Textile industry – FASH455 Global Apparel & Textile Trade and Sourcing

Apparel Sourcing and Trade Outlook for 2026

Top challenges in 2026

I believe the global fashion apparel industry will continue to face two macro-level challenges in 2026. One is the relatively weak consumer demand for clothing amid sluggish economic growth and persistent inflationary pressures. For example, according to the International Monetary Fund’s (IMF) October 2025 forecast, global GDP growth in 2026 is expected to decrease from 3.2% in 2025 to 3.1% in 2026. Specifically, U.S. GDP growth will be around 2.1% (down from 2.8% in 2024), and growth in the EU could drop to 1.1% (down from 1.2% in 2025).

Likewise, several consulting firms forecast that clothing retail sales in key apparel import markets, including the United States and Western Europe, could be stagnant or even decline in 2026. Notably, while Gen Z (i.e., those born between 1997 and 2012) has increasingly become a key customer group for many fashion brands and retailers, analysis shows that this generation has turned more cautious about shopping for clothing, especially for new items. The tariff-driven price increases could further discourage these groups from buying new clothing in the new year ahead.

Meanwhile, the trade policy environment facing the global fashion apparel industry could remain highly uncertain in 2026. Notably, in addition to tariffs, several trade agreements could create new uncertainties for fashion companies when sourcing from affected regions. Specifically:

The U.S.-Mexico-Canada (USMCA) trade agreement will begin its formal six-year review process in 2026. Despite broad industry support for upholding the existing agreement and calls to “do no harm,” we cannot rule out the possibility that the Trump administration might seek significant renegotiation or even replace the USMCA with separate bilateral trade deals.

Likewise, the outlook for the African Growth and Opportunity Act (AGOA) and the Haiti HELP/HOPE program, both of which expired in September 2025, remained highly uncertain. Because both programs play a critical role in supporting U.S. apparel sourcing from Sub-Saharan Africa and Haiti, whether and under which conditions they are renewed will directly influence fashion companies’ sourcing decisions and the long-term competitiveness and investment prospects of these regions.

Furthermore, even with several “trade deals” reached between the US and major trading partners like the EU, Vietnam, Cambodia, and potentially China and India, their implementation and enforcement will warrant close attention. In particular, the meaning and definition of critical terms like “transshipment” in these “trade deals” remain largely unclear. However, the impact could be significant for apparel sourcing if the Trump administration ultimately decides to revisit or set new rules of origin in these agreements to reduce the “China content” in products imported into the United States. Notably, according to OECD’s newly released “trade in value-added database,” apparel exports from Asian countries, including Vietnam and Cambodia, commonly contain 20-30% of value created in China.

Key apparel sourcing trends to watch in 2026

First, trade and economic impacts of tariffs could become more visible and significant in 2026. In particular, almost all U.S. apparel imports will be subject to the higher tariffs in 2026, leaving fashion companies with fewer options to use existing inventory to mitigate the effects. Consequently, fashion companies will face increased pressure to control their sourcing costs and protect their profit margins.

Second, fashion companies will continue to leverage sourcing diversification to navigate market and trade policy uncertainties. For example, according to the 2025 Fashion Industry Benchmarking Study released by the U.S. Fashion Industry Association (USFIA), a record-high percentage of surveyed U.S. fashion brands and retailers (i.e., over 80%) reported sourcing from 10 or more countries. Nearly 60% of respondents plan to source from even more countries in 2026. In a recent study I conducted, some leading U.S. and EU fashion companies mentioned in their 2025 Q2 earnings call transcripts that they intentionally seek vendors with production capacity across multiple countries to achieve sourcing diversification and mitigate risks.

Third, in addition to seeking competitive sourcing costs, fashion companies will increasingly look for vendors that can offer speed to market, flexibility, and agility. As one leading fashion company noted, “increasing the speed” does not necessarily mean “nearshoring,” but also refers to vendors that can deliver products quickly and at scale. Meanwhile, fashion companies increasingly expect suppliers to accommodate last-minute order changes, accept low minimum order quantities (MOQs), arrange raw material sourcing, and offer other value-added services. This shows why, based on trade data, Asian suppliers overall are more competitive and have captured more market share in the U.S. and EU markets in 2025 than “near-shoring” suppliers.

Additionally, China and Asia’s role in apparel sourcing could continue to evolve in 2026. I recently attended an industry event featuring textile and apparel manufacturers in Southeast Asian countries (ASEAN) and China. A few observations from the event stood out to me.

While the tariff was a top concern for most U.S. fashion companies, the conference mainly focused on facilitating investment and creating a more integrated, resilient, and sustainable textile and apparel supply chain in Asia. In other words, Asia-based textile and apparel suppliers did not seem panicked by the tariffs, nor do they believe the tariffs fundamentally challenge their long-term growth trajectory or hurt their export competitiveness.
The Asia-based textile and apparel industry is becoming ever more global, mature, and advanced. Consistent with recent trade data, Asia-based fashion brands today commonly conduct global sourcing. They are investing heavily in new sustainable textile materials and digital technologies. They remain the largest buyer of the most sophisticated textile machinery in the world. Therefore, it is reasonable to expect that Asian suppliers as a whole will continue to dominate textile and apparel production and export into 2026 with no near competitors.
China’s leadership and influence within the Asia-based textile and apparel supply chain are increasingly visible. At the conference, ASEAN-based textile and apparel associations see China as a vital partner and source of investment. Through China’s Belt and Road Initiative (BRI), collaboration is extending from trade and investment to education and skills training. Overall, industry sentiment toward China in ASEAN differs significantly from the “decoupling” and “reducing China exposure” narratives that are gaining traction in the United States.
An interesting question that I took away from the conference was whether China truly worries about losing market share in the U.S. and other markets for final apparel products. Perhaps not. Chinese industry leaders appear confident because they know that many Asian garment-producing countries remain heavily dependent on Chinese textile inputs, and many garment factories are funded or owned by Chinese investors. Given these dynamics, it will be interesting to observe how China’s confidence and its broader leadership role in Asia’s regional textile and apparel supply chain will continue to grow in 2026.

Opportunities in 2026

In 2026, we may see a significant increase in AI use in apparel sourcing. For example, fashion companies could use new AI tools to help optimize inventory levels and logistics, identify and evaluate new suppliers, and improve operational efficiency. AI may also play a more crucial role in supporting efforts around supply chain mapping, traceability, and sustainability data collection. Overall, we could see a more digitalized and data-driven sourcing process in the new year ahead.

On the other hand, in 2026, fashion companies could benefit from investing in and exploring new business models that support designing, making, sourcing, and selling sustainable apparel products. For example, a recent study of mine found that, by stock keeping units (SKUs) count, the number of clothing items made with recycled textile fibers increased by about 24% from 2024 to 2025 (August to October) in the U.S. retail market. Similarly, clothing items made with “regenerative” textile fibers surged by nearly 90% over the same period. These figures represent consumers’ increasing demand and fashion companies’ growing business interest in offering these products. New sustainability legislation, such as the Extended Producer Responsibility (EPR) at the state, regional, or international levels, will also create new incentives and pressure for fashion companies to revisit many of their current business practices. That said, balancing the sustainability benefits with other key sourcing metrics, such as costs, quality, and traceability, for these sustainable apparel products, will require ongoing efforts and improvements by fashion companies and their supply chain partners in 2026.

by Sheng Lu

FASH455 Video Discussion: Textiles, Trade & National Security: A Conversation with Parkdale Mills COO Davis Warlick

Discussion questions (for students in FASH455, please answer at least three questions from below)

#1 Use 1-2 examples from the video and explain how CAFTA-DR and USMCA help shape the Western Hemisphere textile and apparel supply chain.
#2 Based on the video, what do you see as the main opportunities for textile and apparel nearshoring or reshoring in the Western Hemisphere? Please also identify 1–2 key bottlenecks (e.g., cost, infrastructure, labor, sustainability, or trade policy) and explain your viewpoint.
#3 The speaker argues for a sectoral trade policy for textiles and apparel rather than broad “free trade.” What is your evaluation? Please make 1-2 specific points and use specific examples from the video to illustrate your viewpoint.
#4 How does the video help deepen your understanding of the complex economic and non-economic factors related to textile and apparel nearshoring and reshoring in the Western Hemisphere? Explain at least one insight that challenges your prior assumptions/views about sourcing and trade.

FASH455 Exclusive Interview with Karin De León, Investment and Promotion Director, Apparel and Textiles Association of Guatemala (VESTEX)

About Karin De León

Karin De León has been working in the textile and apparel sector in Guatemala for more than 25 years, promoting the development of the industrial cluster, participating in the creation of strategies, supporting the strengthening of the supply chain, and attracting investment.

As part of her role at the Apparel and Textile Association of Guatemala (VESTEX), for 10 years she held the position of Executive Director of CECATEC-RD (Central American and Dominican Council of Clothing and Textiles), the entity that integrates textile & apparel industry associations of Central America and the Dominican Republic and which is responsible for coordinating the inter-institutional relationship with public and private entities of the United States of America, Mexico and Colombia mainly.

From 2020 to the beginning of 2022, she served as Chief of Staff of the Ministry of Economy of Guatemala and later became General Coordinator of the National Competitiveness Program (PRONACOM), a government entity responsible for promoting the country and attracting investment.

Karin is currently VESTEX’s investment and promotion director, and representative of Guatemala in CECATEC-RD. She coordinates the inter-institutional relationship with government entities of the United States (such as the United States Trade Representative and the Department of Commerce) as well as private institutions mainly related to the United States, Mexico, and Colombia.

