after sourcing, and we go ahead and buy the fabric. We buy fabric yardage according to the number of units (garments) in the collection, accounting for the different sizes and colorways.

However, we do occasionally get involved in the sourcing aspect as well. When we source fabrics, we consider the factors I mentioned such as cost, quality, and fiber content. We also think about how we may want to elevate and bring newness to the brand.

When adding certain washes or finishes to fabrics, the appearance can change, so this is something we consider as well. When purchasing a new novelty fabric such as a new jacquard, velour, or cross-dye, we expect the mill to tell us if there is a certain inherent characteristic we should know about prior to booking. For example, a mill might tell us the fabric is known to flare a bit, and this is hard to control, or it tends to shrink a little when washing. This way, we can decide whether the fabric is acceptable based on our needs. If we decide to purchase, we then collaborate with internal cross-functional partners about creating a level of tolerance accounting for these inherent characteristics.

Upon booking any fabric, we always require mills to fill out a fabric detail sheet with information such as cuttable width, weight, price, MOQ (minimum order quantity), lead time, etc… and we have them send us a fabric header which becomes our fabric standard. The design team will also request a sample garment to ensure the fabric is suitable for the garment. All these processes are essential for booking fabric.

Sheng: Where do textile raw materials typically come from, or which countries or regions mostly supply textile raw materials for US fashion companies today?

Ally:Some of the top countries supplying fabric for U.S. fashion companies include China, Vietnam, South Korea, and India. Also, from my observation, Asia plays a significant role as a leading textile raw material supplier for many leading U.S. apparel brands and retailers.

Sheng: From your observation, how has sustainability influenced the selection and sourcing of textile materials for fashion companies? What emerging trends are worth watching?

Ally:From my observation, sustainability is becoming more and more important to brands and consumers alike. Recycled polyester is on the rise as more consumers are paying attention to the materials in their clothing and trying to lessen their environmental impact. Recycled polyester seems easier to incorporate rather than, say, recycled cotton, which is harder to trace back to the source and has quality concerns. I see recycled materials on the rise in my company, and as someone who wrote my master’s thesis on this topic, it is very exciting and encouraging to see.

Sheng: Based on your experience, can you offer any advice to our students regarding preparing for a career in the fashion apparel industry? What could they do at UD?

Ally:Some advice I would give to students preparing for a career in the fashion industry is to think about what classes at UD most intrigued and inspired them. There are so many different career paths within the fashion industry, whether it be design, product development, sales, merchandise planning, costing, garment sourcing, fabric sourcing, merchandise buying, etc… Whatever you are most passionate about, go after it. Also, keep an open mind. You may find a great opportunity that you hadn’t previously considered, and you may end up loving it. There is so much to be learned in any given role, especially when starting out. Throughout my role, I have learned not only the ins and outs of the fabric production cycle, but also the entire garment life cycle. I can see how all the teams within my organization work together to achieve a common goal.

UD has so many amazing resources to utilize for planning your future career. First, take advantage of the career center by meeting with a career counselor and updating your resume and LinkedIn. Next, consider doing a research project with a professor on a topic you are passionate about. There are so many professors in the fashion department who would be happy to chat about research opportunities, and having this experience can really help you stand out during the job search and interview process. Internships and retail experience are also great ways to gain work experience while in school. Lastly, lean on your network. If an alum you know has a career that sounds interesting to you, reach out to them and ask them for a quick phone call to learn more about it. It is great to build your network and learn more about different potential career paths. Overall, my greatest advice is to truly enjoy your college years- they go by so fast. Make the most of your time at UD, pursue your passions, and remember that exciting opportunities lie ahead!

–The End–

Gap Inc.’s Evolving Apparel Sourcing Base: 2021-2024

Gap CEO talks tariff impacts (Feb 2025)

Established in 1969, Gap Inc. is a leading American clothing retailer that operates several prominent brands, including Old Navy, Gap, Banana Republic, and Athleta, catering to diverse consumer segments.

The following analysis is based on Gap Inc.’s publicly released factory list. Only factories identified as producing “apparel” products were included in the analysis.

First, like several other leading U.S. fashion companies, Gap Inc. maintained a geographically diverse global sourcing base but reduced the number of factories it sourced from between 2021 and 2024. Specifically, as of October 2024 (the latest data available), Gap Inc. sourced apparel from 24 countries, an increase from 21 countries as of March 2021. Gap Inc.’s apparel sourcing reached almost all continents, including Asia, the Americas, Europe, and Africa.

However, between March 2021 and October 2024, Gap Inc. decreased the number of apparel factories it contracts with from 548 to 502, a reduction of 46. Most of the cuts occurred in China (down 40 factories), Vietnam (down 32 factories), and Cambodia (down 8 factories).  This pattern aligned with the findings of other industry studies, which indicate that many U.S. fashion companies, particularly larger ones, are consolidating their vendor base to prioritize operational efficiency and strengthen the relationships with key vendors.

Second, Gap Inc. has significantly reduced its reliance on China and actively explored emerging sourcing destinations in the rest of Asia, Central America and beyond. According to Gap Inc.’s 2023 annual report (the latest available at the time of writing), its two largest vendors represented approximately 9 percent and 7 percent of the total dollar amount of the company’s purchases. In value terms, in 2023, approximately 29 percent of Gap Inc.’s products were sourced from Vietnam, followed by Indonesia (18 percent).

While China remained the largest source of U.S. apparel imports according to official trade statistics, China now plays a relatively minor role in supplying finished garments for Gap Inc. As of October 2024, the company sourced apparel from 36 factories in China, representing just 7.2 percent of its total apparel sourcing base, making China only the sixth-largest supplier after Vietnam, India, Indonesia, Bangladesh, and Sri Lanka. In an interview conducted in early 2025 (the video above), Gap Inc.’s CEO disclosed that less than 10 percent of the company’s products are sourced from China.

On the other hand, between March 2021 and October 2024, Gap Inc. expanded its sourcing network beyond the traditional top three (China, Vietnam, and Bangladesh), with significant growth in other parts of Asia and Central America, led by India (added 8 more factories) and Guatemala (added 9 more factories).  In 2022, Gap Inc. pledged to source around $150 million in apparel products each year from Central America by 2025.

Third, Gap Inc.’s apparel sourcing base varies by product category. For example, approximately 45% of the company’s contract factories producing denim and woven bottoms were located in Vietnam and Bangladesh, likely due to the availability of cotton and a relatively abundant low-cost labor force. In contrast, factories in Sri Lanka primarily manufactured intimates, performance wear, and swimwear (IPSS) for Gap Inc. Meanwhile, half of the company’s sweater factories were located in China, largely due to the complex manufacturing process and raw material requirements for these products. Additionally, India played a critical role as a sourcing base for Gap Inc.’s woven apparel.

Furthermore, Gap Inc.’s contract garment factories worldwide vary in size, reflecting the company’s diverse sourcing needs. Specifically, in Asia, garment factories in China are typically small or medium-sized, with fewer than 1,000 workers (94.3%). In contrast, nearly 80% of Gap Inc.’s contract garment factories in Bangladesh have more than 1,000 workers, with similar patterns observed in Vietnam (48.7%), India (50%), Indonesia (63.2%), and Pakistan (57.1%). This pattern aligns with other industry studies suggesting that U.S. fashion companies source apparel products from China primarily for orders with relatively small minimum order quantities (MOQs) and those requiring a great variety.

Meanwhile, most garment factories in Central American countries producing products for Gap Inc. have fewer than 1,000 workers, such as Guatemala (100%), Nicaragua (71%), Haiti (67%), and El Salvador (100%). A similar pattern is observed in other regions, such as Egypt (67%) and Turkey (82%). This result suggests that Gap Inc. may still need to rely on Asia to fulfill orders for large-volume items, as it takes time to expand production capacity in other regions.

by Sheng Lu

VF Corporation’s Evolving Apparel Sourcing Base: 2023-2024

VF Corporation (VF) is one of the largest apparel companies in the US, with an estimated global sales revenue to exceed $10 billion in 2024. VF owns several well-known apparel and outdoor performance brands, including The North Face, Timberland, and Icebreaker. VF also has a global presence. According to its latest annual report, in Fiscal 2024, “VF derived 52% of its revenues from the Americas, 33% from Europe, and 15% from Asia-Pacific.”

The following analysis is based on VF’s publicly released supplier list. Only factories identified as producing “apparel” products and related textile raw materials are included in the analysis.

First, while VF maintained a geographically diverse global sourcing base, it reduced the number of factories it sourced from between 2023 and 2024. Specifically, as of Q3 2024 (the latest data available), VF sourced apparel from 36 countries, the same number as in Q1 2023. These countries spanned almost all continents, including Asia, the Americas, Europe, and Africa. Similarly, over the same period, VF sourced textile raw materials for apparel production—including factories producing polymers—from approximately 30 countries.

However, between Q1 2023 and Q3 2024, VF reduced the number of apparel factories it contracts with from 463 to 426. The number of textile mills VF contracts also declined, from 665 to 546. This pattern aligned with the findings of other industry studies, which indicate that many U.S. fashion companies, particularly larger ones, are consolidating their vendor base to reduce sourcing risks and enhance operational efficiency.

Additionally, VF’s annual reports indicate that no single supplier accounted for more than 6% of its total cost of goods sold during Fiscal Year 2024, the same as in 2023, but lower than 7% in Fiscal Year 2021.

Second, in line with macro trade data, Asia served as VF’s largest apparel sourcing base in Q3 2024, led by China (23.1 percent) and Vietnam (11.5 percent). Specifically, as of Q3 2024, approximately 55.3 percent of VF’s garment factories were located in Asia, an increase from 48.8 percent in Q1 2023. Meanwhile, VF is also adjusting its apparel sourcing strategy within the Asia region. For example, between 2023 and 2024, VF decreased the number of garment factories it worked with in China (down 5), Bangladesh (down 12), and India (down 17), while adding more contract factories in Vietnam (up 36), Cambodia (up 7), and Indonesia (up 4).  The pattern indicates that while VF may attempt to reduce its “China exposure,” it also actively seeks new sourcing opportunities within Asia. 

Conversely, in Q3 2024, around 21.2 percent of VF’s garment factories were based in the Western Hemisphere, a decrease from 27.0 percent in Q1 2023. In most situations, VF worked with about 10-20 garment factories in each Western Hemisphere country. Furthermore, from 2023 to 2024, VF cut the number of garment factories in Mexico (down 16) and the United States (down 10), indicating that expanding near-shoring and on-shoring was not the company’s preferred strategy in the current environment. 

Third, compared to garments, VF’s supply of textile raw materials relies even more heavily on Asia, especially China. Specifically, as of Q3 2024, approximately 83.5 percent of VF’s textile raw material suppliers were located in Asia, the same as in Q1 2023. Notably, China represented nearly half of VF’s textile material suppliers in Q3 2024, including 41.2 percent of textile yarn and fabric mills and 50.9 percent of trim mills. Although VF reduced the number of textile mills in China from Q1 2023 to Q3 2024, China’s share of VF’s total textile raw material supplier base remained the same. Overall, the pattern aligns with previous research suggesting that finding alternative sourcing bases for textile raw materials outside of China and Asia will be more difficult and time-consuming for US fashion companies, considering the capital-intensive nature of making textile products.

Fourth, VF’s contract garment factories worldwide varied in size, reflecting the company’s diverse sourcing needs. Specifically, in Asia, garment factories in China typically were small and medium-sized, with 11-100 workers (43.9 percent) or 101-500 workers (33.7 percent). In contrast, nearly 90 percent of VF’s contract garment factories in Bangladesh had more than 1,000 workers, with similar patterns observed in Vietnam (52.2 percent), Cambodia (50.0 percent), Indonesia (63.2 percent), and Pakistan (100 percent). These findings suggest that VF may use China as a sourcing base for relatively small, diverse orders while relying on other Asian countries with lower labor costs for high-volume production.

Meanwhile, in the Americas and Africa, VF’s contract garment factories in Haiti, Honduras, El Salvador, Kenya, and Jordan included more large-scale operations with over 1,000 workers. These locations could serve as emerging alternatives to sourcing from Asia, especially for specific categories. In contrast, VF’s contract garment factories in Mexico, the US, and Guatemala featured many medium and small operations, which are more likely to fulfill replenishment orders or produce specialized products.

by Sheng Lu

FASH455 Exclusive Interview with Hannah Laurits, Fabric Lab Textile Coordinator at Swim USA, about Fabrics and Apparel Sourcing

About Hannah Laurits

Hello! My name is Hannah Laurits, and I am currently working as a Textile Lab Fabric Coordinator at Swim USA. I graduated from the Master of Science program in Fashion and Apparel Studies at the University of Delaware in 2024. Through the program, I had the opportunity to work on various research projects, ranging from adaptive apparel to sustainable textiles. During my time at UD, I also had the privilege of teaching Fash133 Foundations for Fashion Innovation, which was an incredibly rewarding experience.

In addition to my master’s degree, I hold a Bachelor of Science in Apparel Design and Fashion Merchandising from the University of Delaware. Throughout my academic journey, I completed internships related to textiles and sourcing, which played a significant role in shaping my career and led me to my current position at Swim USA. I am passionate about the intersection of textile innovation, sustainability, and sourcing, and I’m excited to share insights from my experiences in the industry.

Disclaimer: The views expressed in this interview are those of Hannah Laurits and do not reflect the views or positions of her employer or any affiliated organizations.

Sheng: What are your main responsibilities as a fabric lab textile coordinator? What does a typical day look like? Which aspects of the job do you find particularly interesting or unexpected before taking on the role?

Hannah: As a Fabric Lab Textile Coordinator, I work to ensure that the fabrics that go into our products meet both our internal quality standards as well as the standards of our customers and the global textile industry. In the lab, we mainly focus on quality control, which includes ensuring that the fabrics we use in production meet specific quality standards.

In my role, a typical day may include visually and/or digitally reviewing colors to ensure that they align with our established standards. Additionally, each day consists of a variety of testing and analysis of results to ensure that they meet brand requirements. I also assist with raw materials development, particularly in the areas of color and fabric testing for various brands. One key aspect of my work is analyzing testing data to identify risks, areas for improvement, and potential delays in production. The best part of my role is the variety of tasks I’m involved in, the opportunity to work on multiple brands, and the extensive cross-functional collaboration I get to participate in. From color matching and testing to analyzing data and working directly with various teams, no two days are ever the same. The level of collaboration across departments has been extremely helpful, allowing me to learn from different areas of the business and broaden my skill set.

Sheng: In general, what factors should be considered when selecting fabrics in product development and apparel sourcing?

Hannah: When selecting fabrics for product development and sourcing, there are many factors to consider, including but not limited to cost, quality, durability, color and dyeing process, fiber content, intended use, sustainability, lead times, availability, and compliance with regulations. In my role, understanding the fabric composition, color, and dyeing process, as well as the intended final use is essential. Different fibers and dyestuffs have inherent properties that can affect the fabric’s appearance and colorfastness, so it’s crucial to understand how they will perform in the final product. This knowledge helps determine whether achieving a specific color while maintaining the desired quality is feasible. By carefully considering these factors, we ensure that the product meets both aesthetic and performance standards.

Sheng: Part of your job involves testing fabrics. What needs to be tested, and what are the main issues involved in the quality control of fabrics?

Hannah:A large part of my role involves testing fabrics to ensure they meet the required standards. There are a variety of tests that need to be completed, and they generally fall into two main categories: color fastness and physical properties. Color fastness testing is conducted to ensure that the fabric retains its color and/or does not run when exposed to various factors, such as washing, sunlight, or exposure to chlorine. Physical property testing helps ensure that the fabric will meet the required performance standards. This includes testing for qualities like weight, stretch, and dimensional stability. These tests are essential to make sure the final product fits well and performs as expected for the consumer.

Sheng: From your observation, how has sustainability impacted the selection and sourcing of textile materials for fashion companies? How is “sustainability” assessed for fabrics? What emerging trends are worth watching?

Hannah: Sustainability is a major focus in the textile and apparel industry, continuously evolving and shaping how fashion companies approach textile research, development, and sourcing. There is a noticeable shift towards prioritizing eco-friendly materials and minimizing environmental footprint. Sustainability can be assessed in many ways in fabrics throughout a fabric’s entire lifecycle – from raw material sourcing to end-of-life disposal. It is important to consider not only the environmental impact but also the social and ethical aspects of fiber cultivation and fabric production, ensuring that workers’ rights are also prioritized. From what I have observed in the market, the most accessible and widely adopted sustainable fabrics tend to be recycled, organic, or plant-based materials. However, there are many other emerging trends worth watching. These include waterless or low-water dyeing technologies, eco-friendly finishes and treatments, regenerative agriculture, and innovative fiber development. 

Sheng: Following up on the previous question, is it true or a myth that sustainable fabrics are typically more expensive and increase production costs? If so, how can companies balance sustainability with cost-effectiveness?

Hannah:While sustainable fabrics can sometimes be more expensive, it’s not always the case. Factors such as higher initial investments in sustainable technologies, costs of production, the smaller scale of production, and the costs associated with certifications can make sustainable fabrics more costly. However, it is still possible for companies to balance sustainability with cost-effectiveness. Sustainable practices often bring long-term benefits, such as risk reduction, improved durability, and increased brand value. Further, as more brands shift towards and invest in sustainable material innovation, we can expect these fabrics to become more affordable and available over time.

Sheng: Based on your experience, can you offer any advice to our students regarding preparing for a career in the fashion apparel industry? What could they do at UD? What is the benefit of getting a master’s degree in fashion and apparel?

Hannah: My advice to students is to get involved as much as possible. Internships are a great way to gain hands-on experience. If internships aren’t available, networking and learning from professionals in the industry are invaluable. At UD, there are numerous opportunities to take advantage of, like research projects, clubs, and career fairs to build connections and expand your knowledge. I have found that a master’s degree in Fashion and Apparel has provided me with a strong foundation which has helped me secure a career and be successful in the industry. I often find myself referring to course topics and key skills I learned in graduate school such as data analysis.

Additionally, if any students soon graduating are interested in Swim USA, below is information from our HR department on how they search for talent. “For entry-level roles, we typically use Handshake as a great way to reach upcoming graduates or recent alumni. I would advise them to register and look at opportunities there. If they haven’t already, they should also ensure their LinkedIn profile is up to date and has a nice professional picture. Start following companies that you might be interested in, like SWIM USA, to see new or open roles first. They are also welcome to follow our Swim USA careers page for more information.”

–The End–

FASH455 Exclusive Interview with Jillian Silverman, Associate Trim Specialist at Lands’​ End, about Textile Raw Materials and Apparel Sourcing

About Jillian Silverman

Jillian Silverman is an Associate Trim Specialist at Lands’ End, based in Madison, Wisconsin. She earned an Honors degree in Fashion Merchandising with a minor in Environmental Humanities from the University of Delaware in 2016. She later completed her Master’s degree in Fashion and Apparel Studies in 2018, focusing on sustainable material development. Her research, which explored the use of mushrooms as a primary material for footwear, gained national media attention. As a graduate instructor, Jillian taught an undergraduate sustainability course at UD. She continues to share her expertise on textile sustainability as an adjunct professor, teaching several courses in the FASH graduate certificate program for sustainable apparel business.

Disclaimer: The views expressed in this interview are those of Jillian Silverman and do not reflect the views or positions of her employer or any affiliated organizations.

Sheng: What are your main responsibilities as a trim specialist? What does a typical day look like? Which aspects of the job do you find particularly interesting or unexpected before taking on the role?

Jillian: I manage the trims for all our apparel categories, which include hard trims like zippers and buttons and soft trims like thread and interlining, just to name a few. I work with our designers to find out their trim needs and any inspiration, our sourcing team to learn where the garments will be manufactured and any cost, quantity, or lead time considerations, and our global trim suppliers (primarily Asia-based) to select existing trim qualities or bring new ones to fruition. I never realized the intricacies of all the different trim types, and I have learned a lot on the job and still learn as I go! I really enjoy sitting between the creative side, particularly with custom trims, and the more logistical side of things. The different teams often have competing priorities, so while that makes it challenging to juggle, the problem-solving aspect keeps things interesting.

Sheng: In general, what factors should be considered when selecting trims and other textile materials in product development and sourcing?

Jillian: One of the big challenges right now is vendor and garment production location and how that relates to material production locations. With the new administration’s push for tariffs, we’ve been trying to quickly pivot away from China, but many of our raw materials still come from China, so it’s not so simple to move production away without having new challenges with transporting materials and the resulting cost and time delays.

In general, our biggest considerations when selecting materials are aesthetics and performance, cost, lead time (how long it takes to get samples and/or bulk production made), and MOQ (minimum order quantity). We also have to consistently reevaluate our supplier base to make sure we have the right partners who offer what we need at the right place, time, and cost. Speed is becoming more important, so the quicker we can have materials made and transported to our factories, the faster we can start selling those products.

Sheng: Based on your observations, how has sustainability influenced the selection and sourcing of textile materials for fashion companies? How is “sustainability” assessed for trims and other textile materials? What emerging trends should we keep an eye on?

Jillian: Sustainability considerations can be more proactive or reactive depending on the company and the issue at hand. For example, we phased out any PFAS from our supply chain to be in compliance with regulations that were coming. Other initiatives may be to reach certain sustainability goals, like ensuring that a specific percentage of polyester is recycled or using organic or BCI (Better Cotton Initiative) vs. conventional cotton, both of which are transitions we’re working to make. For outerwear, we’ve been using a lot more synthetic insulation, which is generally cheaper, more ethical, and offers easier care to our customers compared to down, so that’s a great option across the board, but many swaps are not so simple; switching to materials with a higher recycled content is often more expensive and less readily available. It can also be hard to quantify what is more “sustainable” about an item, so we look for documentation that supports it wherever possible.

Sheng: How do fashion companies today communicate the sustainability attributes of their apparel products? Is specifically mentioning keywords such as “sustainability” and “low impacts” in labels the most common practice?

Jillian: This has been an interesting topic of discussion lately since at a larger company, the people writing product copies for the website may be fairly removed from the product teams who know the ins and outs of their items and materials and what makes them special. Another challenge is that customers may not recognize the industry terms for things like branded fibers or certifications, so while those are more specific and quantifiable than terms like “sustainable,” they may be lost on the end consumer. I think it’s nice to offer both the more simplified language to get the customer to read further and then to try to break out what makes the item fit that label (e.g., water-saving dyeing method, a certain number of recycled bottles in the insulation, etc.).

Sheng: Following up on the previous question, is it true or a myth that sustainable textile materials are typically more expensive and increase production costs? If so, how can companies balance sustainability with cost-effectiveness?

Jillian: I’ve unfortunately found this to be true in many cases, but as the demand increases, many suppliers are beginning to make these switches automatically and often cost-neutral to their customers. The more brands ask for these changes, the more motivated suppliers are to invest in technology, certifications, etc.. We have to weigh whether or not we can use the more sustainable option without negatively impacting the other business needs, as well as gauge what our customer really cares about. It would be great to use more ethical materials and processes across the board, but we often use a phased approach to transition to more recycled content, for example, over time as we deplete existing stocks or focus on certain programs and styles like our more eco-friendly denim.

Sheng: Based on your experience, do you have any advice for our students on preparing for a career in the fashion apparel industry? What can they do at UD to better prepare? Additionally, what benefits do you see in pursuing a Master’s degree in fashion and apparel?

Jillian: My biggest advice is to be open to opportunities that are different from what you envisioned doing or even realized was a specific job that existed, like one centered around trims! I work with people who have moved between different roles in sourcing, design, technical design, and even IT once they get exposed to different teams and what their work was like. It’s ok to pivot if you find something that suits you better, or to find yourself working on something you weren’t expecting. Getting a breadth of experience also helps you to understand the bigger picture of all the moving parts that go into the apparel industry.

–The End–

2025 WITA Academy Pathways To Opportunity: Textiles and Apparel-University of Delaware

On March 4, 2025 (Tuesday) from 2:15 pm. to 3:45 pm, the Washington International Trade Association (WITA) Academy, in partnership with UD’s Fashion and Apparel Studies Department and JCPenney, will host a virtual workshop (on Zoom) exploring career opportunities across the fashion apparel supply chain, including design, product development, merchandising, sourcing, sustainability, trade compliance and more.

This event is free and open to ALL UD students (undergraduate and graduate), faculty, and prospective students of the UD FASH program, but registration is required (please use .edu email address): https://www.wita.org/events/pathways-careers-behind-the-seams/

Note: Students in FASH455-010 (Tue and Thu) do not need to register for the event. We will attend the workshop and participate in the live Q&A session in the classroom.

Featured speakers (bios here) from JCPenney include:

  • Amanda Blackman, Director of Planning and Allocation
  • Michelle Erwin, Sourcing Manager
  • Hunter Green, Senior Manager of International Transportation
  • Angela Hofmann, VP, Government Affairs
  • Wayne Milano, SVP, Global Sourcing and Product Development
  • Aqsa Tasleem, Senior Manager of Fabric & Sustainability
  • Katie Thurman, Senior Pre-Production Manager
  • Brandi Wallace, Senior Design Director
  • Brian Wolfrum, Director of Trade Compliance
  • Aaron Worley, Senior Buyer

Can Garment Production Survive in A Developed Economy in the 21st Century? A Study of “Made in Ireland”

Abstract

This study explored the survival strategies of apparel manufacturing in a high-wage developed economy using “Made in Ireland” as a case study. Based on a statistical analysis of 4,000 apparel items for sale in the retail market from January 2018 to December 2021, the study found that:

First, unlike the conventional views like the factor proportion trade theory and the global value chain theory, the study’s results showed that garment manufacturing did NOT disappear in Ireland as a high-wage developed country.  Notably, garments “Made in Ireland” demonstrated many unique attributes, such as:

  • statistically more likely to target luxury and high-end markets than foreign-made apparel imported into Ireland;
  • statistically more likely to highlight their Irish cultural heritage and mention keywords such as “traditional,” “centuries-old,” “craftsmanship,” and “historical” in the product description;
  • statistically more likely to focus on manufacturing specific product categories with a world reputation, including jumpers and kilts;
  • statistically less likely to be seen in categories with an abundant supply from lower-cost imports, such as bottoms;

In other words, economic theories need to incorporate non-price competition factors and better explain the development patterns of a country’s garment sector, particularly in developed economies.      

Second, the findings called for a rethink of the strategies supporting the garment-manufacturing sector in a high-wage developed country. Current industry practices and government policies aiming to promote garment manufacturing in a developed country primarily focus on implementing protectionist trade measures (i.e., restricting imports) or investing in modern technologies like automation. However, the study’s findings suggested new approaches. For example, using disaggregated product data at the Stock Keeping Unit (SKU) level, the study indicated that a substantial portion of garments “Made in Ireland” was sold overseas. Thus, promoting exports instead of curbing imports could be a more effective way of expanding garment production in a high-wage developed country.

On the other hand, the popularity of “Made in Ireland” jumpers and kilts in the world marketplace suggested that garment manufacturers in a high-wage developed country could survive their business by leveraging cultural heritage, history, and traditional craftsmanship instead of fancy new technologies. Likewise, to a certain extent, the value of maintaining garment manufacturing in a high-wage developed country in the 21st Century may not necessarily be about replacing imports, improving “speed to market,” or creating jobs but preserving a country’s unique cultural heritage and history.

Third,  the study’s findings revealed the challenges facing garment manufacturers in a high-wage developed country like Ireland. For example, garments “Made in Ireland” were more likely to be sold with a discount, implying their price competition with foreign-made imports might not be entirely avoidable despite all the efforts from targeting the niche markets to differentiating product assortments.

On the other hand, garments “Made in Ireland” often targeted the high-end market, requiring the workforce to obtain demanding skills such as advanced sewing, craftsmanship, and a deep understanding of the Irish culture. However, the aging workforce and the shortage of skilled labor, a common problem facing developed countries, could also prevent the expansion of apparel manufacturing in Ireland in the long run. Thus, prompting the traditional Irish culture and apparel production craftsmanship, especially to attract the young generation to garment factories and be willing to pursue a career there, would be critical for sustaining the garment manufacturing sector in Ireland and other high-wage developed countries.

Background

Ireland has a long history of making garments, and specific categories of apparel “Made in Ireland” are famous worldwide, such as jumpers and kilts. As of 2020 (i.e., the latest data available), about 340 garment factories still operate in Ireland, a notable increase from 293 in 2010 (Eurostat, 2022). Meanwhile, the output of Ireland’s apparel manufacturing sector totaled $68 million in 2020 (measured in value-added), a substantial drop from $142 million ten years ago (Eurostat, 2022).

Meanwhile, export was critical in supporting apparel “Made in Ireland” today. Statistics show that Ireland’s apparel exports totaled $270 million in 2019 before the pandemic, down about 19% from 2005 (UNComtrade). However, over that period, Ireland’s apparel exports to most developed countries enjoyed positive growth, such as Spain (up 151%), the Netherlands (up 4.5%), Germany (up 14.5%), France (up 61.6%), and Japan (up 20.2%). Further, Ireland’s top four largest apparel export markets were all developed Western EU countries (UNComtrade, 2022). Geographic proximity and the specific product structure of Ireland’s apparel exports could be important factors behind these distinct export patterns.

by Miriam Keegan (FASH MS student, Fulbright-EPA scholar) and Sheng Lu

Full paper: Keegan, M. & Lu, S. (2023). Can garment production survive in a developed economy in the 21st century? A study of “Made in Ireland”. Research Journal of Textile and Apparel. (ahead of print)  https://doi.org/10.1108/RJTA-09-2022-0113

FASH455 Video Discussion: The State of Textiles and Apparel “Made in Asia” (Updated February 2025)

Video 1: Threads of Resilience: China’s textile manufacturing goes automated
Video 2: Asian factories struggling to keep young workers
Video 3: How Millions Of Jeans Get Recycled Into New Pairs in Pakistan
Video 4: Vietnam becomes second biggest garment exporter globally

Discussion questions:

#1 How are textiles and apparel “Made in Asia” changing their faces? What are the driving forces of these changes?

#2 How would you assess Asia’s competitiveness as a hub for textile and apparel production and sourcing in the next five years? Why? What relevant factors could come into play?

#3  Is there anything else in the videos that you find interesting, intriguing, thought-provoking, or debatable? Why?