Sheng: Can you provide a brief introduction to VESTEX and a general overview of your member companies?

Karin: VESTEX is the Apparel and Textile Association of Guatemala, a private association representing the Guatemalan textile and apparel export sector. It focuses on promoting the industry’s exports through strategic alliances with public and private institutions at the national and international levels. Its strategic axes are Sectoral Resilience, which seeks to position the industry as a generator of investment and formal employment in the country; Sectoral Sustainability, through the promotion of sustainability as a long-term strategy for industry continuity and compliance, providing companies in the sector with tools that facilitate compliance with the obligations established in the laws and regulations.

VESTEX partners comprise companies that integrate the entire supply chain of the apparel and textile sector, encompassing yarn and fabric manufacturers, apparel producers, as well as firms providing specialized services and accessories to the industry.

Sheng: Studies show that there is consistent interest among U.S. fashion companies in expanding nearshoring from the Western Hemisphere, including Guatemala. What is your observation? What makes Guatemala an attractive destination for apparel sourcing today? What are the unique advantages of sourcing from the country?

Karin:Guatemala has become an increasingly attractive destination for apparel sourcing due to its unique combination of industrial integration, geographic advantages, and strong compliance standards. The country offers a highly integrated apparel cluster that encompasses every stage of the supply chain—from spinning yarn and weaving fabrics to apparel manufacturing, printing, finishing, and packaging. This full-package model not only streamlines operations and enhances traceability but also allows for greater flexibility and product diversity, raising the added value of garments and positioning Guatemala as a competitive supplier for niche and complex products requiring skilled labor and high-quality materials.

Another key differentiator is Guatemala’s strategic location. With access to ports on both the Atlantic and Pacific coasts—separated by only 249 miles—the country can efficiently serve both the East and West coasts of the United States. Guatemala manages the second-largest maritime cargo operation in Central America (after Panama), which is critical for companies seeking to balance and mitigate geopolitical and logistical risks. In addition, proximity to the U.S. substantially reduces environmental impact: sourcing from Guatemala lowers CO₂ emissions from maritime transport by approximately 84% compared to sourcing from Asia. Transit times are also highly competitive, with shipments reaching Miami in as little as three days, enabling U.S. buyers to manage inventories more effectively and respond to market demands with agility.

Equally important, Guatemalan apparel companies operate under a strong framework of labor and environmental compliance. Companies demonstrate a full-spectrum commitment to input traceability, adherence to strict rules of origin, and continuous process improvement to reduce resource consumption. Investments in monitoring and ESG systems underscore their transparency and alignment with global sustainability standards.

Taken together, this integration of cluster capabilities, geographic proximity, and compliance with international norms positions Guatemala as a reliable, sustainable, and strategically advantageous sourcing partner for U.S. fashion companies.

Sheng: How important is the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) in supporting Guatemala’s apparel exports to the U.S. market? What impact do CAFTA-DR’s apparel-specific rules of origin have on garment exporters’ supply chains and export strategies in Guatemala?

Karin:CAFTA-DR has provided certainty by encouraging long-term investments in textile infrastructure and capabilities. CAFTA-DR has been the basis for the development of Guatemala’s apparel industry. The yarn-forward rule established under the agreement has not only fostered integration with the U.S. supply chain but also promoted stronger collaboration among Central American countries. By allowing the accumulation of inputs and processes within the region, CAFTA-DR has significantly strengthened intraregional trade.

This integration has facilitated the specialization of each Central American country. In Guatemala’s case, it has enabled the use of specific yarns and fabrics produced in other countries and manufactured locally, fostering a greater diversification of production.

According to OTEXA figures, in the year ending June 2025, 89.17% of Guatemala’s total apparel exports to the U.S. entered under the Free Trade Agreement preferences. Of this total, 79.69% qualified under the yarn-forward rule—that is, garments made with yarn from the U.S. or yarn produced within one of the Central American countries. CAFTA-DR, and particularly its rules of origin, have been the basis of Guatemala’s strategy in recent years, not only to attract foreign direct investment but also to encourage significant reinvestments.

Sheng: Data shows that an increasing share of yarns and fabrics used by Guatemala garment factories are now locally made in Guatemala and other Central American countries. Could you discuss the recent trends in textile manufacturing capacity building in Guatemala, as well as the industry’s current priorities in building a more vertically integrated regional supply chain?

Karin:Guatemala offers a series of competitive advantages that are reinforcing its role as a regional hub for textile and apparel manufacturing. At the country level, it benefits from a stable macroeconomy, a solid exchange rate, competitive electricity prices within the region, and a reliable energy supply. At the industry level, Guatemala stands out for its robust apparel and textile cluster and highly skilled workforce.

Since the pandemic in 2020, when many global companies accelerated nearshoring strategies, Guatemala has successfully attracted new foreign investment and supported the expansion of companies already established in the country, particularly in the spinning industry. Installed capacity is primarily focused on cotton, although blends are also produced. By the end of 2024, apparel exported to the U.S. consisted of 62.8% cotton, 36.4% synthetics, and 0.8% wool, reflecting the central role of cotton in the country’s production while also showing diversification into other fibers.

Driven by shifting market demand, textile production in Guatemala has been expanding beyond knits, with a modest increase in woven fabrics as well. Investments in innovation and technology have enabled the industry to offer specialized processes, including antimicrobial treatments, absorption, UPF protection, enzymatic washing, softening, and plush finishing, among others. A particularly important advancement has been the investment in elastic knit fabrics, which has opened the door to the production of categories such as sportswear, intimate apparel (seamless), shapewear (technical lingerie and compression fabrics), and medical textiles.

We recognize, however, that there remain challenges and opportunities to broaden the regional textile offering—particularly in the production of yarns and fabrics made from fibers not yet manufactured locally. Expanding capacity in these areas would further strengthen vertical integration and supply chain resilience.

In this context, VESTEX has taken a leading role in supporting and guiding companies interested in exploring these opportunities. In coordination with Guatemala’s foreign direct investment promotion agency, efforts are underway to identify high-demand inputs that are currently unavailable in the region but represent strategic opportunities for local production.

Sheng: Since April 2025, U.S. apparel imports from CAFTA-DR countries, including Guatemala, are subject to a new 10% “reciprocal tariff.” How has this tariff increase and the Trump administration’s trade policy so far impacted Guatemala’s garment industry and exports?

Karin:The main challenge for Guatemala’s apparel industry under the current U.S. trade policy has been the high degree of uncertainty. Markets and buyers demand stability, yet in recent months orders have slowed significantly as companies await clarity on the tariffs that will ultimately apply to each country. This hesitation has already resulted in lost opportunities: seasonal orders cannot be recovered once the selling window has passed.

Traditionally, Guatemala’s apparel sector grows between 3% and 5% annually; however, 2025 projections have been revised downward, and current expectations suggest growth closer to 1–2%. According to the Central Bank of Guatemala, as of June 2025, exports registered a modest 1.36% increase—well below what was anticipated under normal conditions.

Another major impact has been the need for companies to absorb additional costs to maintain contracts with international brands. This has reduced profit margins, limited reinvestment capacity, and increased pressure on already tight production cycles. Buyers face uncertainty as well: they do not know how much a garment ordered today will cost by the time it is delivered six to nine months later, since tariff rates are subject to abrupt changes. The volatility recalls past episodes in China, where tariffs under former President Trump rose as high as 145% before being reduced to 30%, creating unpredictable supply conditions.

That said, Guatemala continues to hold a relative tariff advantage compared with Asian competitors, where rates now reach 15%, 18%, 25%, or even higher. This gap may ultimately favor Guatemala if U.S. buyers reconfigure sourcing strategies to prioritize suppliers who are both geographically closer and more reliable. Indeed, global sourcing is shifting away from a purely low-cost model toward one that values resilience, speed to market, and compliance.

Sheng: The 2025 US Fashion Industry Association Benchmarking Study indicates that U.S. fashion companies are increasingly seeking sourcing destinations that can provide sustainable apparel products, including those made with preferred fibers such as organic, recycled, regenerative, and biodegradable materials. What strategies or recent initiatives has the Guatemalan textile and apparel industry undertaken to meet this demand for sustainability?

Karin: Guatemalan mills already source recycled polyester yarns, organic or regenerative cotton, and biodegradable materials. Brands are actively demanding these products. In fact, mills have obtained various certifications and adhere to practices focused on circular economy, science-based target initiatives, and other sustainability standards.

Traceability is key for the textile and apparel industry, and Guatemala has managed to implement measures such as data management and continuous improvement as a way to demonstrate this.

Adoption of Sustainable Certifications and Standards: Guatemalan manufacturers are obtaining certifications like GOTS (Global Organic Textile Standard), OEKO-TEX, Global Recycled Standard, Recycled Claim Standard, Blue Sign, Higg FEM, among others, ensuring their products meet international sustainability standards.
Investment in Technologies: Many mills are upgrading to water and energy-efficient machinery, as well as more sustainable dyeing and finishing processes.
Training and Capacity Building: Initiatives to train and certify workers and management on sustainable practices and standards are increasing, promoting a culture of sustainability throughout the industry.
Integration of Circular Economy Principles: Some mills are exploring design for recyclability techniques to align with circular economy goals.

These initiatives collectively position the Guatemalan textile and apparel sector as a viable sourcing destination for sustainable fashion, aligning with global market trends and buyer preferences for more sustainable products.

Sheng: In addition to the questions discussed earlier, what are the top business and policy issues facing Guatemala’s textile and apparel industry over the next 1–2 years?

Karin:Over the next 1–2 years, Guatemala’s textile and apparel industry will face several pressing business and policy issues that will shape its competitiveness.

1. Infrastructure and logistics.
A key issue remains the need to strengthen national infrastructure, particularly ports, customs processes, and internal transport routes.

2. Limited availability of regional inputs.
The industry continues to face constraints in the local production of certain yarns, fabrics, and specialized fibers. Inputs such as viscose, spandex, and rayon are not yet manufactured in the region at scale, which limits vertical integration and forces reliance on imports from outside the hemisphere. Expanding textile capacity in these areas is a central issue to ensure resilience and broaden the exportable supply.

3. Market visibility and buyer perception.
Despite its high level of integration, many international buyers remain unaware of Guatemala’s strengths in complex products, compliance, and sustainability. A persistent challenge is to raise global awareness of the country’s capabilities in order to capture greater sourcing opportunities.

4. Policy uncertainty and trade volatility.
The recent 10% reciprocal tariff applied to CAFTA-DR countries has introduced significant uncertainty. Buyers hesitate to place long-term orders when tariff levels are unclear, and this volatility affects sourcing decisions. Stability and predictability in trade policy remain critical issues for the sector.

5. Differentiation and specialization under nearshoring.
Another key challenge is sustaining competitiveness through higher-value products. Today, 54.11% of Guatemala’s apparel exports already include advanced finishing processes, and the industry is investing in spinning, woven fabrics, and technical textiles. However, scaling these capabilities requires reinvestment and foreign capital inflows—both of which are being constrained by global uncertainty. Given that Guatemala currently supplies only about 2% of U.S. apparel imports, a major issue ahead is how to convert this untapped potential into tangible growth.

In short, while the country is positioning itself strategically with competitive tariffs, geographic proximity, and an increasingly sophisticated textile base, the top issues over the next two years will be overcoming infrastructure and logistics bottlenecks, reducing dependence on imported inputs, strengthening promotion to buyers, and navigating trade policy volatility. Addressing these challenges will be crucial for Guatemala to capitalize on long-term opportunities in the ongoing global supply chain reconfiguration.

-The End-

FASH455 Video Discussion: Inside the Costs and Challenges of Making Textiles and Apparel in the U.S.

Video 1: How an Oklahoma denim-maker supports creating American-made jeans

Video 2: President Trump’s Tariffs Backfire on US Textile Exporters

Discussion questions (note: for students in FASH455, please respond to at least two questions listed below in your comment)

Based on the videos, what is your evaluation of the opportunities and challenges of making textiles and apparel in the U.S.?
In what ways has international trade influenced the growth, decline, or transformation of U.S. textile and apparel production?
What do you think about the Round House Jeans owner’s strategy of selling imported jeans from Bangladesh at a higher profit margin to “subsidize” its low-margin U.S.-made jeans? Do you think this could be a sustainable business model in the long run?
Based on the videos, why do you think U.S. textile and apparel production experienced even greater losses in the first half of 2025, despite higher tariffs on imports? [Detailed data HERE]
If you were invited to offer policy recommendations to boost U.S. domestic textile and apparel manufacturing, what would you propose, and why?

Additional reading:

2025 USFIA Fashion Industry Benchmarking Study Released

The full report is HERE.

Key findings of this year’s report:

#1 This year, the top business challenges facing U.S. fashion companies center on the Trump Administration’s escalating tariff policy and its wide-ranging impacts on companies’ sourcing and business operations.

100 percent of respondents rated “Protectionist U.S. trade policies and related policy uncertainty, including the impact of the Trump tariffs” as one of their top business challenges in 2025. This included as much as 95 percent of respondents who ranked the issue among their top two concerns.
Respondents also expressed significant concerns about the wide-ranging effects of Trump’s tariff policy, including “Inflation and economic outlook in the U.S. economy” (80 percent), “Increasing production or sourcing cost” (nearly 50 percent), and “Protectionist trade policies and policy uncertainty in foreign countries, including retaliatory measures against the U.S.” (52 percent).
Over 70 percent of surveyed companies reported that the higher tariffs increased sourcing costs, squeezed profit margins, and led to higher consumer prices. Approximately half of the respondents reported a decline in sales, and 22 percent stated that they had to lay off employees due to increased tariffs.

#2 Maintaining a geographically diverse sourcing base has been one of the most popular strategies adopted by U.S. fashion companies to mitigate the impact of rising tariffs and policy uncertainty.

This year, respondents reported sourcing apparel products from 46 countries, similar to the 48 countries reported in 2024 and an increase from 44 countries in 2023. At the firm level, approximately 60 percent of large companies with 1,000+ employees reported sourcing from ten or more countries in 2025, a notable increase from the 45–55 percent range reported in 2022 and 2023 surveys.
- Amid escalating tariffs and rising policy uncertainty, Asia has become an ever more dominant apparel sourcing base for U.S. fashion companies in 2025. Respondents reported increased use of several Asia-based sourcing destinations other than China in 2025 compared to the previous year, including Vietnam (up from 90 percent to 100 percent), Cambodia (up from 75 percent to 94 percent), Bangladesh (up from 86 percent to 88 percent), Indonesia (up from 75 percent to 77 percent), and Sri Lanka (up from 39 percent to 53 percent).As part of their sourcing diversification strategy, U.S. fashion companies are also gradually increasing sourcing from emerging destinations in the Western Hemisphere and beyond, such as Jordan, Peru, and Colombia.
- Most respondents intend to build a more geographically diverse sourcing base and broaden their vendor network over the next two years. Nearly 60 percent of respondents plan to source apparel from more countries, and another 40 percent plan to source from more suppliers or vendors. Reducing sourcing risk, especially to minimize the impact of rising tariffs and tariff uncertainty, is a key driver of companies’ sourcing diversification strategies

#3 U.S. fashion companies remain deeply concerned about the future of the U.S.-China relationship during Trump’s second term and intend to further “reduce China exposure” to mitigate sourcing risks.

While 100 percent of respondents reported sourcing from China this year, a record-high 60 percent of respondents reported sourcing fewer than 10% of their apparel products from China, up from 40 percent in 2024. Approximately 70 percent of respondents no longer used China as their top apparel supplier in 2025, representing a further increase from 60 percent in 2024 and significantly higher than the 25-30 percent range prior to the pandemic.
Despite the announcement of the reaching of a U.S.-China “trade deal” in May 2025, more than 80 percent of respondents plan to further reduce their apparel sourcing from China over the next two years through 2027, hitting a new record high. Many large-scale U.S. fashion companies are already limiting or plan to limit their apparel sourcing from China to a “low single-digit” percentage by 2026 or earlier, mainly due to concerns about the increasing geopolitical and trade policy risks associated with sourcing from the country.
Still, respondents rated China as highly economically competitive as an apparel sourcing base compared to many of its Asian competitors regarding vertical manufacturing capability, low minimum order quantity (MOQ) requirements, flexibility and agility, sourcing costs, and speed to market. However, non-economic factors, particularly the perceived extremely high risks of facing U.S. import restrictions, geopolitical tensions with the U.S., and concerns about forced labor, are driving U.S. fashion companies to continue their de-risking efforts.

#4 No evidence indicates that the Trump Administration’s tariff policy has successfully encouraged U.S. fashion companies to increase domestic sourcing of “Made in the USA” textile and apparel products or to expand sourcing from the Western Hemisphere.

Only about 44 percent of respondents explicitly say that they would expand sourcing from the Western Hemisphere, and even fewer respondents (17 percent) plan to source more textiles and apparel “Made in the USA” amid the tariff increase.
This year, fewer respondents reported sourcing apparel from Mexico and Canada (down from 60 percent in 2024 to 50 percent in 2025) and members of the Dominican Republic-Central America Free Trade Agreement, CAFTA-DR (down from 75 percent in 2024 to 64 percent in 2025).
About half of the respondents plan to expand apparel sourcing from Mexico and CAFTA-DR members over the next two years. Notably, nearly all of these companies also intend to increase sourcing from Asia, indicating that U.S. fashion companies view near-shoring from the Western Hemisphere as a complement, not a replacement, to their broader sourcing diversification strategy.
Respondents consider the most urgent capacity-building needs within CAFTA-DR lie in the production of textile raw materials (e.g., spandex) and accessories (e.g., zippers, threads, and buttons). Meanwhile, USMCA members are considered to have relatively stronger capacities in yarn and fabric production but face more pressing shortages in accessories.

#5 Respondents overall remain highly committed to sustainability, social responsibility, and compliance issues in the sourcing process.

This year, the top sustainability and compliance areas where respondents plan to allocate more resources include “Investing in technology to enhance supply chain traceability or isotopic testing” (53 percent), “Providing sustainability and social compliance training for internal employees” (50 percent) and “Providing sustainability and social compliance training for suppliers” (50 percent).
As part of U.S. fashion companies’ sustainability efforts, all respondents (100 percent) report sourcing clothing made with “sustainable textile fibers” in 2025. Having 11–50% of apparel products containing various “sustainable textile fibers” is the most common (40 percent of respondents), followed by having 1–10% of the total sourcing value or volume(30 percent of respondents).
Moreover, most respondents (over 70 percent) plan to increase their use of various “sustainable fibers” in clothing over the next three years. This trend is especially strong for recycled materials, with 80 percent of respondents indicating they intend to increase their use.
The top three positions with the highest demand among respondents from 2025 through 2030 are “Environmental sustainability-related specialists or managers,” “Trade compliance specialists,” and “Data scientists”—more than 40 percent of respondents plan to increase hiring. There is also strong demand for “Textile raw material specialists” and “Sourcing specialists.”