(FASH455: this post is for in-class discussion only; please do not leave your comment)

Outlook 2025–Key Issues to Shape Apparel Sourcing and Trade

In December 2024, Just-Style consulted a panel of industry experts and scholars in its Shape of apparel sourcing in 2025 briefing. Below is my contribution to the report. Welcome any comments and suggestions!

What’s next for apparel sourcing

Although the world economy is predicted to grow at a similar pace in 2025 from 2024, the slowing US and Chinese economies could impose new challenges to apparel sourcing, from weakened demand to intensified price competition.

Regarding the macroeconomic environment in 2025, which “sets the tone” for apparel sourcing, the International Monetary Fund (IMF) and the World Bank estimated that the world economy would grow by approximately 2.7-3.2 percent in 2025, with almost no change from the previous year. Similarly, the World Trade Organization (WTO) projected that world merchandise trade would increase by 3.3 percent in 2025, slightly higher than 2.6 percent in 2024.

Despite this incremental improvement, the world’s two largest economies–the US (with 2.2 percent GDP growth in 2025, down from 2.8 in 2024 and 2.9 in 2023) and China (with 4.5 percent GDP growth in 2025, down from 4.8 in 2024 and 5.2 in 2023) are expected to experience slower economic growth in the new year ahead. This slowdown means that apparel producers around the world, particularly those developing countries making large-volume basic items, will likely continue to struggle with a shortage of souring orders in 2025 due to overall weak import demand.

Even more concerning, as China grapples with declining domestic sales, the world clothing market could see an additional influx of low-cost Chinese products, especially through new e-commerce channels. Notably, less than half of China’s clothing production is exported, indicating its significant untapped export capacity. Furthermore, while China’s wage levels are higher than those in many other Asian apparel-producing countries, the unit price of U.S. apparel imports from China measured in dollar per square meter equivalent ($/SME) dropped by more than 21% between 2018 and 2024 (up to October). In contrast, U.S. apparel import prices from the rest of the world increased by 7.8% over the same period. Related to this, what is often overlooked is that even Shein, the “ultra-fast fashion” retailer known for its exceptionally competitive pricing, deliberately opted out of the vast Chinese market due to concerns about the intense price competition there. In other words, disregarding the new Trump tariff, 2025 could see an escalation of trade tensions targeting Chinese products in the US market and beyond.

Meanwhile, due to concerns about rising geopolitical tensions worldwide and trade policy uncertainty during Trump’s second term, fashion companies will likely continue to leverage sourcing diversification to mitigate risks. However, the “reducing China exposure” and sourcing diversification movement has yet to substantially benefit near-shoring or emerging sourcing destinations such as the Western Hemisphere and Sub-Saharan Africa (SSA). This result was mainly because fashion companies utilized China to source a wide range of various products, whereas Western Hemisphere and SSA suppliers can only produce a few basic categories.

For example, my latest studies show that in the first nine months of 2024, even excluding major platforms like Shein, Amazon, and Temu, US fashion companies sourced more than 60K Stock Keeping Units (SKUs) of clothing items from China. In comparison, India and Vietnam each supplied approximately 15K SKUs, Cambodia and Bangladesh each contributed 3,000 SKUs, Mexico provided only 2K SKUs, and CAFTA-DR and AGOA member countries supplied around 200 SKUs each. Therefore, even if fashion companies report sourcing from more countries, they are likely to stay sourcing from more Asian countries with closer export capacity and structure to China. Meanwhile, the total value or volume of trade may not fully capture the whole picture of sourcing diversification. This trend may persist in 2025, even with new tariff escalations.

Apparel industry challenges and opportunities

Today’s fashion business is highly global and relies heavily on the frequent movement of goods and services across borders. Thus, the uncertain and protectionist nature of U.S. trade policy during Trump’s second term could present significant challenges to the fashion industry in 2025. Of particular concern is that Trump’s new tariff actions would raise fashion companies’ sourcing costs, create additional inflationary pressure, reduce US consumers’ purchasing power on clothing, and trigger retaliatory trade measures from U.S. trading partners, ultimately hurting the U.S. economy. Notably, when the 7.5% Section 301 tariff was imposed on selected Chinese clothing products in 2018, the U.S. Consumer Price Index (CPI) growth was relatively low at 1.9%. However, imposing a 20% global tariff, a 60% tariff on Chinese products, and the existing 15%-30% regular tariff on clothing when the CPI is historically high is like “adding fuel to the fire.”

Besides tariffs, in 2025, if not sooner, U.S. fashion companies and many e-commerce suppliers worldwide will closely watch how Congress and the new Trump administration reform the de minimis rule, which currently exempts small-value shipments under $800 from tariffs and most customs procedures.  With Trump’s new tariffs looming, some argue that closing the de minimis “loophole” has become even more urgent, as it creates more financial incentives to use the rule to bypass the tariff increase. Meanwhile, proposals under consideration suggest removing textile and apparel products entirely from de minimis, a move that could be an “earthquake” for those fashion companies utilizing the rule heavily.

Trump’s approach and philosophy toward conventional trade agreements and trade preference programs in 2025 also deserve attention. During his first term, Trump launched a few bilateral trade negotiations, from the one with the United Kingdom and Japan to Kenya. Back then, Trump saw a bilateral agreement would give the U.S. more leverage for a better “deal.” Specifically related to apparel sourcing and trade, two flagship U.S. trade preference programs–the African Growth and Opportunity Act (AGOA) and the Haiti HOPE/HELP Act, will expire in September 2025. It remains uncertain whether the new Trump administration will support the early renewal of these two trade preference programs with minimal changes or prefer to renegotiate them and add new bilateral elements.

Additionally, even though the new Trump administration may not prioritize addressing climate change, it is an irreversible trend for fashion companies to allocate more resources to comply with upcoming or newly implemented sustainability and environmental-related legislation, whether from the EU or the US state level. Unlike in the past, when being more sustainable only meant adding operational costs or paying a “one-time fee,” today’s new generation of sustainability-focused regulations—such as Extended Producer Responsibility (EPR)—requires companies to shift their mindset and demonstrate continuous improvement. Interestingly, my recent study tracking apparel products’ sustainability claims shows that vague terms like “sustainable” and “eco-friendly” are gradually being replaced by more neutral, fact-based keywords such as “regenerative,” “textile waste,” and “low impact.”

Meanwhile, offering “sustainable” apparel products and those using “preferred sustainable fibers” could provide fashion companies new opportunities to diversify their sourcing base and expand their vendor networks. For example, studies show that in the U.S. market, China and many other Asian countries are not necessarily the top suppliers of clothing made with recycled materials. Instead, Europe and countries in the Western Hemisphere or even Africa present unique sourcing advantages and capacities due to the unique nature of such products. Therefore, in 2025, we can expect an ever-closer collaboration between design, product development, merchandising, sourcing, and legal teams within fashion companies, working together to meet the growing demand for sustainable apparel and ensure compliance with evolving regulations.

by Sheng Lu

FASH455 Discussion: How likely will US fashion companies increase apparel sourcing from Guatemala in 2025 compared to 2024?

Note: The video was taken during a Guatemala garment factory visit in May 2024. Credit: Sheng Lu

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 Exclusive Interview with Michael Lambert, Executive Director of Global Trade and Compliance of Urban Outfitters, about Trade Compliance and Global Apparel Sourcing

About Michael Lambert

Michael Lambert is the Executive Director of Global Trade and Compliance at Urban Outfitters (URBN). He also serves as the Vice Chair of the Board of Directors of the United States Fashion Industry Association (USFIA).

Michael has spent over 30 years in the retail fashion business, primarily in the import/export and Customs compliance area. At URBN, Michael is responsible for Customs, Social, Vendor and Regulatory Compliance. Urban Outfitters has a global footprint, with stores in the U.S., Canada, Europe and the United Kingdom.  Urban Outfitters designs and develops products throughout the world, working with a core vendor base across more than thirty countries. Prior to Urban Outfitters, Michael spent nine years with Limited Brands as head of their Import Planning department.  He spent his last two years with Limited Brands in London, setting up Compliance activity for Limited Brands as they expanded overseas.

Michael has been a Licensed Customs Broker since 1998 and is a graduate of Pennsylvania State University, with a Bachelor of Arts in International Politics and Foreign Service.

About Emilie Delaye (Moderator)

Emilie Delaye is a 2024 UD entrepreneurship graduate and an incoming UD graduate student in fashion and apparel studies. Emilie is the recipient of the 2024 UD Alumni Association Alexander J. Taylor Sr. Awards for Outstanding Seniors.

Mega Trade Agreements in the Asia-Pacific Region and Textiles and Apparel Trade (Updated August 2024)

Speaker: Dr. Deborah Elms, Founder and Executive Director of the Asian Trade Centre and the President of the Asia Business Trade Association. The clip was part of the webinar “Asia’s Noodle Bowl Of Trade” (March 2023).

Background

The Asia-Pacific region includes several mega free trade agreements:

ASEAN (Association of Southeast Asian Nations) is a regional intergovernmental organization comprising ten countries in Southeast Asia (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam). In 2022, ASEAN members have a combined nominal GDP of $3.6 trillion and a population of 671.6 million.

CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) is a free trade agreement signed by 11 countries in the Asia-Pacific region, including Japan, Malaysia, Vietnam, Australia, Singapore, Brunei, New Zealand, Canada, Mexico, Peru, and Chile. The CPTPP covers a market of 495 million people with a combined GDP of $13.5 trillion in 2021. The United States was originally a participant in the Trans-Pacific Partnership (TPP) negotiations, but in January 2017, former US President Trump withdrew the US from the agreement. The Biden administration has indicated no interest in rejoining CPTPP. Additionally, China is actively seeking to join CPTPP (as of March 2024).

RCEP (Regional Comprehensive Economic Partnership) is a free trade agreement signed by 15 countries in the Asia-Pacific region, including China, Japan, South Korea, Australia, New Zealand, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam. In 2021, RCEP members collectively represented a market of 2.3 billion people with a combined GDP of $26.3 trillion. India was an RCEP member but withdrew from the agreement due to concerns about import competition with China.

IPEF (Indo-Pacific Economic Framework for Prosperity) is a US-led economic cooperation framework that aims to “link major economies and emerging ones to tackle 21st-century challenges and promote fair and resilient trade for years to come.” IPEF is NOT a traditional free trade agreement, and it does not address market access issues like tariff cuts. Instead, IPEF includes four pillars: trade, supply chains, clean economy, and fair economy. IPEF members in the Asia-Pacific region include the United States, Japan, Australia, New Zealand, South Korea, India, Fiji, Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. The IPEF is designed to be flexible, meaning that IPEF partners are not required to join all four pillars. For example, India chooses not to join the trade pillar of the framework. In 2021, IPEF countries collectively represented a market of 2.1 billion people with a combined GDP of $23.3 trillion. The potential economic impact of IPEF remains too early to tell.

Notably, ASEAN, CPTPP, RCEP, and IPEF members play significant roles in the world textile and apparel trade. Specifically:

ASEAN and RCEP members have established a highly integrated regional textile and apparel supply chain. For example, a substantial portion of ASEAN and RECP members’ textile imports came from within the region.

ASEAN and RCEP members’ supply chain connection with China has substantially strengthened over the past decade. In contrast, the US barely participated in Asia-based textile and apparel supply chains. For example, other than CPTPP, the US accounted for less than 2% of ASEAN, RCEP, and IPEF members’ textile imports in 2022.

ASEAN and RCEP members also hold significant market shares in the world textile and apparel exports (over 50%). Meanwhile, the US and EU are indispensable export markets for ASEAN and RCEP members.

Because of the inclusion of the United States, IPEF represented one of the world’s largest apparel import markets (i.e., 33.7% in 2021, measured in value). Similarly, in 2022, about 26% of US apparel imports came from current IPEF members. Should IPEF address market access issues, it could offer significant duty-saving opportunities for textile and apparel products.

Additionally, the UK’s membership in CPTPP may have a limited direct impact on the textile and apparel sector, at least in the short to medium terms. For example, current CPTPP members only accounted for about 6% of the UK’s apparel imports in 2022.

2024 USFIA Fashion Industry Benchmarking Study Released

The full report is HERE

Key findings of this year’s report:

#1 Respondents reported growing sourcing risks of various kinds in 2024, from navigating an uncertain U.S. economy, managing forced labor risks, and responding to shipping and supply chain disruptions to facing rising geopolitical tensions and trade protectionism.

  • Over half of the respondents ranked “Inflation and economic outlook in the U.S.” and “Managing the forced labor risks in the supply chain” as their top business challenges in 2024.
  • The issues of “Shipping delays and supply chain disruptions” and “Managing geopolitics and other political instability related to sourcing” have newly emerged among respondents’ top five concerns in 2024.
  • About 45 percent of respondents rated “Protectionist trade policy agenda in the United States” as a top five business challenge this year, a jump from only 15 percent in 2023.

#2 U.S. fashion companies leverage sourcing diversification to respond to the growing sourcing risks and market uncertainty in 2024.

  • Nearly 70 percent of large-sized companies with 1,000+ employees reported sourcing from ten or more countries, significantly higher than the 45-55 percent range in the past few years. It also has become more common for medium to small-sized companies with fewer than 1,000 employees to source apparel from six or more countries in 2024 than in the past.
  • Nearly 80 percent of respondents plan to source from the same number of countries or even more countries through 2026, aiming to mitigate sourcing risks more effectively. However, their approaches differ at the firm level—some U.S. fashion companies plan to work with fewer vendors, while others intend to source from more.

#3 Managing the risk of forced labor in the supply chain continues to be a top priority for U.S. fashion companies in 2024.

  • U.S. fashion companies have adopted a comprehensive approach to comply with UFLPA and mitigate forced labor risks. On average, each surveyed company has implemented approximately six distinct practices across various aspects of their business operations this year, up from an average of five in 2023.
  • More than 90 percent of respondents say they are “Making more efforts to map and understand our supply chain, including the sources of fibers and yarns contained in finished products.” Notably, nearly 90 percent of respondents report mapping their entire apparel supply chains from Tier 1 to Tier 3 in 2024, a significant increase from about 40 percent in the past few years.
  • More than 80 percent of respondents say they “intentionally reduce sourcing from high-risk countries” in response to the UFLPA’s implementation. Another 75 percent of respondents explicitly state that their company has “banned the use of Chinese cotton in the apparel products” they carry.
  • About 45 percent of respondents have been actively “exploring sourcing destinations beyond Asia to mitigate forced labor risks.” However, this year, fewer respondents (i.e., under 10 percent) plan to cut apparel sourcing from Asian countries other than China directly, implying a more targeted and balanced approach to mitigating risks and meeting sourcing needs.
  • Based on field experience, respondents call for greater transparency in U.S. Customs and Border Protection (CBP)’s UFLPA enforcement, specifically in shipment detention and release decisions and in targeted entities and commodities information. Respondents also suggested that CBP reduce repeated detentions, focus on “bad actors” only, clarify enforcement on recycled cotton, and continue to partner with U.S. fashion companies on UFLPA enforcement.

#4 U.S. fashion companies remain deeply concerned about the deteriorating U.S.-China bilateral relationship and plan to further “reduce China exposure” to mitigate risks.