#6 With the upcoming expiration of the trade preference program this September, respondents again underscore the importance of immediate renewal of the African Growth and Opportunity Act (AGOA) and extending the agreement for at least another ten years.

Due to the upcoming expiration of AGOA and uncertainty about its future, this year, respondents sourced from only six SSA and AGOA members (i.e., Kenya, Ethiopia, Ghana, Madagascar, Mauritius, and Tanzania), fewer than the seven countries in 2024. And none of these countries were used by more than 20 percent of respondents.
Nearly 80 percent of respondents support “renewing AGOA for at least another ten years,” and no one opposes. This shows a consistent and wide base of support for AGOA among U.S. fashion companies.
More than 70 percent of respondents say that securing a long-term renewal of AGOA for at least ten years is essential for expanding apparel sourcing from the region. Similarly, another 60 percent of respondents believe that a long-term renewal of AGOA is necessary for U.S. fashion companies and their supply chain partners to commit to new investments in the region.
Respondents warned that AGOA’s pending renewal has already begun to harm the region’s prospects as an apparel sourcing base. Approximately 30 percent of respondents explicitly stated that they had already reduced sourcing from AGOA members due to the uncertainty surrounding the agreement’s renewal.

About the study

Authored by Dr. Sheng Lu in collaboration with the United States Fashion Industry Association (USFIA), this year’s benchmarking study was based on a survey of executives from 25 leading U.S. fashion companies from April to June 2025. The study incorporated a balanced mix of respondents representing various businesses in the U.S. fashion industry. Approximately 85 percent of respondents were self-identified retailers, 60 percent were self-identified brands, and about 50 percent were importers/wholesalers.

The survey respondents included large U.S. fashion corporations and medium-sized companies. Around 90 percent of respondents reported having over 1,000 employees; the rest (10 percent) represented medium-sized companies with 100-999 employees.

FASH455 Exclusive Interview with Matthias Knappe, Head of Fibres, Textiles and Clothing Unit, International Trade Centre

About the interview

Textile and apparel trade matters. Even today in the 21^st century, apparel could still account for 80—90% of a developing country’s total merchandise export and play a critical role in promoting economic growth, poverty reduction, and gender equality. The interview explored several key topics:

Why textile & apparel trade matters for development in the 21^st century
How ITC provides capacity building support and enhances the export competitiveness of garment exporters in developing countries
Sustainability movement’s impact on apparel sourcing and export competitiveness of developing countries
The promise and complexity of circularity in tackling used clothing challenges
Empowering women entrepreneurs through SheTrades
Skills and education needed to thrive in the global fashion apparel trade

About Matthias Knappe (speaker)

Matthias Knappe is the Head of Fibres, Textiles and Clothing Unit at the International Trade Centre (ITC), which is co-run by the World Trade Organization (WTO) and the United Nations (UN). Matthias has over 30 years of diversified professional experience in international trade and development. He has worked at the enterprise, institutional, and governmental levels. Matthias is leading ITC’s textile and apparel and light manufacturing unit. Over the last 20 years, he has been working with the T&C sector around the world to increase its export competitiveness. He designed and currently manages ITC’s Global Textiles and Clothing (GTEX) programme and various other fibre, apparel and light manufacturing projects. The Unit’s present portfolio includes projects in 15 countries.

About Emilie Delaye (moderator)

Emilie Delaye is a master’s student in Fashion and Apparel Studies at the University of Delaware, with a specific interest in supply chain, global sourcing, and sustainability. With a background in Entrepreneurship and Fashion Management, Emilie’s passion lies in improving the fashion industry through innovative problem-solving and collaboration. She has worked on projects exploring sourcing destinations and emerging sourcing trends, as well as collaborated with Macy’s on an initiative centered around Extended Producer Responsibility (EPR) regulations. Emilie’s work is driven by a commitment to fostering innovation and ethical practices in fashion, positioning her as a future leader in driving the industry toward greater sustainability and responsibility.

FASH455 Current Event Discussion: Ongoing Tariff War and Apparel Sourcing and Trade (Updated April 2025)

Video 1: Is U.S. Clothing Manufacturing at Risk? Tariffs and Competition Threaten Jobs (RT≠ Endorsement)

Video 2: Northern Virginia T-shirt brand faces challenges (RT≠ Endorsement)

Video 3: Tariffs could raise wedding dress prices for American brides (RT≠ Endorsement)

Video 4: Bangladeshi garment industry sweating on Trump tariffs (RT≠ Endorsement)

Video 5: Trump’s Tariff Twist: Can Pakistan’s Textiles Fill China’s Shoes? (RT≠ Endorsement)

Video 6: Tariffs: Europe’s textile sector holds its breath

Discussion questions (note: you may answer any of the following questions. However, you must watch all the videos above and use examples from the videos to support your viewpoints and arguments. For this learning activity, students are expected to form their own independent assessments of the topic.)

#1 Based on the videos, how do you expect the apparel sourcing strategy of US fashion companies to evolve in response to the tariff increase? For example, will companies continue to diversify sourcing, wait and see, or focus on expanding sourcing to countries or regions regarded as “safe havens”?

#2 Do you expect the higher tariffs on U.S. imports, including textiles and apparel, to benefit domestic “Made in the USA” production? Why or why not?

#3 As consumers, how do you perceive the impact of the tariffs on your shopping behavior and experiences? Have you noticed any changes, such as in price and product availability, while shopping for clothing recently? Feel free to share your observations.

#4 Are there any other notable impacts of the tariff increase on the global fashion apparel industry that we should be aware of? What additional questions do you have in mind about the tariff impacts?

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.”

Used Clothing Trade Debate Continues in Kenya (updated March 2025)

A new study by the Changing Markets Foundation suggests severe negative environmental and social, economic impacts of used clothing exports to Kenya. However, the Textile Recycling Association, based in the UK, argues strongly in favor of the benefits of the used clothing trade.

Concerns about the used clothing exports to Kenya (viewpoints from the Changing Markets Foundation)

Data from the United Nations (UNComtrade) shows that Kenya’s used clothing imports surged by over 500% from 2005 ($27 million) to 2021 ($172 million).
An overwhelming volume of used clothing shipped to Kenya is waste synthetic clothing, a toxic influx creating devastating consequences for the environment and communities. It is estimated that over 300 million items of damaged or unsellable clothing made of synthetic or plastic fibers are exported to Kenya each year, where they end up dumped, landfilled, or burned, exacerbating the plastic pollution crisis.
Interviews with used clothing traders in Kenya show that 20–50% of the used clothing in bales they purchased was unsellable due to being damaged, too small, unfit for the climate or local styles, and sometimes even with clothing that is covered in vomit, stains or otherwise damaged beyond repair.
European sorting companies often skimmed off high-quality used clothing for resale in the local EU market. They exported the lower-quality and lower-graded ones to developing countries like Kenya.
It remains challenging to recycle synthetic clothing as it often contains harmful additives or other materials that make the recycling process difficult or impossible. Additionally, the quality of the recycled synthetic fibers is typically lower than that of the original fabric (i.e., using virgin fiber).

Defend the used clothing exports to Kenya (viewpoints from the Textile Recycling Association, TRA)

Sorting, trading and selling used clothing “directly employs two million people in Kenya alone , with tens of millions employed globally and supporting many more employment positions in ancillary sectors.”
“Used clothing and textiles collected in the UK, should go through a detailed sorting process and can be sorted typically into 130 plus re-use and recycling grades and sometimes this can be more than 200 grades. In the sorting process each garment is picked up and individually assessed by highly trained experts*. The good quality re-useable products are segregated from the recycling grades.” [*According to Changing Markets Foundation’s report, about 36 million pieces of used clothing were exported from the UK to Kenya in 2021; All EU countries exported about 112 million pieces to Kenya]
“It is the buyers in these countries (note: countries like Kenya) that dictate the flows of (used clothing) textiles and which import the goods into their countries.”
“TRA members are required to ensure that only good quality re-usable clothing products are sold onto countries in Africa and other non-OECD countries. Recycling grades and other non-textile/clothing items have to be removed… However, the majority of countries are not subject to the same tight restrictions on trading as the UK.. This is to the extent that some countries allow unsorted used textiles containing a complete mix of re-usable items, recycling grades, and waste to be sold into African countries as a product.” “The qualities of (used clothing) items originating from different countries is likely to vary significantly.”
“Kenyan’s buy more than 10 times as much used clothing from China than they do from the UK.”

Discussion questions proposed by FASH455 class:

#1 What is your stance on the used clothing trade? Should the government impose more export or import trade restrictions on used clothing?
#2 After considering both sides of the debate, what is your decision regarding donating used clothing? What factors influenced your choice?
#3 Any other thoughts or comments on the used clothing trade debate?
#4 As we learned in class, developing countries like Kenya are supposed to rely on making and exporting labor-intensive garments to develop their economies. Can importing used clothing lead to similar economic growth? Any evidence that can support the argument?
#5 What are the ethical issues involved in the used clothing trade? Should government policies play a role in regulating these ethical concerns?
#6 Could restricting the used clothing trade discourage fast fashion and reduce textile waste generation? Why or why not?
#7 Should developed countries like the U.S. voluntarily restrict used clothing exports to lessen the economic and environmental pressures on developing countries like Kenya? What are the potential benefits and drawbacks of such a policy?
#8 Based on the reading, what critical questions remain unanswered, and what further studies could be conducted to gather valuable information for informed decision-making on regulating the used clothing trade?