  • A record 43 percent of respondents sourced less than 10 percent of their apparel products from China this year, compared to only 18 percent in 2018. Likewise, nearly 60 percent of respondents no longer use China as their top apparel supplier in 2024, much higher than the 25-30 percent range before the pandemic.
  • Respondents rated China as economically competitive as an apparel sourcing base compared to many of its Asian competitors regarding vertical manufacturing capability, relatively low minimum order quantity (MOQ) requirements, flexibility and agility, sourcing costs, and speed to market. However, non-economic factors, particularly the perceived high risks of forced labor and geopolitical tensions, are driving U.S. fashion companies to move sourcing out of China. This trend applies to surveyed U.S. fashion companies selling products in China.
  • Nearly 80 percent of respondents plan to reduce their apparel sourcing from China further over the next two years through 2026. Consistent with last year’s results, large-size U.S. fashion companies with 1,000+ employees currently sourcing more than 10 percent of their apparel products from China are among the most eager to “de-risk.”

#5 U.S. fashion companies are actively exploring new sourcing opportunities, with a particular focus on emerging destinations in Asia and the Western Hemisphere.

  • This year, more respondents reported sourcing from India (89 percent utilization rate) than from Bangladesh (86 percent utilization rate) for the first time since we began the survey. Also, nearly 60 percent of respondents plan to expand apparel sourcing from India over the next two years, exceeding the planned expansion from any other Asian country.
  • For the second year in a row, three non-Asian countries made it to the top ten most utilized apparel sourcing destination list in 2024, including Guatemala (ranked 7th), Mexico (ranked 7th), and Egypt (ranked 10th). All three countries also witnessed an improved utilization rate in 2024 compared to last year’s survey results.
  • This year, a new record 52 percent of respondents plan to expand apparel sourcing from members of the Dominican Republic-Central American Free Trade Agreement (CAFTA-DR), over the next two years, up from 40 percent in 2023. However, most U.S. fashion companies consider expanding near-shoring from the Western Hemisphere as part of their overall sourcing diversification strategy. For example, nearly ALL companies that plan to increase sourcing from CAFTA-DR over the next two years also plan to increase sourcing from Asia.
  • 75 percent of respondents identified the “lack of sufficient access to textile raw materials” as the main bottleneck preventing them from sourcing more apparel from CAFTA-DR members. Respondents say the local manufacturing capability for yarns and fabrics using fiber types other than cotton and polyester, such as spandex, nylon, viscose, rayon, and wool, was modest or low in the CAFTA-DR region, even when including the United States.
  • The U.S.-Mexico-Canada Trade Agreement (USMCA) entered into force on July 1, 2020, replacing the North American Free Trade Agreement (NAFTA). Within the context of expanding nearing-shoring from the Western Hemisphere, in 2024, about 65 percent of respondents reported sourcing from Mexico and Canada (or USMCA members), a noticeable increase from about 40 percent in 2019-2020. About 36 percent of respondents say their companies “expanded apparel sourcing from USMCA members because of the agreement.”

#6 Respondents underscore the importance of immediate renewal of AGOA before its expiration in September 2025 and extending the agreement for at least another ten years.

  • This year, respondents reported sourcing from seven AGOA members or countries in Sub-Saharan Africa (SSA), including Lesotho, Ethiopia (note: lost AGOA eligibility in 2022), Kenya, Madagascar, Mauritius, Tanzania, and Ghana, an increase from four countries in 2023, and six countries in 2022. Most respondents sourcing from AGOA in 2024 are typically large-scale U.S. fashion brands or retailers with 1,000+ employees. Generally, these companies treat AGOA as part of their extensive global sourcing network.
  • Over 86 percent of respondents support renewing AGOA for at least another ten years, and none object to the proposal. This reveals U.S. fashion companies’ strong support for the trade preference program and the non-controversial nature of continuing this agreement.
  • Over 70 percent of respondents say another 10-year renewal of AGOA is essential for their company to expand sourcing from the region.
  • About 30 percent of respondents reported that they had already held back sourcing from AGOA members due to the pending renewal of the agreement and associated policy uncertainty. This figure could increase to half of the respondents if AGOA is not renewed by the end of 2024.
  • Another 30 percent of respondents indicate that keeping the flexible rules of origin in AGOA, such as the “third country fabric provision” for least-developed members, is essential for their company to source from the region.

Other topics the report covered include:

  • 5-year outlook for the U.S. fashion industry, including companies’ hiring plan by key positions
  • The competitiveness of major apparel sourcing destinations in 2024 regarding sourcing cost, speed to market, flexibility & agility, minimum order quantity (MOQ), vertical integration and local textile manufacturing capability, social and environmental compliance risks and geopolitical risks (assessed by respondents)
  • Respondents’ detailed sourcing portfolio in 2024 for garments and textile materials (i.e., yarns, fabrics and accessories)
  • Respondents’ latest strategies to mitigate forced labor risks in the supply chain and fashion companies’ suggestions for CBP’s UFLPA enforcement based on field experience
  • U.S. fashion companies’ latest social responsibility and sustainability practices related to sourcing
  • U.S. fashion companies’ trade policy priorities in 2024

About the study

This year’s benchmarking study was based on a survey of executives from 30 leading U.S. fashion companies from April to June 2024. The study incorporated a balanced mix of respondents representing various businesses in the U.S. fashion industry. Approximately 80 percent of respondents were self-identified retailers, 60 percent were self-identified brands, 41 percent were importers/wholesalers, and 3 percent were manufacturers.

The survey respondents included large U.S. fashion corporations and medium-sized companies. Around 80 percent of respondents reported having over 1,000 employees; the rest (20 percent) represented medium-sized companies with 100-999 employees.

New Study: Is Sub-Saharan Africa Ready to Serve as an Alternative Apparel Sourcing Destination to Asia for U.S. Fashion Companies? A Product-Level Analysis

Full paper: Lu, S. (2024), “Is Sub-Saharan Africa ready to serve as an alternative apparel-sourcing destination to Asia for US Fashion companies? A product-level analysis“, Competitiveness Review, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/CR-03-2024-0041

Summary:

The prospect of Sub-Saharan Africa (SSA) as an apparel-sourcing base for U.S. fashion companies has been a growing heated debate. On the one hand, U.S. fashion companies, driven by increasing geopolitical concerns and other market factors, were eager to diversify apparel sourcing away from Asia. The SSA region was often regarded as one of the most popular alternative sourcing destinations thanks to its large population, relatively low labor costs, and shorter shipping distance to U.S. ports compared to most Asian. The African Growth and Opportunity Act (AGOA), a trade preference program enacted in 2000, in particular, allowed eligible apparel exports from SSA countries to enter the United States import duty-free, creating substantial financial incentives for U.S. fashion companies to source from the SSA region.

However, empirical trade data shows that U.S. apparel imports from SSA members have stagnated over the past decades without evident growth. Notably, with little change from 2010, SSA countries collectively accounted for only 1.8% of U.S. apparel imports in 2023, with no single SSA member achieving a market share of more than 1%. In contrast, over the same period, despite China’s declining market shares, the following five largest Asian suppliers—Vietnam, Bangladesh, India, Indonesia, and Cambodia—jointly accounted for 43.0% of U.S. apparel imports in 2023, a notable increase from 27.4% in 2010.

This study aims to evaluate SSA countries’ capacity to serve as an alternative apparel sourcing destination to Asian suppliers for US fashion companies. Specifically, the study examined the detailed product information of a total of 10,000 stock keeping units (SKUs) of clothing items sold in the U.S. retail market from January 2021 to December 2023. Half of these items were sourced from the six largest apparel-exporting countries in SSA: Lesotho, Kenya, Mauritius, Ethiopia, Madagascar, and Tanzania. Together, these countries accounted for over 96% of the value of U.S. apparel imports from the SSA region between 2021 and 2023. The remaining half came from China, Vietnam, Bangladesh, Cambodia, India, and Indonesia, the six largest Asian apparel exporters, which stably accounted for approximately 90% of U.S. apparel imports from Asia over the past decade.

Key findings:

First, the results revealed that U.S. fashion companies’ sourcing strategies for SSA countries appeared more subtle and complicated than simply treating the region as another low-cost sourcing destination, as suggested by previous studies. Instead, according to the results, U.S. fashion companies seemed to leverage SSA countries as suppliers of “niche products,” such as those relatively simple and basic apparel categories containing African cultural elements and targeting the luxury and premium market segment. Meanwhile, the demand for such products could be much smaller than regular apparel items sold in the value and mass market. This allows SSA countries to fulfill these smaller orders despite their limited production capacity, often family-owned or involving handmade processes.

Second, the study’s findings identified significant challenges for SSA countries serving as immediate alternatives to sourcing from Asia for U.S. fashion companies. While SSA countries could offer relatively low sourcing costs, the range of apparel products available for U.S. fashion companies to source from the SSA region remained significantly more limited than those from Asia. For example, results show that U.S. fashion companies preferred sourcing relatively basic and technologically simple categories like knitwear, T-shirts, and bottoms from SSA countries. However, imports from SSA countries offered more limited sizing and color choices and were less likely to include womenswear and relatively more sophisticated or specialized product categories such as outerwear and swimwear. As another example, U.S. apparel imports from SSA countries were primarily made of cotton and polyester, with less use of other fiber types, including nylon, rayon, viscose, wool, and those made from recycled textile materials (see table below).

Third, building on the previous point, the results call for new thinking on strengthening SSA countries’ genuine competitiveness as an apparel-sourcing destination. Over the past decades, trade preference programs such as AGOA have mainly focused on improving the price competitiveness of SSA countries’ apparel exports. However, as this study’s findings illustrate, AGOA and other trade preference programs seemed inadequate in assisting SSA countries in developing capacity beyond basic apparel categories and securing a sufficient variety of textile materials. As U.S. fashion companies have placed greater emphasis on factors beyond price in their sourcing decisions, such as flexibility, agility, sustainability, and vendors’ capability to make a wide variety of products, this could put SSA countries at even more significant disadvantages down the road to being considered alternatives to Asia for apparel sourcing.

The results also reminded us that AGOA’s liberal rules of origin, which allowed least-developed SSA countries to use textile materials from anywhere worldwide, cannot replace the crucial need to develop the local textile manufacturing capacity within the SSA region. Without a robust local textile manufacturing sector, SSA countries would encounter significant challenges in diversifying their product offerings to include more complex and versatile clothing categories, such as outerwear and women’s dresses. These categories typically require a wide variety of raw textile materials and accessories, making it highly impractical and inefficient to rely solely on imports for their supply.

On the other hand, the findings reveal the necessity of creating a stable and foreseeable business environment, such as the long-term renewal of AGOA, to attract more long-term investments in SSA. For example, investing in and strengthening SSA countries’ local supply of sustainable textile materials, such as recycled or organic fibers, could strategically enhance SSA countries’ competitiveness in meeting the increasing demand from U.S. fashion companies for sustainable apparel products.

Additional reading:

The Puzzling US Apparel Import Data…

The latest US apparel import data raises several puzzles that deserve to be investigated further.

Question 1: Why did imports suddenly surge, and is this surge sustainable?

Unexpectedly, US apparel imports experienced a significant surge in February 2024. This surge was marked by a 12.9% increase in quantity and a 2.9% increase in value compared to the previous year. Seasonally adjusted US apparel imports in February 2024 were also nearly 10% higher than in January 2024. The import surge was particularly surprising given that the value of US clothing sales in February 2024 was only 1.3% higher than a year ago and even 0.5% lower than in January 2024 (seasonally adjusted).

That being said, US total merchandise imports also enjoyed a 2.2% increase year over year in February 2024, the best performance since last fall. Meanwhile, the World Trade Organization (WTO)’s latest April 2024 forecast predicted the world merchandise trade volume to grow by 2.6% in 2024 as opposed to a 1.2% decline in 2023.

Therefore, it will be important to watch whether the US apparel trade has indeed reached a turning point and will continue growing in the coming months and throughout the year.

Question 2: Could the volume of US apparel imports in 2023 have been underreported?

With over 98% of clothing sold in the US retail market being imported today, there exists a strong correlation between US apparel retail sales (NAICS code 4481) and the volume of apparel imports. Between 2015 and 2022, the US clothing sales to clothing import ratio remained consistently around 3.0-3.2 (seasonally adjusted). In other words, the value of retail sales was approximately three times the value of apparel imports. However, in 2023, this ratio increased to 4.0-4.5.

One suspicion is that as more apparel imports came into the US through the de minimis, the official US apparel import data in 2023 was somewhat underreported. Notably, according to Euromonitor, about 40% of US apparel retail sales were achieved through e-commerce in 2023, a substantial increase from 9.4% in 2010. Likewise, with US customs tightening controls on “small package shipments” and enhancing UFLPA enforcement, more imports likely began entering through the standard procedure in recent months, which explains why the US apparel sales to import rato fell back to 3.8 in February 2024.

On the other hand, some say the lowered US apparel import volume in 2023 was due to retailers’ efforts to control inventory levels. Data shows that US clothing stores’ stock-to-sales ratio in the last quarter of 2023 averaged 2.34, slightly lower than 2.43 from 2015 to 2019, but was higher than 2.19 back in 2021. In other words, while there was some effort by retailers to control inventory (as seen by the ratio being lower than pre-pandemic levels), it wasn’t a significant enough change to have a large impact on import demand. Also, considering that apparel is a seasonal product, it doesn’t seem too likely that retailers would risk losing sales opportunities during the most critical selling season of the year (i.e., 4th quarter) by promoting outdated items instead of stocking new ones on the shelf.

Question 3: Why did Asian countries export more apparel to Mexico?

As a developing country, Mexico is not traditionally a leading apparel import market due to consumers’ limited purchasing power and the sufficient local apparel supply. Take China, Vietnam, Bangladesh, and Cambodia, the four top Asian apparel exporting countries (Asia4), for instance. Between 2018 and 2020, Mexico typically accounted for 0.4%-0.7% of Asia4’s total apparel exports. However, since 2022, Asia4 has almost doubled its apparel exports to Mexico (i.e., increased to 1.5%-2.0%). Moreover, during the same period, the percentage of Asia4’s apparel exports to the United States declined from 27% to below 20%, especially in the last quarter of 2023.   

What’s behind the increase in Asian countries’ apparel exports to Mexico needs to be investigated further. As noted earlier, Mexico itself is a leading apparel-producing country. Also, according to Euromonitor, the clothing market in Mexico stayed relatively stable at around 7.6%-7.9% of the size of the US from 2017 to 2023 (in quantity). In other words, Mexico’s increased import demand for Asian clothing doesn’t make much sense.

Others suspect some Asian apparel exports to Mexico eventually entered the US market either by taking advantage of the de minimis rule or the US-Mexico-Canda (USMCA) trade agreement. However, the exact size of this particular trade flow calls for further investigation.

By Sheng Lu

Current Event Discussion: U.S. Customs and Border Protection (CBP) and Textile Enforcement

#1: On April 5, 2024, the US Department of Homeland Security (DHS) released its new enhanced strategy to combat illicit trade and level the playing field for the American textile industry and the estimated over 500,000 US textile jobs*. *note: according to the Bureau of Labor Statistics, as of December 2023, the US textile and apparel manufacturing sector employed about 272,400 workers (seasonally adjusted), including 89.3K in NACIS313 textile mills, 95.6K in NAICS314 textile product mills and 87.5K in NAICS315 apparel manufacturing. As of December 2023, NAICS 4482 apparel retail stores employed about 850,000 workers (seasonally adjusted).