(Note: For students in FASH455, please answer at least two of the questions above. Be sure to mention the question number in your response, but there is no need to repeat the question.)

Additional reading:

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–

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?

Event Recording: Regulating and Reforming De Minimis (October 2024)

The event was hosted by the Washington International Trade Association on October 9, 2024

Panelists

Ralph Carter, Staff Vice President, Regulatory Affairs, FedEx
Kim Glas, President & CEO, National Council of Textile Organizations; Commissioner, U.S.-China Economic and Security Review Commission
Melissa Irmen, Director of Advocacy, NAFTZ-National Association of Foreign-Trade Zones
John Pickel, Senior Director, International Supply Chain Policy, National Foreign Trade Council
Felicia Pullam, Executive Director, Office of Trade Relations, U.S. Customs and Border Protection
Ana Swanson, Trade and International Economics Reporter, The New York Times (Moderator)

Event summary: Competing views about de minims and its reform

Arguments supporting De Minimis: Proponents like Ralph from FedEx argue that de minimis reduces trade friction, drives international supply chain efficiency, and allows U.S. companies to offer competitive pricing through free returns and streamlined customs processes. Meanwhile, they argue that the de minimis supports low-income U.S. consumers and enables small U.S. businesses to remain competitive.

Criticism of De Minimis: Critics, including Kim Glas from the National Council of Textile Organizations (NCTO), argue that it undercuts U.S. manufacturers, especially in industries like textiles, by allowing cheap imports from countries like China, often bypassing tariffs and safety regulations. They also say that de minimis was unfair to U.S. retailers that pay millions of dollars of tariff duties. Additionally, there are significant concerns about the safety risks posed by counterfeit goods and dangerous products (e.g., fentanyl) entering under de minimis exemptions.

Challenges of dealing with de Minimis: Felicia from the U.S. Customs and Border Protection (CBP) emphasizes the strain on the agency’s resources due to the sheer volume of de minimis shipments—it surged from about 2.8 million shipments per day in fiscal year 2023 to close to 4 million shipments per day in fiscal year 2024. She highlighted challenges such as the often unreliable information the de minimis imports submitted and the outdated authorities that hinder CBP’s enforcement.

Equal treatment for U.S. Foreign Trade Zones: U.S. Foreign Trade Zones (FTZs) are designated areas within the United States that are considered outside U.S. customs territory for import duties. They allow businesses to import, store, assemble, manufacture, or process goods with deferred or reduced customs duties, which are only paid when goods leave the FTZ and enter U.S. commerce. Currently, U.S. FTZs do not benefit from the de minimis exemption, meaning goods imported directly into the U.S. from overseas warehouses can qualify for de minimis, but goods entering through U.S. FTZs do not.

Melissa Irmen from NAFTZ-National Association of Foreign-Trade Zones advocates for U.S. foreign trade zones to be given the same de minimis privileges as foreign warehouses, arguing that this would ensure better oversight and security while maintaining trade efficiency. Critics, however, say that expanding de minimis in this way would exacerbate the problem rather than fix it.

Reforming the De minimis: There is a push for comprehensive reform of the De minimis system, with proposals ranging from raising duties on certain products to eliminating the exemption altogether for specific categories of goods (e.g., textiles, products subject to Section 301 tariffs).

Particularly, in a face sheet released in September 2024, the Biden Administration announced it would address “the significant increased abuse of the de minimis exemption, in particular China-founded e-commerce platforms.” The announcement said the Biden Administration would issue a Notice of Proposed Rulemaking that would exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962. The announcement also called for Congress to pass new legislation to reform the de minimis rule comprehensively.

Related readings:

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.

FASH455 Exclusive Interview with Tricia Carey, Chief Commercial Officer of Renewcell, about Textile Recycling and Implications for Apparel Sourcing and Supply Chain

About Tricia Carey

Throughout her career, Tricia believes in ‘progress over perfection’. As an advocate for innovation and circularity in the textile and apparel industry, she recently joined Renewcell to accelerate the commercial development of CIRCULOSE®, making fashion circular. With a vast global network, as well as experience in brand building, storytelling, and business development, she is an invaluable partner to close the loop and optimize the benefits of CIRCULOSE®.

For more than twenty years, Tricia held various commercial management positions at Lenzing Fibers to establish the TENCEL™ brand, build mill partners, and set retailer specifications. Her roles comprised marketing, Americas business development, and global denim segment expansion, including the creation of the Carved in Blue platform and numerous collaborative collections with mills and brands.

Tricia holds a bachelor’s degree in Fashion Merchandising from The Fashion Institute of Technology, as well as certificates in Digital Marketing and Strategy from Cornell University and MIT.

Tricia serves on the board of Accelerating Circularity, as well as the Transformers Foundation and the Fashion Impact Fund. She was Vice Chair at Textile Exchange from 2014-2018. In 2020 she was nominated as B2B Content Marketer of the Year by Content Marketing Institute, as well as top 100 Denim Legends by WeAr Magazine. In 2019 Tricia was awarded the RIVET 50 for influential denim industry leaders. She has been a speaker at various industry events, including the Conscious Fashion and Lifestyle Network at the United Nations, Transformers, Kingpins Show, Southern Textile Association, Texworld, Premiere Vision, Wear Conference, and more.

Tracia lives in New York City and can be seen dashing on the Peloton leaderboard. The best way to connect with Tricia is through LinkedIn.

The interview was moderated by Emilie Delaye, UD’s entrepreneurship major and fashion management minor. Emilie has been involved in several research projects on the textile and apparel trade, sourcing, and sustainability issues, including authoring a paper on US fashion companies’ evolving sourcing strateiges published in Just-Style. Emilie is also the recipient of the 2024 Warner and Taylor Awards for Outstanding Seniors, the highest recognition for UD’s graduating seniors.

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., 4^th 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):

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?
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?
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.”

US Fashion Companies’ Evolving Sourcing Strategies and the Future of the US Textile and Apparel Industry: Discussion Questions from FASH455

Students in FASH455 have proposed the following discussion questions based on the readings about the US textile and apparel industry and fashion companies’ sourcing strategies. Everyone is welcome to join the online discussion. For FASH455 students, please address at least two questions and mention the question number (#) in your reply.

#1 As a developed country, should the US prioritize further strengthening highly capital-intensive yarn manufacturing, or should we rebuild a vertically integrated textiles and apparel supply chain (e.g., yarns, fabrics, and garments) at home? What is your recommendation, and why?

#2 In FASH455, we discussed how the US textile industry has experienced a decline in employment despite increasing production volumes, largely due to advancements in technology. However, why is import competition often cited in the media as the single largest threat to the US textile industry?

#3 While studies show that US fashion companies are reducing “China exposure,” measured in quantity, China still accounted for 36.1% of US apparel imports in 2023, even higher than 34.7% in 2022. How can we explain this phenomenon? What factors have made US fashion companies hesitant to move away from China?

#4 How will US fashion companies’ growing interest in carrying more sustainable textiles and apparel affect their sourcing destinations and supply chains? Will developing countries with cheap labor and/or developed countries with the right capital and technology be the winners in the sustainability movement? Please provide your thoughts.

#5 Will the growing demand for supply chain transparency and traceability reduce the incentives or add additional burdens for fashion companies to diversify their supply chain further? What are the benefits of pursuing sourcing diversification other than mitigating the potential sourcing risks?

#6 What is your vision for the use of AI in apparel sourcing? What key sourcing and supply chain problems facing fashion brands and retailers can AI potentially solve?

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

Exploring the Production and Export Strategies of U.S. Textiles and Apparel Manufacturers

The full study is available HERE.

Textiles and apparel “Made in the USA” have gained growing attention in recent years amid the increasing supply chain disruptions during the pandemic, the rising geopolitical tensions worldwide, and consumers’ increasing interest in sustainable apparel and faster speed to market. Statistics from the U.S. Bureau of Economic Analysis showed that U.S. textile and apparel production totaled nearly $28 billion in 2022, a record high in the most recent five years. Meanwhile, unlike in the old days, a growing proportion of textiles and apparel “Made in the USA” are sold overseas today. For example, according to the Office of Textiles and Apparel (OTEXA) under the U.S. Department of Commerce, U.S. textiles and apparel exports exceeded $24.8 billion in 2022, up nearly 12% from ten years ago.

By leveraging U.S. Department of Commerce Office of Textiles and Apparel (OTEXA)’s “Made in U.S.A. Sourcing & Products Directory,” this study explored U.S. textiles and apparel manufacturers’ detailed production and export practices. Altogether, 432 manufacturers included in the directory as of October 1, 2023, were analyzed. These manufacturers explicitly mentioned making one of the following products: fiber, yarn, fabric, garment, home textiles, and technical textiles.

Key findings:

First, U.S. textile manufacturers exhibit a notable geographic concentration, whereas apparel manufacturers are dispersed throughout the country. Meanwhile, by the number of textile and apparel manufacturers, California and North Carolina are the only two states that rank in the top five across all product categories, showcasing the most comprehensive textile and apparel supply chain there.

Second, U.S. textile and apparel manufacturers have a high concentration of small and medium-sized enterprises (SMEs). Highly consistent with the macro statistics, few textile and apparel manufacturers in the OTEXA database reported having more than 500 employees. Particularly, over 74% of apparel and nearly 60% of home textile manufacturers are “micro-factories” with less than 50 employees.