According to DHS, the new enforcement plan will focus on the following areas:

  • Cracking down on small package shipments to prohibit illicit goods from U.S. markets by improving screening of packages claiming the Section 321 de minimis exemption for textile, Uyghur Forced Labor Prevention Act (UFLPA), and other violations, including expanded targeting, laboratory and isotopic testing, and focused enforcement operations.
  • Conducting joint Customs and Border Protection (CBP)-Homeland Security Investigation (HIS) HSI trade special operations to ensure cargo compliance. This includes physical inspections; country-of-origin, isotopic, and composition testing; and in-depth reviews of documentation. CBP will issue civil penalties for violations of U.S. laws and coordinate with HSI to develop and conduct criminal investigations when warranted.
  • Better assessing risk by expanding customs audits and increasing foreign verifications. DHS personnel will conduct comprehensive audits and textile production verification team visits to high-risk foreign facilities to ensure that textiles qualify under the U.S.-Mexico-Canada Agreement (USMCA) or the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). (note: As CBP noted, most US free trade agreements and trade preference programs have complex textiles and apparel-specific rules of origin requirements. CBP is “responsible for ensuring that the trade community complies with all statutory, regulatory, policy, and procedural requirements that pertain to importations under free trade agreements and other trade preference programs.”)
  • Building stakeholder awareness by engaging in an education campaign to ensure that importers and suppliers in the CAFTA-DR and USMCA region understand compliance requirements and are aware of CBP’s enforcement efforts.
  • Leveraging U.S. and Central American industry partnerships to improve facilitation for legitimate trade. (note: The Biden Administration aims to leverage textile and apparel trade as part of the solution to address “root causes of migration in Central America. According to the White House Fact Sheet released in March 2024, the Office of the U.S. Trade Representative and Central American Trade Agencies and textiles and apparel industry stakeholders will work together to build a directory with detailed profiles of manufacturing and sourcing companies in the region, including information on business practices and production capabilities, to facilitate transparent sourcing, and bolster the region’s supply chain.)
  • Expanding the Uyghur Forced Labor Prevention Act (UFLPA) Entity List to identify malign suppliers for the trade community through review of additional entities in the high-priority textile sector for inclusion in the UFLPA Entity List. (note: Once an entity is on this list, in general, it is prohibited from exporting its goods to the United States. Importers are required to ensure the supply chains of their imported products are free from entities on the Entity List).

#2: Several US textile and apparel industry stakeholders have publicly responded to DHS’s new strategy.:

 The National Council of Textile Organizations (NCTO), representing the US textile manufacturing sector, made several points in its statement:

“We strongly commend DHS for the release of a robust textile and apparel enforcement plan today. We also greatly appreciate Secretary Mayorkas’ personal engagement in this urgent effort and believe it’s a strong step forward to addressing pervasive customs fraud that is harming the U.S. textile industry.”

“The essential and vital domestic textile supply chain has lost 14 plants in recent months. The industry is facing severe economic harm due to a combination of factors, exacerbated by customs fraud and predatory trade practices by China and other countries, which has resulted in these devastating layoffs and plant closures. DHS immediately understood the economic harms facing the industry and deployed the development of a critical action plan.”

“The industry requests include

  • Ramped up textile and apparel enforcement with regard to Western Hemisphere trade partner countries, including onsite visits and other targeted verification measures to enforce rules of origin as well as to address any backdoor Uyghur Forced Labor Prevention Act (UFLPA) violations.
  • Increased UFLPA enforcement to prevent textile and apparel goods made with forced labor from entering our market, including in the de minimis environment.
  • Immediate expansion of the UFLPA Entity List, isotopic testing, and other targeting tools. Intensified scrutiny of Section 321 de minimis imports and a review of all existing Executive Branch authorities under current law to institute basic reforms to this outdated tariff waiver mechanism. “

Joint Association Statement on New DHS Textile Trade Enforcement from the American Apparel & Footwear Association, the National Retail Federation, the Retail Industry Leaders Association, and the United States Fashion Industry Association:

“We appreciate the Department of Homeland Security (DHS)’s announcement today outlining enhanced enforcement activities to prevent illicit trade in textiles. Our members support 55 million (more than one in four) American jobs and invest considerable time and resources in their customs compliance programs. Many of our members are Tier 3 participants in Customs-Trade Partnership Against Terrorism (C-TPAT). They are trusted traders and meet the high standards required to receive that designation by U.S. Customs and Border Protection and DHS. Our members are on the front lines for ensuring that they have safe and secure supply chains.

 “While DHS launches this enforcement plan, we urge it to partner with our associations and our associations’ members. A successful enforcement plan must include input from all stakeholders, clear communication with the trade, and coordinated activities with importers, especially if DHS finds illicit activity happening in the supply chain. The results of any illicit activities must be shared so that our members and other importers can act quickly to address the issue. As our members look to diversify their supply chains, especially back to the Western Hemisphere, we must make sure efforts are included to incentivize and not deter new investments.”

#3 Comments: Overall, the new DHS textile enforcement plan suggests several key US textile and apparel trade policy directions: 1) revisit the current de minimis rules that are used by many e-commerce businesses; 2) further strengthen the UFLPA and forced labor enforcement; 3) expand the Western hemisphere textile and apparel supply chain and encourage more US apparel sourcing from CAFTA-DR members; 4) scrutinize US apparel imports from China and imports from other Asian countries that heavily use textile raw material from China.

Discussion questions for FASH455 (please answer them all):

  1. How do the perspectives of the US textile industry and US fashion brands and retailers diverge concerning CBP’s new strategy? What are the areas in which they share common ground?
  2. Building on the previous question, how can the difference between the US textile industry and US fashion brands and retailers be explained regarding their response to DHS’s new enforcement strategy?
  3. As a sourcing manager for a major US apparel brand with global operations, how do you plan to adjust your company’s sourcing practices in light of DHS’s new strategy? You can list 1-2 detailed action plans and provide your analysis.

Background

The U.S. Customs and Border Protection (CBP) is an agency within the Department of Homeland Security (DHS), responsible for “regulating and facilitating international trade, collecting import duties, enforcing U.S. trade laws, and protecting the nation’s borders.”  

Homeland Security Investigations (HSI) is also a division within the Department of Homeland Security (DHS), responsible for “investigating transnational crime and threats, specifically those criminal organizations that exploit the global infrastructure through which international trade, travel and finance move.”

Product Development and Apparel Sourcing: FASH455 Exclusive Interview with Abby Edge, Product Development Associate at Eileen Fisher

About Abby Edge

Abby Edge is the Product Development associate at Eileen Fisher, where she supports key initiatives in sourcing and sustainability. She graduated from the University of Delaware (UD) in 2020 with a degree in Fashion Merchandising. During her time at UD, she developed a passion for sustainable sourcing and social responsibility, which led her to pursue a career with a company that aligns with these values. Abby also served as a teaching assistant for FASH455 in Spring 2020 and was the co-author of How will EU Trade Curb Affect Cambodia’s Apparel Industry published in Just-Style.

Disclaimer: The views expressed in this interview are those of Abby Edge and do not reflect the views or positions of her employer or any affiliated organizations.

Sheng: What does a Product Development Associate do? Can you walk us through your typical day at Eileen Fisher? Also, what makes you love your job?

Abby: Product development can mean different things at different companies, but at Eileen Fisher (EF) it means costing and development prior to product development (PO). All samples, fabrics, and costs need to be approved during the Product Development period before the business teams place their buys. Every day, I communicate with our vendors to cost styles and create time & action plans so that delivery will be met. We work with our vendors and fabric mills to align and finalize pricing to achieve our margin goals. We also must think strategically about material and vendor allocation to improve lead times and mitigate carbon footprint.

I work hybrid, and our beautiful office is on the Hudson River in Irvington, New York. I enjoy going into the office to spend time with my team and review the product in person. I love my job because I am exposed to so many new and exciting sustainability initiatives every day. I admire everything that EF stands for and that we can promote a “less is more” wardrobe.

Sheng: What are the key steps involved in product development, and how do you collaborate with your sourcing team throughout this process?

Abby: At Eileen Fisher, there are two main stages of the product development process before “commitment”: “development” and “dupe.” At the development stage, we focus on any new materials that are being added to the line. We make sure the costing, testing, and lead times are workable. Then, at the dupe stage, we cost and sample the entire product line so that the merchandising and buying teams have all the information they need to place their buys. After commitment, we pass the baton to the Production team to finalize quantities, issue purchase orders, and track orders. Together, the Product Development

Sheng: Sustainability is a key focus in the fashion apparel industry today. From the product development perspective, what notable improvements have been made in recent years, and where do opportunities lie for further progress?

Abby: Eileen Fisher is leading the way in sustainability within the fashion industry, and it has been incredibly rewarding to be a part of a team where this principle is integrated into every aspect. For example, materials are at the core of EF. We focus on natural, organic, and regenerative materials and steer away from synthetics. Regenerative organic cotton is a new material that I’m really excited about. It all starts with the health of the farm and the people growing our cotton. The regenerative organic certification means that the cotton is grown holistically and healthily, contributing to the soil’s health and mitigating the impacts of climate change.

Additionally, the certification has strict social responsibility guidelines, requiring a living wage and safe working conditions for all farmers. This is just one example of innovative improvements that are being made in the material sector. Others include Lenzing Tencel lyocell, regenerative responsible wool, and organic linen.

Another key initiative at Eileen Fisher is our take-back program called “Renew,” where customers bring back their old EF garments in exchange for a $5 store credit. Since the program started in 2009, 2 million garments have been collected. Of the 2 million, 660,885 have been re-sold in stores, and the rest have been donated, repurposed, or downcycled. Some of my favorite EF pieces have actually been purchased from the store’s renewal section! It is also great to see other brands following suit and creating take-back and recycling programs. Clothing waste is an industry-wide problem; we need all hands on deck to make a difference.

Sheng: From your observation, how has the adoption of digital technologies transformed the practices of product development and apparel sourcing?

Abby: Our Product lifecycle management (PLM) system— Centric— has helped streamline the design and product development process tremendously. All teams have access to the PLM system, which allows everyone to be on the same page and easily access any information they might need. For example, designers use the system to set up styles and tech packs, whereas the merchandising team uses the system to line plan and set retails. In my role, I use PLM to enter and land costs and analyze margins. It is dynamic and provides everyone the key tools to succeed while working on multiple seasons at once.

Sheng: Are there any other major trends in the fashion industry that we should closely monitor in the next 1-2 years, particularly in product development and sourcing?

Abby: Traceability and transparency have become increasingly important in the industry. Technology platforms are emerging that can ensure transparency throughout all supply chain tiers using a digital “fiber coin.” The specific platform we use— Textile Genesis—maps the supply chain from fiber to retail to verify any sustainable fibers so that all claims we make are valid. In other words, they ensure the “transactions” between each supply chain step (fiber to yarn to fabric to garment) are authentic. It has been very exciting to see this project come to life, and I feel that platforms like this will become increasingly more prominent in the coming years.

Sheng: What reflections can you share from your experiences at UD and FASH? what advice would you offer to current students preparing for a career in product development and apparel sourcing?

Abby: I am so grateful for my time at UD in the FASH program. I made so many connections with my peers, professors, and alums that have helped me get to where I am now. My advice to current students is to get involved as much as possible, whether through study abroad programs, internships, or clubs. Don’t limit yourself or close yourself off to areas of the industry and embrace any opportunity you get, as you never know where it could lead. My internship with Under Armour in Hong Kong through the FASH study abroad program really helped me grow personally and professionally and I would not be where I am without that experience.

–End–

Patterns of US Apparel Imports in 2023 and Critical Sourcing Trends to Watch in 2024

The latest data from the Office of Textiles and Apparel (OTEXA) and the United States International Trade Commission (USITC) suggested several key patterns of US apparel imports in 2023.

First, affected by the macro economy, US apparel import volume in 2023 suffered the most significant decline since the pandemic. Specifically, US apparel imports decreased by 22% in quantity and value in 2023 compared to 2022, with none of the top ten suppliers experiencing positive growth.

Nevertheless, after several months of straight decline, US apparel imports finally bounced back in December 2023. Thanks to the holiday season and a gradual improvement of the US economy, seasonally adjusted US apparel imports in December 2023 were about 4.5% higher in quantity and 4.2% higher in value than the previous month. Highly consistent with trends, the US Consumer Confidence Index (CCI) increased from 67.2 in November to 76.4 in December (January 2019=100), suggesting US households turned more confident about their financial outlook and willing to spend. That being said, the latest January 2024 International Monetary Fund (IMF) forecasts still predicted the US GDP growth would slow down from 2.5% in 2023 to 2.1% in 2024. Thus, whether the US apparel import volume could continue to maintain growth after the holiday season remains a big question mark.

Second, while the pace of sourcing cost increases has slowed, the costs and financial pressure facing US fashion companies are far from over. Specifically, as of December 2023, the price index of US apparel imports stood at 106 (January 2019=100), almost no change from January 2023. However, two emerging trends are worth watching. One is the declining US apparel retail price index since August 2023, which means US fashion companies may have to sacrifice their profits to attract consumers to the store. The second trend is the surging shipping costs as a result of the recent Red Sea shipping crisis, which were not reflected in the December price data. According to J.P. Morgan, during the week of January 25, 2024, the container shipping rates from China to the US West Coast and East Coast saw a significant spike of around 140% and 120% from November 2023, respectively. Even worse, there is no sign that the Red Sea crisis will soon be solved. Therefore, 2024 could pose another year of financial challenges for many US fashion companies.

Third, diversification remained a pivotal trend in US fashion companies’ sourcing strategy in 2023. For example, the Herfindahl–Hirschman index (HHI), a commonly used measurement of market concentration, went down from 0.105 in 2022 to 0.101 in 2022, suggesting that US apparel imports came from even more diverse sources.

Notably, measured in value, only 71.6% of US apparel imports came from Asia in 2023, the lowest in five years. Highly consistent with the US Fashion Industry Association’s Benchmarking Survey results, OTEXA’s data reflected companies’ intention to diversify their sourcing away from Asia due to increasing geopolitical concerns, particularly the rising US-China strategic competition.

However, it should be noted that Asia’s reduced market share did not benefit “near-shoring” from the Western hemisphere much. For example, in 2023, approximately 14.6% of US apparel imports originated from USMCA and CAFTA-DR members, nearly the same as the 14.3% recorded in 2022. Instead, US apparel imports outside Asia and the Western Hemisphere jumped to 11.4% in 2023 from 9.8% a year ago. Some emerging EU and African suppliers, such as Turkey, Romania, Morocco, and Tunisia, performed relatively well in the US market in 2023, although their market shares remained small. We could highly expect the sourcing diversification strategy to continue in 2024 as many companies regard the strategy as the most effective to mitigate various market uncertainties and sourcing risks.

Fourth, US fashion companies continued reducing their China exposure as much as possible, but China will remain a key player in the game. On the one hand, about 20.0% of US apparel imports in value and 25.9% in quantity came from China in 2023, both hit a new low in the past decade. Recent studies also show that it became increasingly common for China to no longer be the largest source of apparel imports for many US fashion companies.