Third, U.S. textile and apparel manufacturers have limited vertical manufacturing capability. A vertically integrated manufacturer generally makes products covering various production stages, from raw materials to finished products. Results show that only one-third of U.S. textile and apparel manufacturers in OTEXA’s database reported making more than one product type (e.g., yarn or fabric). Meanwhile, specific types of vertically integrated production models are relatively popular among U.S. textile and apparel manufacturers, such as:

Apparel + home textiles (5.8%)
Fabric + technical textiles (5.1%)
Yarn + fabric (3.9%)

However, the lack of fabric mills (N=38 out of 432) appears to be a critical bottleneck preventing the building of a more vertically integrated U.S. textile and apparel supply chain.

Fourth, it is not uncommon for U.S. textile and apparel manufacturers to use imported components. Specifically, among the manufacturers in the OTEXA database, nearly 20% of apparel and fabric mills explicitly say they utilized imported components. In comparison, given the product nature, fiber and yarn manufacturers had a lower percentage using imported components (11%). Furthermore, smaller U.S. textile and apparel manufacturers appear to be more likely to use imported components. For example, 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 SME U.S. textile and apparel manufacturers to access textile input through mechanisms such as the Miscellaneous Tariff Bill (MTB).

Fifth, many US textile and apparel manufacturers have already explored overseas markets. Specifically, factories making textile products reported a higher percentage of engagement in exports, including fiber and yarn manufacturers (68.4%), fabric mills (78.9%), and technical textiles producers (69.1%). In comparison, relatively fewer U.S. apparel and home textile producers reported selling overseas.

Sixth, U.S. textile and apparel manufacturers’ export markets are relatively concentrated. Specifically, as many as 72% of apparel mills and 57% of home textiles manufacturers in the OTEXA database reported selling their products in less than two markets. These manufacturers also have a high percentage of selling to the U.S. domestic market. Likewise, because of the reliance on the Western Hemisphere supply chain, more than half of U.S. fiber and yarn manufacturers reported only selling in two markets or less. In comparison, reflecting the global demand for their products, U.S. technical textile manufacturers had the most diverse markets, with nearly 40% exporting to more than ten countries.

Seventh, while the Western Hemisphere remains the top export market, many U.S. textile and apparel manufacturers also export to Asia, Europe, and the rest of the world. For example, nearly half of U.S. textile and apparel manufacturers in OTEXA’s database reported exporting to Asia, and over 60% of U.S. technical textile manufacturers sold their products to European customers.

Additionally, over half of U.S. textile and apparel mills engaged in exports leveraged U.S. free trade agreements (FTAs). U.S. textile mills, on average, reported a higher percentage of using FTAs than apparel and home textile manufacturers. As most U.S.-led FTAs adopt the yarn-forward rules of origin, the results suggest that while such a rule may favor the export of U.S. textile products, its effectiveness and relevance in supporting U.S. apparel exports could be revisited.

Moreover, in line with the macro trade statistics, U.S. textile and apparel manufacturers in the OTEXA database reported a relatively high usage of USMCA, given Mexico and Canada being the two most important export markets. In comparison, U.S. textile and apparel manufacturers’ use of CAFTA-DR was notably lower, even for fiber and yarn manufacturers (37%) and fabric mills (33.3%).

by Kendall Ludwig, Miranda Rack and Sheng Lu

Picture above: On December 13, 2023, Kendall Ludwig and Miranda Rack, FASH 4+1 graduate students and Dr. Sheng Lu, had the unique opportunity to present the study’s findings to senior U.S. trade officials from OTEXA and the Office of the U.S. Trade Representative (USTR) in Washington DC, including Jennifer Knight (Deputy Assistant Secretary for Textiles, Consumer Goods and Materials), Laurie-Ann Agama (Acting Assistant US Trade Representative for Textiles), Maria D’Andrea-Yothers (Director of OTEXA), Natalie Hanson (Deputy Assistant US Trade Representative for Textiles) and Richard Stetson (Deputy Director of OTEXA).

Check the Udaily article that features the research project and the presentation (February 2024).

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.

Technical Design and Apparel Sourcing: FASH455 Exclusive Interview with Emma Zuckerman (UD & FASH BS16), Technical Designer at Nike

About Emma Zuckerman

Emma Zuckerman, a New Jersey native, graduated from the University of Delaware in 2016 with a degree in Apparel Design. During her time at UD, she actively participated in the FASH program and engaged in extracurricular activities related to her major. Emma conducted research on functional fashion with Dr. Martha Hall and held positions on the executive board, eventually becoming the President of Synergy Fashion Group in her senior year. She also founded a club dedicated to creating adaptive garments for children with disabilities. After graduation, Emma commenced her career in technical design with Under Armour (UA), accumulating six years of experience across various apparel categories and fabrications. She began in youth basketball, then transitioned through a range of products, from underwear to seamless leggings, woven jackets, and pants. In her later years at Under Armour, she played a significant role in the launch of Curry Brand and the introduction of UA’s first inline women’s basketball apparel line (non-uniform). Presently, Emma holds the position of Senior Technical Designer at Nike, where she contributes to the development of ACG and Nike SB product lines.

In her free time, Emma loves working on personal sewing, patterning, and draping projects. She also loves hiking, skateboarding, baking, swimming, and painting!

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

Sheng: What does a technical designer do? Can you walk us through your typical day as a technical designer? Also, what makes you love your job?

Emma: Technical designers work on developing clothing – we work with factory partners to take a style from a conceptual sketch to bulk production. For each style, we start by working with our design partners to understand their vision. We create detailed construction sketches, measurement charts, and sometimes original patterns, then compile those into a tech pack along with our designer’s garment sketch and a Bill of Materials outlining all garment components. A factory partner uses the information in that tech pack to make a sample to send back to us. We fit that sample with our team, cutting and pinning until we achieve the desired fit and aesthetic. The factory uses our feedback to create a second sample, and this process repeats until the style is finalized and approved for production. Throughout the process, we keep the tech pack up-to-date and ensure it accurately reflects the style we’re developing.

There are so many things I love about my job! The subjects of fitting and patterning are fascinating to me, and there will always be so much to learn about them. I love that throughout my career, there will be no limit to how much I can learn and how much my skills can grow. I exercise my creativity while also exercising the mathematical side of my brain, so my job is constantly challenging me in really interesting ways. I get to work with people around the world, learn about other cultures, backgrounds, and communication styles, and collaborate with amazingly talented teammates.

Sheng: How does a technical designer get involved in a fashion company’s sourcing process?

Emma: A technical designer’s level of involvement in the sourcing process varies from company to company, but it is always extremely helpful to work closely with our sourcing team. Since both technical designers and the sourcing team communicate with factories, we often check in with each other to make sure the information we’re sending is consistent. We (technical designers) can help provide feedback on factory capabilities and sample quality. Understanding the sourcing process helps us gain insight into why our sourcing partners allocate certain styles to specific factories (for example, a factory might have expertise with woven fabrics, outerwear, or embroidery; a style might qualify for a lower duty rate if sourced from a specific region; some factories may reach their maximum capacity for new styles more quickly than others).

Technical designers work most closely with our sourcing partners during costing conversations. Factories send cost sheets for every style at several key points during development. These cost sheets break down every element that contributes to the final cost of making the garment, from materials to trims, to time spent. One major role of a sourcing partner (or, at some companies, a product developer) is to process these cost sheets and advise the rest of the team on how much cost needs to be saved, and/or what steps can be taken to save cost, to ensure the style is profitable. Technical designers can use our garment construction and patterning expertise to effectively contribute to these conversations (which leads nicely into the next question)!

Sheng: We know production cost is a critical sourcing factor for fashion brands and retailers. From a technical designer’s perspective, what factors affect garment production and its sourcing costs? What strategies can be employed to manage these costs, beyond labor wages?

Emma: So many factors affect production cost – at the top of my mind are material cost (for fabric yardage and individual trims like zippers) and cut/make time (which includes labor cost and factory overhead). Material usage and cut/make time are both factors that technical designers can heavily influence during costing conversations with our design and sourcing teams.

Material usage: Marker efficiency refers to the amount of fabric used per garment compared to the amount wasted. The more closely pattern pieces can fit together, the less space for fabric scraps between them and the more efficient a marker will be. A technical designer can use their patterning experience to advise pattern shapes that will contribute to marker efficiency. For example, adding or removing a seam may allow pattern pieces to fit more closely together. Choosing where and when to engineer print placements – for example, matching stripes across a seam – will also impact the way pattern pieces can be arranged and, therefore, how efficient a marker can be. An efficient marker will both save cost and minimize fabric waste.

More on material usage, and cut/make time: Each construction choice contributes to the final cost of making the garment. For example, when it comes to finishing seam allowances, binding a seam allowance will take longer and use more material than an overlock stitch. For that reason, binding a seam allowance will also be more expensive. As garment construction experts, we lead conversations about style details, the time it will take to construct them, and other options that could potentially save time and material. This helps our team make informed choices that consider both cost and aesthetics.

Sheng: What are your thoughts on the trend of fashion companies using more sustainable materials like recycled cotton in their products?

Emma: I support fashion companies making an effort toward more sustainable & ethical production, and using recycled materials is an important step. Fabric with recycled fiber content can be more expensive and more difficult to source than traditional fabric, which may discourage some companies from moving in that direction. I’m hopeful that this trend will continue and that as it gains popularity, fabric with recycled fiber content will become easier to source over time.