However, China remains highly competitive in terms of the variety of products it offers. For example, the export product diversification index, calculated based on trade data at the 6-digit HTS code level (Chapters 61 and 62), shows that few other countries can match China’s product variety. Likewise, product level data collected from industry sources indicates that China offered far more clothing styles (measured in Stock Keeping Units, SKUs) than its competitors in 2023. According to the results, rather than identifying 1-2 specific “next China,” US fashion companies appeared to leverage “category killers”—for example, utilizing Vietnam as a sourcing base for outerwear, underwear, and swimwear; India for dresses, and Bangladesh for large-volume basic knitwear items.

Related to this, another recent study found that the top five largest Asian suppliers next to China, including Vietnam, Bangladesh, Indonesia, India, and Cambodia, collectively can offer diverse product categories almost comparable to those from China in the US market.

Fifth, trade data reveals early signs that US fashion companies are gradually reducing sourcing cotton apparel products from Asia because of the implementation of the Uyghur Forced Labor Prevention Act (UFLPA). Notably, when concerns about cotton made by Xinjiang forced labor initially emerged in 2018, US fashion companies quickly shifted sourcing orders for cotton apparel (OTEXA code 31) from China to other Asian countries. However, UFLPA’s enforcement increasingly targets imports from Asian countries other than China due to the highly integrated regional textile and apparel supply chain and Asian countries’ heavy reliance on textile inputs from China. Consequently, Asia (excluding China) accounted for a declining share in the total imports of US cotton apparel in 2023.

Meanwhile, affected by UFLPA’s enforcement, only 11.8% of US cotton apparel imports came from China in 2023, marking a further decline from 13% in 2022 and reaching a new low for the past decade. China also deliberately decreased the percentage of cotton apparel in its total apparel exports to the US market, dropping from nearly 40% in 2017 to only 25% in 2023. In comparison, cotton apparel consistently represented about 45% of total US apparel imports during the same period.

Additionally, while there was no substantial increase in the volume of US apparel imports from CAFTA-DR members, as a silver lining, the utilization of the trade agreement improved. In 2023, about 19.2% of US apparel imports claimed duty-free benefits under US free trade agreements and trade preference programs, a notable increase from 17.7% in 2022. Most such imports came under CAFTA-DR (45.4%) and USMCA (19.7%).

Meanwhile, in the first 12 months of 2023 (latest OTEXA data), about 70.2% of US apparel imports came from CAFTA-DR members claimed the duty-free benefit, up from 66.6% the same period a year ago. Particularly, 65.4% of US apparel imports under CAFTA-DR complied with the yarn-forward rules of origin in 2023, a notable increase from 61.3% in 2022. Another 2.6% of imports utilized the agreement’s short supply mechanism, which also went up from 2.3% in 2022. The results could reflect an ever more integrated regional textile and apparel supply chain among CAFTA-DR members due to increasing investments made in the region in recent years. However, there is still much that needs to be done to effectively increase the volume of US apparel imports from the region.

by Sheng Lu

Outlook 2024–Key Issues to Shape Apparel Sourcing and Trade

In December 2023, Just-Style consulted a panel of industry experts and scholars in its Outlook 2024–what’s next for apparel sourcing briefing. Below is my contribution to the report. Welcome any comments and suggestions!

What’s next for apparel sourcing?

Apparel sourcing is never about abrupt changes. However, fashion companies’ sourcing practices, from their crucial sourcing factors and sourcing destinations to operational priorities, will gradually shift in 2024 in response to the evolving business environment.

First, besides conventional sourcing factors like costs, speed to market, and compliance, fashion companies will increasingly emphasize flexibility and agility in vendor selection. One driving factor is economic uncertainty. For example, according to leading international organizations such as the World Bank and the International Monetary Fund (IMF), the world economy will likely grow relatively slowly at around 2.6%-3% in 2024. However, it is not uncommon that the economy and consumers’ demand for clothing could perform much better than expected. This means companies need to be ready for all occasions. Likewise, geopolitical tensions, from the Russia-Ukraine war and the US-China decoupling to the military conflict in the Middle East, could cause severe supply chain disruptions anytime and anywhere. Thus, fashion companies need to rely on a more flexible and agile supply chain to address market uncertainties and mitigate unpredictable sourcing risks.

Secondly, it will be interesting to watch in 2024 to what extent fashion companies will further reduce their exposure to China. On the one hand, it is no surprise that fashion companies are reducing finished garments sourcing from China as much as possible. However, fashion brands and retailers also admit that it is difficult to find practical alternatives to China in the short to medium terms regarding raw textile materials and orders that require small runs and great variety. Meanwhile, investments from China are flowing into regions considered alternative sourcing destinations, such as the rest of Asia and Central America. These new investments could complicate the efforts to limit exposure to China and potentially strengthen, not weaken, China’s position in the apparel supply chains. And stakeholders’ viewpoints on “investments from China” appear even more subtle and complicated.

Third, regulations “behind the borders” could more significantly affect fashion companies’ sourcing practices in 2024, particularly in sustainability-related areas. While sustainability is already a buzzword, fashion companies must deal with increasingly complex legal requirements to achieve sustainability. Take textile recycling, for example. The enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) on recycled cotton, the US Federal Trade Commission’s expanded Green Guides, the EU’s extended producer responsibility (EPR) program and its strategy for sustainable textiles, and many state-level legislations on textile waste (e.g., California Textile Recycling Legislation) may all affect companies’ production and sourcing practices for such products. Fashion companies’ sourcing, legal, and sustainability teams will need to work ever more closely to ensure “sustainable apparel” can be available to customers.

Apparel industry challenges and opportunities

In 2024, a slow-growing or stagnant world economy will persist as a significant challenge for fashion companies. Without sourcing orders from fashion brands and retailers, many small and medium-sized manufacturers in the developing world may struggle to survive, leaving garment workers in a precarious financial situation. China’s economic slowdown could worsen the situation as many developing countries increasingly treat China as an emerging export market. With shrinking domestic demand, more “Made in China” apparel could enter the international market and intensify the price competition. 

Another challenge is the rising geopolitical tensions and political instability in major apparel-producing countries. For example, while a broad base supports the early renewal of the African Growth and Opportunity Act (AGOA), which will expire in 2025, the reported human rights violations in some essential apparel exporting countries in the region could complicate the renewal process in US Congress. Likewise, even though the Biden administration is keen to encourage fashion companies to expand sourcing from Central America, political instability there, from Nicaragua to Haiti, makes fashion companies hesitant to make long-term sourcing commitments and investments. Furthermore, 2024 is the election year for many countries, from the US to Taiwan. We cannot rule out the possibility that unexpected incidents could trigger additional instability or even new conflict.

On the positive side, it is encouraging to see fashion companies continue to invest in new technologies to improve their operational efficiency in apparel sourcing. Digital product passports, 3D product design, PLM, blockchain, Generative AI, and various supply chain traceability tools are among the many technologies fashion companies actively explore. Fashion companies hope to leverage these tools to improve their supply chain transparency, strengthen relationships with key vendors, reduce textile waste, accelerate product development, and achieve financial returns.

It is also a critical time to rethink and reform fashion education. In addition to traditional curricula like apparel design and merchandising, we need more partnerships between the apparel industry and educational institutions to expose students to the real world. More direct engagement with Gen Z will also benefit fashion companies tremendously, allowing them to understand their future core customers and prepare qualified next-generation talents. 

by Sheng Lu

Exploring US Apparel Brands and Retailers’ Evolving Sourcing Strategies (December 2023)

The full article is here (Just-Style access required). Below are the key findings:

Based on a content analysis of the annual reports of about 30 largest US fashion brands and retailers from 2018 to 2023, this study aims to identify these companies’ most critical evolving sourcing practices, including their sourcing destination adjustment, primary sourcing factors, and emerging sourcing-related “hot topics.” The findings provide critical market intelligence, informing US fashion companies about their peers’ emerging sourcing trends and popular practices. The results show that:

First, maintaining a relatively diverse sourcing base remains common among US fashion companies. Results show that large-size companies today typically source from more than 20 countries. One critical factor behind fashion companies’ sourcing diversification strategies is that no single supplying country is “perfect,” given the increasingly complex sourcing factors. Sourcing diversification allows fashion companies to balance various sourcing factors. For example, according to company #19, “the (sourcing diversification) approach provides us with the greatest flexibility in identifying the appropriate manufacturers while considering quality, cost, timing of product delivery and other criteria.” On the other hand, sourcing diversification enables companies to adapt quickly to market uncertainties and enjoy supply chain flexibility and resilience.

Second, while US fashion companies are not necessarily leaving any particular countries they source from, many have substantially reduced the number of vendors they work with over the past few years. Specifically, out of the 30 fashion companies the study examined, over 60% explicitly mentioned they consolidated their sourcing base at the vendor level from 2017/2018 to 2022/2023, although the degree varied. For example:

  • Company #4, a leading sportswear brand, cut its contracted factories from 363 to 291 (or down 19.8%)
  • Company #6, which owns several jeans and sportswear brands, reduced its contracted factories from 1,000 to around 340 (or down 66%)
  • Company #9, a well-known specialty clothing store, cut its vendors from 800 to 250 (or down 68.8%)
  • Company #26, a specialty clothing store targeting the youth, cut its vendors from 150 to around 119 (or down 20.7%)
  • Company #28, a discount department store, cut its vendors from 3,100 to around 2,800 (or down 9.7%)

Associated with the trend of “country diversification and vendor consolidation,” US fashion companies are increasingly interested in working with “super vendors,” e.g., those with multiple country presence or vertical manufacturing capability. The use of “super vendor” can also be observed in fashion companies’ willingness to give more sourcing orders to their top suppliers. For example, Company #18, a casual and outdoor wear retailer, reduced its vendors from 200 in 2017/2018 to 110 in 2022/2023, but increased the cap of sourcing orders for its top 10 vendors from 40% to 47% over the same period.

Third, regarding the sourcing base, many US fashion companies have intentionally reduced their apparel sourcing from China, given the US-China tariff war, deteriorating bilateral relations, and the forced labor concerns with China’s Xinjiang region (XUAR). Specifically, more than one-third of the examined companies explicitly mentioned their strategy to reduce finished garments sourcing from China. Furthermore, several US fashion companies indicated their “reducing China exposure” strategy would continue, implying China’s market share in the US apparel import market could decrease further.

Nevertheless, even though fewer finished garments are coming from China, US fashion companies admit that China will continue to play a critical role as a textile raw material supplier as no immediate practical alternative is available. For example, Company #20, a specialty clothing chain focusing on trendy and fashionable items, says, “During fiscal 2022, we sourced most of our finished products with partners and suppliers outside the US and we continued to design and purchase fabrics globally, with most coming from China.”

Fourth, in line with trade statistics, US fashion companies consider other Asian suppliers, such as Vietnam, Bangladesh, Cambodia, and Indonesia, as their top choices as China’s alternatives. In comparison, few fashion companies explicitly mentioned moving their sourcing orders from China to Western Hemisphere countries or other regions.

Additionally, regarding emerging “hot topics” related to sourcing:

  • Geopolitics: the deteriorating US-China relations, escalated trade tensions expanded from tariffs to forced labor, and the potential trade disruptions have concerned US fashion companies significantly. Notably, US fashion companies regard sourcing from China as increasingly risky, with the implementation of the Uyghur Forced Labor Prevention Act (UFLPA) in June 2022. For example, according to Company 2, “The Uyghur Forced Labor Prevention Act and other similar legislation may lead to greater supply chain compliance costs and delays to us and to our vendors.”
  • Near-shoring: due to the decoupling and de-risking from the China movement, US fashion companies have begun actively exploring near-shoring sourcing opportunities in the Western Hemisphere, particularly from members of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). For example, Company #1, the North American manufacturer, disclosed that “(our) Company relies on a number of preferential trade programs (…) including the Dominican Republic – Central America – United States Free Trade Agreement (CAFTA-DR (…) Collectively, these agreements strengthen US economic relations and expand trade with Central America, the Dominican Republic, and Haiti.”
  • Sustainability and social responsibility: It is noteworthy that aside from climate change and forced labor, which are typically addressed as risk factors, US fashion companies generally hold an optimistic and forward-looking perspective for sustainability, such as new technologies and endeavors toward more sustainable production and sourcing. Terms such as using preferred or recycled materials, supply chain transparency and traceability, and emerging sustainability technologies have been more frequently mentioned in companies’ annual or ESG reports. For example, Company #17 says, “Increase the usage of environmentally preferred materials to comprise 32.6% of the brand’s global materials footprint.” Company #2 adds, “Our goal is to use preferred materials in 100 percent of our products by 2030.” Company #9 states, “We collaborate with suppliers to increase the supply of preferred raw materials.”
  • Supply chain transparency: US fashion companies attach great importance to improving supply chain transparency and traceability. Compared to the past, fashion companies are more willing to invest in new technologies and digital tools, allowing them to map supply chains and achieve sustainability goals more effectively. Related to this, US fashion companies have actively engaged with industry associations and other industry communities outside the company to stay informed about sustainability trends and learn best practices.

By Emily Delaye and Sheng Lu

Note: Welcome to the webinar hosted by the US Fashion Industry Association (USFIA) on Friday, December 15, 2023 at 2:00pm EST, to hear Emily Delaye discuss the study in detail.

FASH455 Exclusive Interview with Julia Hughes, President of the United States Fashion Industry Association about the Latest US Apparel Sourcing Trends

About Julia K. Hughes

Julia K. Hughes is President of the United States Fashion Industry Association (USFIA), which represents brands, retailers, importers, and wholesalers based in the United States and doing business globally. She represents the industry in front of the U.S. government as well as international governments and stakeholders, explaining how fashion companies create high quality jobs in the United States and economic opportunities around the world.

An expert on textile and apparel trade issues, Julie has testified before Congress and the Executive Branch. She frequently speaks at international conferences including the China & Asia Textile Forum, Fashion Institute of Technology (FIT), Harvard University’s Bangladesh Development Conference, MAGIC, Prime Source Forum, Vietnam Textile Summit, and others.

Julie served as the first President and is one of the founders of the Washington Chapter of Women in International Trade (WIIT) and is one of the founders of the WIIT Charitable Trust. She also was the first President of the Organization of Women in International Trade (OWIT).  In 1992, she received the Outstanding Woman in International Trade award and in 2008, the WIIT Lifetime Achievement Award. She also is a member of the International Women’s Forum.

Julia has an M.A. in International Studies from the Johns Hopkins School of Advanced International Studies and a B.S. in Foreign Service from Georgetown University.

The interview was conducted by Leah Marsh, a graduate student in the Department of Fashion and Apparel Studies at the University of Delaware. Leah’s research focused on​​ exploring EU retailers’ sourcing strategies for clothing made from recycled textile materials and fashion companies’ supply chain and sourcing strategies.

The interview is part of the 2023 Cotton in the Curriculum program, supported by Cotton Incorporated, to develop open educational resources (OER) for global apparel sourcing classes.

Patterns of US Apparel Imports (Updated September 2023)

First, while US apparel imports gradually recovered, the import demand remained weak overall. For example, US apparel imports in July 2023 increased by 0.9% in value and 2% in quantity from June (seasonally adjusted). However, the trade volume still experienced a decrease of approximately 17-18% compared to the previous year. Meanwhile, the US consumer confidence index fell again in August 2023, suggesting the economic uncertainties are far from over. Notably, so far in 2023 (January to July), US apparel imports decreased by 22.3% in value and 28% in quantity from the previous year, the worst performance since the pandemic.

As a silver lining, the price of US apparel imports has stabilized, although inflation remains an issue for the US economy.  

Secondly, because of the seasonal pattern, Asian countries were able to capture relatively higher market shares since June. For example, measured in value, China, ASEAN, and Bangladesh accounted for over 64% of total US apparel imports in July 2023, a notable increase from 61% in June and 58% in May 2023.

Nevertheless, US fashion companies continue diversifying their sourcing base to mitigate various supply chain risks and rising geopolitical tensions. For example, the HHI Index for US apparel imports dropped to 0.097 in the first seven months of 2023, which is lower than the 0.106 recorded in the same period the previous year (January to July 2022), indicating a greater diversity in the sources of imports.

Third, despite an apparent rebound in exports to the US, China continued to experience a further decline in its market share. For instance, in July 2023, China’s market share was more than 3 percentage points lower in value (27.2% in July 2022 vs. 24.1% in July 2023) and 2.5 percentage points lower in quantity (43.1% in July 2022 vs. 40.6% in July 2023). This marked the worst performance since April 2023. In other words, consistent with recent industry surveys, US fashion companies continue to reduce their China exposure given the adverse business environment.

Fourth, the latest data suggests that US apparel imports from CAFTA-DR members remain stagnant, and some critical problems, such as the underutilization of the agreement, even worsened. For example, about 9.5% of US apparel imports in value and 8.5% in quantity came from CAFTA-DR members in July 2023, lower than 10.2% and 9.0% in the previous year (i.e., July 2022). In absolute terms, US apparel imports from CAFTA-DR in 2023 were about 20% lower than in 2022.

Additionally, CAFTA-DR’s utilization rate (i.e., the value of imports claiming the duty-free benefits under CAFTA-DR divided by the total value of imports from CAFTA-DR) fell from 70.2% in 2022 (Jan to July) to a new low of 69.2% in 2023 (Jan to July). Likewise, the value of imports utilizing CAFTA-DR’s short supply decreased by more than 20%. Thus, how to leverage CAFTA-DR to meaningfully encourage more US apparel imports from the region, particularly in light of US fashion companies’ eagerness to reduce their exposure to China, calls for sustained efforts and probably new strategies.

by Sheng Lu

WTO Reports World Textiles and Clothing Trade in 2022

Note: the World Textiles and Clothing Trade in 2023 is available:

Lu, S. (2024). World Textile and Clothing Trade: Key Patterns and Emerging Trends. Global Textile Academy, International Trade Centre, Geneva, Switzerland.

This article comprehensively reviewed the world textiles and clothing trade patterns in 2022 based on the newly released World Trade Organization Statistical Review 2023 and data from the United Nations (UNComtrade). Affected by the slowing world economy and fashion companies’ evolving sourcing strategies in response to the rising geopolitical tensions, mainly linked to China, the world’s textiles and clothing trade in 2022 displayed several notable patterns different from the past.

Pattern #1: The expansion of world clothing exports witnessed a notable deceleration in 2022, primarily attributed to the economic downturn. Meanwhile, the world’s textile exports decreased from the previous year, affected by the reduced demand for textile raw materials used to produce personal protective equipment (PPE) as the pandemic waned.

  • The world’s clothing exports totaled $576 billion in 2022, up 5 percent year over year, much slower than the remarkable 20 percent growth in 2021. The slowed economic growth plus the unprecedented high inflation in major apparel import markets, particularly the United States and Western European countries, adversely affected consumers’ available budget for discretionary expenditures, including clothing purchases.
  • The world’s textile exports fell by 4.2 percent in 2022, totaling $339 billion, lagging behind most industrial sectors. Such a pattern was understandable as the demand for PPE and related textile raw materials substantially decreased with the pandemic nearing its end.

Pattern #2: China continued to lose market share in clothing exports, which benefited other leading apparel exporters in Asia. Notably, for the first time, Bangladesh surpassed Vietnam and ranked as the world’s second-largest apparel exporter in 2022.

  • In value, China remained the world’s largest apparel exporter in 2022. However, China’s clothing exports experienced a growth of 3.6 percent, below the global average of 5.0 percent, positioning China at the bottom of the top ten exporters.
  • China’s global market share in clothing exports dropped to 31.7 percent in 2022, marking its lowest point since the pandemic and a significant decrease from the approximate 38 percent recorded from 2015 to 2018. In fact, China lost market share in almost all major clothing import markets, including the US, the EU, Canada, and Japan. The concerns about the risks of forced labor linked to sourcing from China and the deteriorating US-China relations were among the primary factors driving fashion companies’ eagerness to reduce their ‘China exposure” further.
  • China has been diversifying its clothing exports beyond the traditional Western markets in response to the challenging business environment. For example, from 2021 to 2022, Asian countries, especially members of the Regional Comprehensive Economic Partnership (RCEP), became relatively more important clothing export markets for China. Nevertheless, since RCEP members primarily consist of developing economies with ambitions to enhance their own clothing production, the long-term growth prospects for their import demand of ‘Made in China’ clothing remain uncertain.
  • Bangladesh achieved a new record high in its market share of world clothing exports, reaching 7.9 percent in 2022, which exceeded Vietnam’s 6.1 percent. Many fashion companies regard Bangladesh as a promising clothing-sourcing destination with growth potential because of its capability to make cotton garments as China’s alternatives, competitive price, and reduced social compliance risks.
  • Fashion companies’ efforts to “de-risking from China” also resulted in the robust growth of clothing exports from other large-scale Asian clothing producers in 2022, including Vietnam (up 13 percent), Cambodia (up 12 percent), and India (up 10 percent). In other words, despite the concerns about China, fashion companies still treat Asia as their primary sourcing destination.

Pattern #3: Developed countries stay critical textile exporters, and middle-income developing countries gradually build new textile production and export capability.

  • The European Union members and the United States stayed critical textile exporters, accounting for 25.1 percent of the world’s textile exports in 2022, up from 24.5 percent in 2021 and 23.2 percent in 2020. Thanks to the increasing demand from apparel producers in the Western Hemisphere, U.S. textile exports increased by 5 percent in 2022, the highest among the world’s top ten.
  • As a persistent long-term trend, middle-income developing countries have consistently been strengthening their textile production and export capability. For example, China, Vietnam, Turkey, and India’s market shares in the world’s textile exports have steadily risen. They collectively accounted for 56.8 percent of the world’s clothing exports in 2022, a notable increase from only 40 percent in 2010. Also, over time, these middle-income developing countries have achieved a more balanced textiles-to-clothing export ratio.

Pattern #4: Regional textile and apparel trade patterns strengthened further with the growing popularity of near-shoring, particularly in the Western Hemisphere. However, an early indication has emerged that Asian countries are diversifying their sources of textile raw materials away from China to mitigate growing risks.

  • The regional textile and apparel supply chains were in good shape in Asia and Europe. For example, nearly 80 percent of Asian countries’ textile input and apparel imports came from within the region in 2022. Likewise, approximately half of EU countries’ textile imports were intra-region trade in 2022, and one-third were for apparel.
  • The Western Hemisphere (WH) textile and apparel supply chain became more integrated in 2022 thanks to the booming near-shoring trends. For example, 20.8 percent of WH countries’ textile imports came from within the region in 2022, up from 20.1 percent in the previous year. Likewise, about 15.1 percent of WH countries’ apparel imports came from within the region in 2022, higher than 14.7 percent in 2021 and 13.9 percent in 2022.
  • Compared with Asia and the EU, SSA clothing producers used much fewer locally-made textiles (i.e., stagnant at around 11% from 2011 to 2022), reflecting the region’s lack of textile manufacturing capability. A more comprehensive examination of strategies for bolstering the textile manufacturing sector in Sub-Saharan Africa, particularly in light of the recently enacted African Continental Free Trade Area (AfCFTA) agreement, might be warranted.
  • Additionally, data suggests that Asian countries began diversifying their textile imports away from China to mitigate supply chain risks. For example, with the official implementation of anti-forced labor legislation in the US and other primary apparel import markets directly targeting cotton made in China’s Xinjiang region, Asian countries significantly reduced their cotton fabric imports (SITC code 652) from China in 2022. Instead, Asian countries other than China accounted for 46.3 percent of the region’s textile supply in 2022, up from around 42-43 percent between 2019 and 2021.
  • It is critical to watch how willing, to what extent, and how quickly Asian countries can effectively reduce their dependency on textile supplies from China. The result is also an important reminder that Western fashion companies’ de-risking from China could exert significant and broad impacts across the entire supply chain beyond finished goods.

By Sheng Lu

Further reading: Lu, Sheng (2023).Key trends to watch as world clothing trade moves from China to wider Asia in 2023. Just-Style.

2023 USFIA Fashion Industry Benchmarking Study Released

The full report is available HERE

USFIA webinar (Aug 2023)

Key findings of this year’s report:

#1 U.S. fashion companies are deeply concerned about the deteriorating U.S.-China bilateral relationship and plan to accelerate “reducing China exposure” to mitigate the risks.

  • Respondents identified “Finding a new sourcing base other than China” as a more prominent challenge in 2023 than the previous year (i.e., 4th in 2023 vs. 11th in 2022).
  • This year, over 40 percent of respondents reported sourcing less than 10 percent of their apparel products from China, up from 30 percent of respondents a year ago and a notable surge from only 20 percent in 2019. Similarly, a new record high of 61 percent of respondents no longer use China as their top supplier in 2023, up from 50 percent of respondents in 2022 and much higher than only 25-30 percent before the pandemic.
  • Nearly 80 percent of respondents plan to reduce apparel sourcing from China over the next two years, with a record high of 15 percent planning to “strongly decrease” sourcing from the country. This strong sentiment was not present in past studies. Notably, large-size U.S. fashion companies (with 1,000+ employees) that currently source more than 10 percent of their apparel products from China are among the most eager to de-risk.

#2 Tackling forced labor risks in the supply chain remains a significant challenge confronting U.S. fashion companies in 2023.

  • “Managing the forced labor risks in the supply chain” ranks as the 2nd top business challenge in 2023, with 64 percent of respondents rating the issue as one of their top five concerns.
  • Most surveyed U.S. fashion companies have taken a comprehensive approach to mitigating forced labor risks in the supply chain. Three practices, including “asking vendors to provide more detailed social compliance information,” “attending workshops and other educational events to understand related regulations better,” and “intentionally reducing sourcing from high-risk countries,” are the most commonly adopted by respondents (over 80 percent) in response to forced labor risks and the UFLPA’s implementation.
  • Since January 1, 2023, U.S. Customs and Border Protection (CBP)’s UFLPA enforcement has affected respondents’ importation of “Cotton apparel products from China,” “Cotton apparel products from Asian countries other than China,” and “Home textiles from China.”
  • U.S. fashion companies are actively seeking to diversify their sourcing beyond Asia to mitigate the forced labor risks, particularly regarding cotton products.

#3 There is robust excitement about increasing apparel sourcing from members of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR).

  • CAFTA-DR members play a more significant role as an apparel sourcing base this year. Over 80 percent of respondents report sourcing from CAFTA-DR members in 2023, a notable increase from 60 percent in the past few years. Also, nearly 30 percent of respondents placed more than 10 percent of their sourcing orders with CAFTA-DR members this year, a substantial increase from only 19 percent of respondents in 2022 and 10 percent in 2021.
  • About 40 percent of respondents plan to increase apparel sourcing from CAFTA-DR members over the next two years. Most respondents consider expanding sourcing from CAFTA-DR as part of their overall sourcing diversification strategy.
  • With U.S. fashion companies actively seeking immediate alternatives to sourcing from China and Asia, respondents emphasize theincreased urgencyof improving textile raw material access to promote further U.S. apparel sourcing from CAFTA-DR members. “Allowing more flexibility in sourcing fabrics and yarns from outside CAFTA-DR” was regarded as the top improvement needed.

#4 US fashion companies demonstrate a solid dedication to expanding their sourcing of clothing made from recycled or other sustainable textile fibers:

  • Nearly 60 percent of respondents say at least 10 percent of their sourced apparel products already use recycled or other sustainable textile fibers. Another 60 percent of surveyed companies plan to “substantially increase sourcing apparel made from sustainable or recycled textile materials over the next five years.”
  • Addressing the higher sourcing costs and the low-profit margins are regarded as the top challenge for sourcing clothing using recycled or other sustainable fiber.
  • About 60 percent of respondents also call for policy support for sourcing clothing using recycled or other sustainable textile materials, such as preferential tariff rates and guidance on sustainability and recycling standards.

#5 Respondents strongly support and emphasize the importance of the early renewal of the African Growth and Opportunity Act (AGOA) and extending the program for at least another ten years.

  • Respondents sourcing from AGOA members are typically large-scale U.S. fashion brands or retailers (with 1,000+ employees). Generally, these companies treat AGOA as part of their extensive global sourcing network and typically source less than 10 percent of the total sourcing value or volume from the region.
  • About 40 percent of respondents view AGOA as “essential for my company to source from AGOA members.”
  • About 60 percent of respondents say the temporary nature of AGOA “has discouraged them from making long-term investments and sourcing commitments in the region.” Many respondents expect to cut sourcing from AGOA members should the agreement is not renewed by June 2024.
  • About one-third of respondents currently sourcing from AGOA explicitly indicate, “Ethiopia’s loss of AGOA eligibility negatively affects my company’s interest in sourcing from the entire AGOA region.” In comparison, only about 17 percent of respondents say they “have moved sourcing orders from Ethiopia to other AGOA members.

Other topics covered by the report include:

  • 5-year outlook for the U.S. fashion industry, including companies’ hiring plan by key positions
  • The competitiveness of major apparel sourcing destinations in 2023 regarding sourcing cost, speed to market, flexibility & agility, and compliance risks (assessed by respondents)
  • Respondents’ qualitative comments on the prospect of sourcing from China and “re-risk”
  • U.S. fashion companies’ latest social responsibility and sustainability practices related to sourcing
  • U.S. fashion companies’ trade policy priorities in 2023

Background

This year’s benchmarking study was based on a survey of executives from 30 leading U.S. fashion companies from April to June 2023. The study incorporated a balanced mix of respondents representing various businesses in the U.S. fashion industry. Approximately 73 percent of respondents were self-identified retailers, 60 percent self-identified brands, and 65 percent self-identified importers/wholesalers.

The respondents to the survey included both large U.S. fashion corporations and medium to small companies. Around 77 percent of respondents reported having more than 1,000 employees. And the rest (23 percent) represented medium to small-sized companies with 100-999 employees.

Progress and Challenges in Apparel Supply Chain Traceability: A Case Study on ASKET

ASKET is a prominent online retailer based in Sweden that commits to complete supply chain transparency. Based on analyzing nearly 40 unique products and their detailed supply chain information posted on ASKET’s website as of May 2023, the article aims to shed light on the company’s supply chain traceability progress and the remaining challenges it faces.

First, while ASKET achieved full traceability for Tier 1 suppliers, tracking Tier 2 and Tier 3 suppliers was more difficult. For example, compared with its perfect traceability score for Tier 1 suppliers (i.e., garment factories), ASKET’s average traceability for Tier 2 Milling factories (i.e., yarn and fabric producers) was at around 97%, and the score fell to only 77% for trims suppliers in Tier 3.