Speaking of ethical production, I also would like to see fashion industry brands take additional steps toward a more earth-positive and people-positive existence, including:

Considering local labor laws, worker wages, and working conditions when selecting factories
Implementing garment repair programs to extend the lifecycle of their styles
Improving accuracy of demand planning to reduce excess inventory and/or considering donation or upcycling of excess inventory
Expanding size ranges and accurately grading sizes to fit well on plus-sized consumers
Moving away from gendering clothing as “men’s” or “women’s;” during sample development, checking that samples fit well on lots of body types (including individuals who have had gender-affirming care, individuals who haven’t, individuals who may be wearing gender affirming garments like binders)
Diversifying the company workforce at every level, from entry-level to leadership to c-suite
Expanding representation in advertising campaigns to reflect the diversity of global consumers
Supporting nonprofit agencies whose work aligns with company values

Some companies are doing a great job of fulfilling some, most, or all of the items on my above wish list, but we know that the fashion industry has a long way to go when it comes to impacting our earth and our societies positively. I think it’s our job as newer fashion industry professionals to speak up about all of this and start to push our industry in a better direction.

Sheng: What other key industry trends will you closely monitor in 2023?

Emma: I am so interested in the increased use of 2D and 3D patterning software. Programs such as Gerber, Optitex, Clo, and Browzwear are already changing the design and development process in fascinating ways. Experience in any of these programs has already become a very valuable asset for job applicants. I’m curious whether garments will ever be sold to consumers based only on 3D renderings, and if body scanning will become a more mainstream part of the shopping process.

I’m also curious how the increased use of 2D and 3D patterning software will impact more traditional design processes, like paper patterns and draping. Will these arts be preserved? Are there types of apparel that will always need to be draped or patterned physically? Will students 20 years from now still learn to pattern and drape the way we did, or will these skills be fully computer-based?

Sheng: Any reflections on your experiences at UD and FASH? what advice would you offer current students preparing for a career in fashion after graduation?

Emma: I feel so lucky to have had the experience that I did at UD and within the FASH program. I learned so much in my patterning, draping, collections, textiles, and sourcing classes (big shoutout to Dr. Lu!) that has stayed with me and helped me find success in my current job.

I have so much advice! If you’re looking for a career in technical design, practice any patterning software you can access as much as you can. As you begin applying to jobs, try to reach out to contacts at the companies you’re applying to (even if it means sending a random LinkedIn message to a fellow UD grad, or asking a professor/another student to help connect you with someone). Start your career with curiosity and an open mind – you will learn so much on the job that isn’t covered in school. Try to find a mentor, or several mentors, who’ve had work experiences similar to yours. A mentor who you can trust and rely on for advice makes a huge difference when work gets challenging. Speaking of which – work does get challenging, and that’s okay! Work on learning to identify situations that you can work through and learn from (which are hugely beneficial to your personal growth and career development), compared to work environments that are more consistently unhealthy or not providing what you need (which are an indication that it’s time to make a change). If you have coworkers you trust, sharing salary information openly is a great way to make sure everyone’s skills and contributions are being valued appropriately.

Enjoy your time in college and in the FASH program. I miss it!

–The END–

FASH455 Debate: Is the U.S. Textile Manufacturing Sector a Winner or Loser of Globalization and International Trade? (Updated September 2023)

(note: the following comments are from students in FASH455 based on the video “Textile Manufacturing in America, post-globalisation”

Argument: The U.S. textile manufacturing industry has been a winner of globalization

Comment #1: While it is true that many Americans lost their jobs due to the increase in trade, there are more benefits to both importing and exporting rather than the mercantilist view of trade. Increasing trade and globalization, especially during the Clinton administration, was an opportunity to develop strong relationships with other nations. The value of U.S. textile exports since 2000 has risen by 30% for yarn and 15% for fabric, after the establishment of agreements such as NAFTA. Additionally, one of the U.S. apparel manufacturers in the video used machinery for their production from Sweden. Without globalization and trade, they would not be able to use this high-tech equipment. All in all, U.S. textile manufacturing sector benefits from both importing and exporting goods.

Comment #2: Deeper down, the US textile sector seems to be winning in the long run. The squeeze that globalization has placed on them has allowed for innovation within the industry as they fight to stay relevant and compete with overseas goods. Operational slack such as high turnover jobs have been eliminated with automation, and US manufacturers gained a new branding niche that overseas companies do not: a US “personal touch.” Consumers may now be more willing to pay more for a garment just because it says it is made in the USA. USA-made clothing may now be perceived as higher quality and more scarce. The sentiment towards US-made goods and their quality could enact change to reduce overseas reliance, which is a win for US manufacturing in the long run. Additionally, globalization expands the export market for the US textile manufacturing sector.

Comment #3: As discussed in the video, there is a growing trend of reshoring and regionalization in some manufacturing sectors, including textiles. Some U.S. textile manufacturers have seized this opportunity to bring production back to the United States, capitalizing on the advantages of local supply chains, quality control, and speed to market. The video also shows how technology and automation can help streamline production processes and make manufacturing more competitive, even in higher-cost regions like the United States. US textile manufacturers have invested in innovation and automation, making them competitive in producing textiles with advanced features and properties in today’s global economy. It is globalization that is pushing the US textile industry to adopt these new technologies and continue improving its international competitiveness.”

Argument: the U.S. textile manufacturing industry has been a loser of globalization

Comment #4: One of the biggest arguments for globalization is the lower prices & affordability for the consumer. From this perspective, it seemed that the United States was a winner of globalization as a whole. However, when beginning to look at the consequences of moving production overseas, we not only see the textile manufacturing sector being affected, but we also see this impact disperse to the communities in America as well. When brands offshore and outsource production overseas for lower prices & labor, our very own US textile manufacturing industry is losing out on this business. It also forces this industry into a highly competitive environment that does not have equal “playing fields” and does not have insurance/protection in case environmental factors ruin crops. The US has clear labor laws and human rights policies (as well as increasing environmental policies), whereas their cotton-growing competitors, for instance, do not have to follow the same rules. This allows labor exploitation to decrease costs and makes US companies seem unappealing or less competitive.

Comment #5: Over the past few decades, the number of manufacturing jobs in the US textile industry has plummeted after companies began moving production overseas, specifically to countries like China, which have preferential treatment. These foreign facilities can produce things much faster and cheaper because the standards and regulations are completely different than those of the United States. Free trade does not consider these differences in labor and environmental laws, making it much less “free” than it claims. As countries overseas– specifically China and regions like Xinjiang– continue to not play by the rules, the US is forced to keep up by implementing things like the Toyota System…Americans want to be the best in manufacturing and globalization often gets in the way of this. With near-shoring, the US can reclaim high-quality, American-made garments while helping with job security and sustainability.

Comment #6: Overall, I believe that the U.S. textile manufacturing industry is a loser of globalization and international trade, mostly due to the competition from overseas. This competition includes more manufacturers from other countries, but also the competition of pricing since other oversea manufacturers are able to sell their cotton/textile materials at a lower price. Since the U.S. struggles to compete with these lower prices, they are forced to look for another way to have a competitive advantage in the textile manufacturing sector, such as lean manufacturing and technology improvements. At Carolina Cotton Works, Bryan Ashby shares how they have increased efficiency and use high-quality machines (note: imported) for their products. Although this sounds great, this also means that there are fewer workers.

Comment #7: Globalization creates a trade dependence on imports. It’s important we don’t depend on things for when things happen that we can’t predict like the pandemic where we can’t import anymore. Since there was a lack of local textile manufacturing and sourcing in the United States compared to what was being imported, there was less of a chance for technological advances and improvement in the United States textile manufacturing sector. Post Globalization, however, may be the chance for the United States to bring back the textile manufacturing sector momentum. I think this because the United States has seen the result of heavily relying on other countries for their cheap labor/sources, and this could add extra motivation for companies to want to figure out better alternatives in manufacturing in their own country.

Comment #8: I think currently the US is a loser to globalization only because brands want to get the product for cheap. I think brands think that would create more profit that way. However, I do believe we could get to a future where more things would be created in the US and wouldn’t have to pay that much in tariffs and other external prices. I think it would help boost people to work more. I think people are worried about making things in our country because of the relations we have with other countries.

Discussion questions:

Do you agree or disagree with any particular argument above? Any follow-up comments on the impact of globalization on the US textile manufacturing sector? What should government do with trade given the debates? Please feel free to share any additional thoughts.

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., 4^th in 2023 vs. 11^th 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 2^nd 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.

New USITC Report: African Growth and Opportunity Act (AGOA): Program Usage, Trends, and Sectoral Highlights

On April 17, 2023, the US International Trade Commission (USITC) released a new report analyzing the trade and economic impact of the African Growth Opportunity Act (AGOA). The report fulfills the investigation request by the US House of Representatives Committee on Ways and Means in January 2022.