As one critical contributing factor to the phenomenon, Tier 2 and Tier 3 suppliers had far more players than Tier 1, which presented a more significant challenge in obtaining detailed information about all the factories involved. For example, ASKET’s garment cutting and sewing operations predominantly occurred within a single facility. In contrast, making yarns, fabrics, and trims EACH usually involve multiple facilities in different parts of the world.

Second, a comprehensive understanding of the sub-supply chains associated with apparel components is pivotal in enhancing a fashion company’s overall traceability. Notably, the apparel supply chain is far more complicated than the commonly known four stages—fiber, yarn, fabric, and garment manufacturing. Rather, apparel components like yarns, fabrics, sewing threads, buttons, and zippers have complex and intricate sub-supply chains. For instance, for ASKET’s shirts or polo shirts:

  • Cotton was “farmed in New Mexico, Arizona, California and Texas, USA, ginned in Anqing, China.”
  • Yarn was “spun and twisted in Hyderabad, India,” and “dyed in Varese, Italy.”
  • Fabric was “woven in Letohrad, Czech Republic, dyed and finished in Prato, Italy.”
  • Sewing thread was “produced in Breisgau, Germany, wound and packed in St. Maria de Palautordera, Spain”
  • Button was produced in Saccolongon, Italy, with corozo farmed in Manabi, Ecuador.

Third, using recycled textile materials in apparel products could make it trickier to map the supply chain.

  • ASKET reported no problem tracking recycled textile materials derived from natural fibers, especially recycled wool products.
  • ASKET’s capability of tracing recycled man-made fiber textiles yielded mixed results. For example, ASKET was still investigating the Tier 3 raw material suppliers for one fabric made with “100% pre-consumer recycled nylon.” Likewise, for one body fabric derived from “plastic waste collected from Spanish Mediterranean and French Atlantic oceans and coastlines,” pinpointing the precise origin of the raw fiber posed a challenge.

Fourth, ASKET’s data shows that using recycled textiles in apparel products could incur higher transportation costs. For example, the average transportation cost for an ASKET garment using recycled textiles would reach $5 per unit (or 6.3% of the total production costs), much higher than regular clothing using non-recycled materials ($1 per unit or 3% of the total production). However, on average, making a garment using recycled textile materials could involve fewer facilities(e.g., 9 vs. 12). This result suggests that the higher transportation cost associated with clothing made from recycled textiles may not be attributed to a longer supply chain but rather to a more tedious and expensive recycled fiber collection process.

Additionally, ASKET’s data indicates a strong correlation between its retail price and sourcing costs. Specifically, ASKET’s applied a gross margin% ranging from 71%–81%. This implies that a $2 increase in sourcing costs could potentially lead to a retail price increase of $10-$20. Thus, controlling and managing sourcing costs will always be a priority for a fashion company.

By Sheng Lu

Further reading: Lu, Sheng (2023). How Asket is achieving apparel supply chain traceability. Just-Style.

New Study: Impact of Textile Raw Material Access on CAFTA-DR Members’ Apparel Exports to the United States

The full paper is HERE. Below are the key findings:

Over the past decade, U.S. fashion brands and retailers have seen Central America as a critical emerging apparel-sourcing destination. Especially since implementing the Dominican-Republic Central America Free Trade Agreement (CAFTA-DR) in 2006, a trade deal among the United States, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic (joined in 2007), and Costa Rica (joined in 2009), apparel sourcing from the region gained consistent interest among U.S. companies.

Nevertheless, U.S. apparel sourcing from CAFTA-DR members is NOT without significant challenges. For example, CAFTA-DR countries’ market shares in the U.S. apparel import market fell from 11.8% in 2005 before the trade agreement entered into force to only 10.6% in 2022, measured by value. Trade data also indicated that U.S. apparel sourcing from CAFTA-DR members concentrated on simple and low-value items, such as T-shirts, and lacked product diversification with no improvement over the years.

Given the high stakes of improving the status quo, this study quantitatively evaluated the impact of textile raw material access on CAFTA-DR’s apparel exports to the United States. Specifically, this study assumed that CAFTA-DR members cut their textile import tariff rates to improve garment producers’ textile raw material access (i.e., to reduce the cost of sourcing textiles from anywhere in the world and beyond the U.S. supply). The computable general equilibrium (CGE) model estimation based on the GTAP9 database shows mixed results:

On the one hand, cutting CAFTA-DR members’ textile import tariffs to improve their garment producers’ textile raw material access would significantly improve CAFTA-DR members’ price competitiveness of their apparel exports to the United States and increase the export volume.

However, cutting CAFTA-DR members’ textile import tariffs to improve their garment producers’ textile raw material access would significantly expand their textile imports from non-U.S. sources. This means that CAFTA-DR members’ dependence on the U.S. textile raw material supply may decline further.

Overall, the study’s findings remind us that the debate on expanding U.S. apparel sourcing from CAFTA-DR members should go beyond CAFTA-DR members’ garment production. Instead, more efforts could be made to enhance CAFTA-DR garment producers’ textile raw material access as an effective way to expand the region’s apparel exports to the United States.

Meanwhile, several leading CAFTA-DR apparel exporting countries, including Honduras and Nicaragua, have been engaged in negotiations for free trade agreements with China, Taiwan, and other Asian economies. As the study’s findings indicate, these new trade deals could incentivize CAFTA-DR apparel manufacturers to increase their textile sourcing from Asia. In other words, inaction on the U.S. side and maintaining the status quo still could have significant implications for the future stability of the Western Hemisphere textile and apparel supply chain.

by Sheng Lu

USITC Assessment on the Economic Impacts of the Section 301 Tariffs—Textiles and Apparel

In March 2023, the US International Trade Commission (USITC) released its official assessment of the economic impacts of Section 301 tariffs on imports from China.

USITC adopted two methods to estimate Section 301 tariffs’ economic impacts:

  • Econometric model estimates using monthly trade data (10-digit HS code) from January 2017 to December 2021.
  • A set of partial equilibrium models that linked section 301 tariffs to domestic prices and production at the four-digit NAICS code level. USITC used data from 2018 to 2021 as the base year.
  • USITC only considered Section 301 tariffs’ direct impacts, i.e., “how tariffs impacted prices, production, and trade for products subject to section 301 tariffs and domestic sectors that compete directly with those imports.”

Regarding the overall impact of Section 301 actions, USITC found that the tariffs imposed on Chinese goods resulted in a price rise paid by US importers, but the exporter prices received by Chinese firms were mostly unchanged. As a result, “imports from China decreased in quantity, leading to a substantial decline in their import value. These changes, in turn, caused an increase in production and prices in US domestic industries that were competing with Chinese imports.”

USITC also evaluated the specific impacts of Section 301 tariffs on the Cut and Sew apparel (NAICS 3152) sector. According to USITC:

“nontariff-inclusive value” refers to the change in the value of imports from China excluding the value of the section 301 duties themselves, which provide an indication of the change in import quantities because export prices are mostly unchanged.

First, Section 301 tariffs hurt US apparel imports from China. USITC estimated that US woven apparel (NAICS 3152) imports from China decreased by 14.7% in 2019 but fell nearly 40% in 2020 and 2021 due to Section 301 tariffs. However, USITC didn’t explain why imports from China suddenly worsened, nor if other factors, such as the Uyghur Forced Labor Prevention Act (UFLPA), played a role.

Second, Section 301 tariffs mostly replaced US woven apparel (NAICS3152) imports from China with other sources. However, the direct benefits of Section 301 tariffs to US domestic cut and sew manufacturing seemed limited. Specifically, USITC estimated that US woven apparel imports from sources other than China increased by 7.1% in 2019, 24.8% in 2020, and 25.2% in 2021 due to Section 301 tariffs. In comparison, Section 301 tariffs resulted in modest growth of US domestic woven apparel (NAICS3152) production (up to 6.3%) over the same period.

Actual trade and production data further showed that US woven apparel (NAICS 3152) imports from sources other than China increased from $55.3 billion in 2018 to $61.2 billion in 2021 (or up 10.7%). Over the same period, US domestic woven apparel (NAICS 3152) sales & value of shipments declined from $7.49 billion to $7.38 billion (or down 1.4%) (Data source: Census). In other words, no clear evidence suggests that Section 301 tariffs boosted US domestic woven apparel production.

Third, Section 301 tariffs made US woven apparel (NAICS 3152) imports from EVERYWHERE more expensive. On the one hand, USITC found that the price of US woven apparel (NAICS 3152) imports from China increased by 4.4% in 2019, 14.7% in 2020, and 14.5% in 2021 due to the Section 301 tariffs. However, similar to the case of trade volume, USITC didn’t explain why Section 301 tariffs’ price impact suddenly became more significant in 2020 and 2021. (Note: In fact, the Tranche 4A tariffs were 15% since September 1, 2019, but were reduced to 7.5% effective February 14, 2020, because of the US-China Phase One deal.)

Meanwhile, due to limited production capacity outside of China, the Section 301 tariffs caused an increase in the cost of US woven apparel imports from all other countries. Specifically, USITC found that the price of US woven apparel (NACIS 3152) imports from sources other than China increased by 3.2% from 2018 to 2021. (Note: given the hiking sourcing costs in 2022, the price increase could be more significant should USITC include updated 2022 trade data in the estimation.)

Additionally, USITC acknowledged that its estimation may “likely captures the most significant impacts of these tariffs in the short run.” However, some effects of section 301 tariffs would likely be delayed. For example, USITC said, “if importers and domestic producers anticipated the tariffs remaining in place long enough,” they may consider more costly changes, such as adjusting their supply chains and investing in domestic production.

Discussion questions:

  • Based on USITC’s assessment, should President Biden keep or remove the Section 301 tariffs on imports from China? Why or why not?
  • Regarding the impact of Section 301, any questions remain unanswered or can be studied further?
  • Any findings in the USITC report surprised you and why?

Additional readings:

US Apparel Import and Sourcing Trends: Asia vs. Near-shoring from the Western Hemisphere (Updated February 2023)

Trend 1: US fashion companies continue to diversify their sourcing base in 2022

Numerous studies suggest that US fashion companies leverage sourcing diversification and sourcing from countries with large-scale production capacity in response to the shifting business environment. For example, according to the 2022 fashion industry benchmarking study from the US Fashion Industry Association (USFIA), more than half of surveyed US fashion brands and retailers (53%) reported sourcing apparel from over ten countries in 2022, compared with only 37% in 2021. Nearly 40% of respondents plan to source from even more countries and work with more suppliers over the next two years, up from only 17% in 2021.

Trade data confirms the trend. For example, the Herfindahl–Hirschman index (HHI), a commonly-used measurement of market concentration, went down from 0.110 in 2021 to 0.105 in 2022, suggesting that US apparel imports came from even more diverse sources.

Trend 2: Asia as a whole will remain the dominant source of imports

Measured in value, about 73.5% of US apparel imports came from Asia in 2022, up from 72.8% in 2021. Likewise, the CR5 index, measuring the total market shares of the top five suppliers—all Asia-based, i.e., China, Vietnam, Bangladesh, Indonesia, and India, went up from 60.6% in 2021 to 61.1% in 2022. Notably, the CR5 index without China (i.e., the total market shares of Vietnam, Bangladesh, Indonesia, India, and Cambodia) enjoyed even faster growth, from 40.7% in 2021 to 43.7% in 2022.

Additionally, facing growing market uncertainties and weakened consumer demand amid high inflation pressure, US fashion companies may continue to prioritize costs and flexibility in their vendor selection. Studies consistently show that Asia countries still enjoy notable advantages in both areas thanks to their highly integrated regional supply chain, production scale, and efficiency. Thus, US fashion companies are unlikely to reduce their exposure to Asia in the short to medium term despite some worries about the rising geopolitical risks.

Trend 3: US fashion companies’ China sourcing strategy continues to evolve

Several factors affected US apparel sourcing from China negatively in 2022:

  • One was China’s stringent zero-COVID policy, which led to severe supply chain disruptions, particularly during the fall. As a result, China’s market shares from September to November 2022 declined by 7-9 percentage points compared to the previous year over the same period.
  • The second factor was the implementation of the Uyghur Forced Labor Prevention Act (UFLPA) in June 2022, which discouraged US fashion companies from sourcing cotton products from China. For example, only about 10% of US cotton apparel came from China in the fourth quarter of 2022, down from 17% at the beginning of the year and much lower than nearly 27% back in 2018.
  • The third contributing factor was the US-China trade tensions, including the continuation of Section 301 punitive tariffs. Industry sources indicate that US fashion companies increasingly source from China for relatively higher-value-added items targeting the premium or luxury market segments to offset the additional sourcing costs.

Further, three trends are worth watching regarding China’s future as an apparel sourcing base for US fashion companies:

  • One is the emergence of the “Made in China for China” strategy, particularly for those companies that view China as a lucrative sales market. Recent studies show that many US fashion companies aim to tailor their product offerings further to meet Chinese consumers’ needs and preferences.
  • Second is Chinese textile and apparel companies’ growing efforts to invest and build factories overseas. As a result, more and more clothing labeled “Made in Bangladesh” and “Made in Vietnam” could be produced by factories owned by Chinese investors.
  • Third, China could accelerate its transition from exporting apparel to providing more textile raw materials to other apparel-exporting countries in Asia. Notably, over the past decade, most Asian apparel-exporting countries have become increasingly dependent on China’s textile raw material supply, from yarns and fabrics to various accessories. Moreover, recent regional trade agreements, particularly the Regional Comprehensive Economic Partnership (RCEP), provide new opportunities for supply chain integration in Asia.

Trend 4: US fashion companies demonstrate a new interest in expanding sourcing from the Western Hemisphere, but key bottlenecks need to be solved

Trade data suggests a mixed picture of near-shoring in 2022. For example, members of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) and US-Mexico-Canada Trade Agreement (USMCA) accounted for a declining share of US apparel imports in 2022, measured in quantity and value. While CAFTA-DR and USMCA members showed an increase in their market share of US apparel imports in the fourth quarter of 2022, reaching 10.7% and 3.1%, respectively, this growth was not accompanied by an increase in trade volume. Instead, US apparel imports from these countries decreased by 11% and 15%, respectively, compared to the previous year. CAFTA-DR and USMCA members’ gain in market share was mainly due to a sharper decline in US apparel imports from the rest of the world (i.e., decreased by over 25% in the fourth quarter of 2022).

Trade data also suggests two other bottlenecks preventing more US apparel sourcing from CAFTA-DR and USMCA members. One is the lack of product diversity. For example, the product diversification index consistently shows that US apparel imports from CAFTA-DR members and Mexico concentrated on only a limited category of products, and the problem worsened in 2022. The result explained why US fashion companies often couldn’t move souring orders from Asia to CAFTA-DR and USMCA members.

Another problem is the underutilization of the trade agreement. For example, CAFTA-DR’s utilization rate for US apparel imports consistently went down from its peak of 87% in 2011 to only 74% in 2021. The utilization rate fell to 66.6% in 2022, the lowest since CAFTA-DR fully came into force in 2007. This means that as much as one-third of US apparel imports from CAFTA-DR did NOT claim the agreement’s preferential duty benefits. Thus, regarding how to practically grow US fashion companies’ near-shoring, we could expect more public discussions and debates in the new year.

by Sheng Lu

Further reading: Lu, Sheng (2023). Key trends to watch as US apparel imports hit record high in 2022 but slow in 2023. Just-Style.