The full report is HERE. Below are the key findings regarding the apparel sector:

The African Growth and Opportunity Act (AGOA) matters significantly to Sub-Saharan African countries (SSA)’s apparel exports to the United States

AGOA has been the primary competitive advantage for SSA’s apparel exports to the United States. For example, US apparel imports from AGOA beneficiaries have risen from $953 million in 2001 to $1.4 billion in 2021 (note: up to $1.76 billion in 2022). More than 96.4% of these imports claimed AGOA’s duty-free benefits, including 98.8% utilized the “third-country fabric” provision.
While twenty countries were eligible for AGOA’s apparel provision, over 90% of US apparel imports from AGOA members in 2021 originated in five SSA countries: Kenya (31.5%), Madagascar (19.9%), Lesotho (20.6%), Ethiopia (18.3%), and Mauritius (5.1%).
AGOA benefits appear essential for SSA countries to maintain their apparel exports to the United States. USITC noted that in every case when a country lost AGOA eligibility between 2000 and 2021, there was a noticeable decrease in US apparel imports from that country, such as Rwanda and Madagascar. (note: according to OTEXA’s latest trade data, US apparel imports from Ethiopia, which lost its AGOA eligibility in 2022, dropped by 42% in the first two months of 2023 from a year ago, far worse than a 5.8% decrease of AGOA members as a whole.)
SSA garment manufacturers often find supplying the US apparel market a better fit than Europe, primarily because US brands tend to place orders for higher volume bulk basics, which allows workers to focus on a narrower set of skills.

The impact of AGOA on SSA’s apparel production and exports varied at the country level

Some SSA countries (e.g., Kenya and Lesotho) already had well-established apparel industries when AGOA was implemented in 2000. In contrast, other SSA countries (e.g., Madagascar, Ethiopia, Tanzania, and Ghana) received substantial investments from foreign-owned firms after AGOA was enacted, which helped jumpstart their apparel sectors.
USITC also identified two “unsuccessful” AGOA cases. For example, Mauritius was the largest AGOA beneficiary apparel supplier to the United States in 2000 but has since fallen to the fifth-largest in 2021, largely due to increased labor costs. Likewise, South Africa’s apparel export to the US was negatively affected by its disqualification from the “third-country fabric” provision under AGOA.

AGOA has had a limited impact on building an integrated regional textile and apparel supply chain in SSA

Currently, SSA countries primarily participate in the cut-and-sew operations of apparel based on imported textile raw materials from outside the region (mostly from Asia).
The USITC identified several challenges in building the local textile industry in SSA. For example, building a textile mill typically requires much higher investments (e.g., $200–300 million) than a garment factory (i.e., $25 million). Also, most SSA manufacturers cannot make the various types of yarns and fabrics in demand from U.S. buyers.
The dilemma is not new: Access to textile inputs from sources outside SSA is essential for garment manufacturers in SSA to meet the specifications of US buyers. However, relying on imported textile inputs reduces the incentives for investing in new textile production capabilities in SSA.
The USITC report found Mauritius an exception as it has developed a relatively competitive capability in producing cotton fabrics, which are supplied to garment factories in Madagascar. There is also some collaboration between cotton producers in Tanzania and Uganda and Kenya’s textile manufacturers.

US fashion companies generally see SSA as a promising emerging sourcing destination

Apparel producers in SSA are less established in global apparel value chains than manufacturers in other parts of the world. Therefore, it is not uncommon that fashion brands and retailers “work more directly with SSA apparel manufacturers to ensure product quality, particularly for new or expanding product lines.”
Most SSA garment factories only have cut, make, and trim (CMT) capability and rely on imported textile materials arranged by fashion brands and retailers.
USITC found that US companies increasingly import man-made fiber (MMF) apparel from AGOA members to benefit from greater import duty savings. (note: US tariff rates for MMF apparel were typically higher than those made with natural fibers like cotton. On the other hand, however, it’s worth noting that SSA countries generally have more competitive advantages in producing cotton apparel products than in producing MMF apparel).
SSA countries also have advantages over their Asia competitors. For example, “a shipment takes about 15–18 days to travel from the port in Lomé to the East Coast of the United States. From China or Bangladesh, lead times range from 40–50 days.”
Many fashion brands “have expressed interest in sourcing from greenfield factories with fewer legacy challenges posed by compliance and environmental impacts.”
US fashion companies’ sourcing diversification strategy to avoid risk exposure also contributed to the expansion of their apparel imports from AGOA members.

Uncertainty of AGOA renewals hurt US apparel imports from SSA

Apparel companies typically make sourcing decisions 12–18 months in advance. This practice underscores the importance of renewing AGOA early rather than granting extensions only within two to nine months of expiration, as in the past.
The USITC report mentioned, “Without the assurance of the “third country fabric” provision, many US apparel companies sourced from AGOA beneficiaries reported holding back orders from the region.”

More can be done to leverage SSA’s cotton production better

Cotton growing is widespread across about thirty SSA countries. SSA accounts for about 7 percent of the world’s cotton production, the fifth-largest globally.
However, most SSA cotton is sold to international buyers and exported to Asian mills that process it into yarns and fabrics. In contrast, the consumption of domestic cotton in SSA is limited.
The SSA cotton industry produces high-quality, “sustainable” cotton that can be used in several high-value end products sold globally. However, because of a lack of mechanization, SSA cotton production struggles to increase supply to meet demand.
Also, cotton-growing regions in SSA tend to be poorer and less politically stable than other parts of the region.

Discussion questions:

Based on the blog post and class discussions, how competitive or attractive are AGOA members as apparel-sourcing destinations for US fashion companies, especially compared with suppliers from Asia and the Western Hemisphere?
Based on the blog post, what improvement can be made to make AGOA or any problems that need to be addressed?
Any other thoughts related to the patterns of apparel trade and sourcing based on the blog post?

USTR Fiscal Year 2024 Goals and Objectives—Textiles and Apparel

In March 2023, the Office of the United States Trade Representative (USTR) released its 2024 Fiscal Year Budget report, outlining six major goals and objectives for FY2024. USTR’s FY2024 goals and objectives for textile and apparel are similar to FY2023, but keywords such as “near-shoring” are newly emphasized.

Goal 1: Open Foreign Markets and Combat Unfair Trade

Provide policy guidance and support for international negotiations or initiatives affecting the textile and apparel sector to ensure that the interests of U.S. industry and workers are taken into account and, where possible, to provide new or enhanced export opportunities for U.S. industry. (Note: no change from FY2023)
Conduct reviews of commercial availability petitions regarding textile and apparel products and negotiate corresponding FTA rules of origin changes, where appropriate, in a manner that takes into account market conditions while preserving export opportunities for U.S. producers and employment opportunities for U.S. workers. (Note: no change from FY2023)
Engage relevant trade partners to address regulatory issues potentially affecting the U.S. textile and apparel industry’s market access opportunities. (Note: no change from FY2023)
Continue to engage with CAFTA-DR partner countries to address trade-related issues to optimize inclusive economic opportunities; strengthen trade rules and transparency and address non-tariff trade impediments; provide capacity building in areas such as textile and apparel trade-related regulation and practice on customs, border and market access issues, including agricultural and sanitary and phytosanitary regulations, to avoid barriers to trade. (note: newly mentioned “transparency”)
Continue to engage CAFTA-DR partners and stakeholders to identify and develop means to increase two-way trade in textiles and apparel and strengthen the North American supply chain and near-shoring to enhance formal job creation. (note: newly emphasized “Near-shoring”)
Provide policy guidance and support for international negotiations or initiatives affecting the textile and apparel sector to ensure that the interests of U.S. industry and workers are taken into account and, where possible, to provide new or enhanced export opportunities for U.S. industry. (Note: no change from FY2023)
Conduct reviews of commercial availability petitions regarding textile and apparel products and negotiate corresponding FTA rules of origin changes, where appropriate, in a manner that takes into account market conditions while preserving export opportunities for U.S. producers and employment opportunities for U.S. workers (note: no change from FY2023)
Engage relevant trade partners to address regulatory issues potentially affecting the U.S. textile and apparel industry’s market access opportunities. (note: no change from FY2023)

Goal 2: Fully Enforce U.S. Trade Laws, Monitor Compliance with Agreements, and Use All Available Tools to Hold Other Countries Accountable

Closely collaborate with industry and other offices and Departments to monitor trade actions taken by partner countries on textiles and apparel to ensure that such actions are consistent with trade agreement obligations and do not impede U.S. export opportunities. (note: no change from FY2023)
Research and monitor policy support measures for the textile sector, in particular in the PRC, India, and other large textile producing and exporting countries, to ensure compliance with international agreements. (note: no change from FY2023)
Continue to work with the U.S. textile and apparel industry to promote exports and other opportunities under our free trade agreements and preference programs, by actively engaging with stakeholders and industry associations and participating, as appropriate, in industry trade shows. (note: no change from FY2023)

Goal 4: Develop Equitable Trade Policy Through Inclusive Processes

Take the lead in providing policy advice and assistance in support of any Congressional initiatives to reform or re-examine preference programs that have an impact on the textile and apparel sector. (note: no change from FY2023)

Other Priorities for USTR in FY2024:

#1 “Advancing a Worker-Centered Trade Policy.” For example, given “communities of color and lower socio-economic backgrounds were more negatively affected by free trade policies that have reduced tariffs and distributed supply chains across the globe,” USTR will develop “a new strategic approach to trade relationships that is not built on traditional free trade agreements…USTR is embarking on trade engagements with allies and like-minded economies, like Taiwan and Kenya and [through] multinational economic frameworks that focus on clean energy and supply chains rather than tariffs.”

#2 Address forced labor. For example, USTR developed the first-ever focused trade strategy to combat forced labor. Paired with the implementation of the Uyghur Forced Labor Prevention Act, and the Memorandum of Cooperation (MOC) launching of a Task Force on the Promotion of Human Rights and International Labor Standards in Supply Chains under the U.S.-Japan Partnership on Trade. And USTR will “use every tool available to block the importation of goods made partially or entirely with forced labor.”

#3 Re-Aligning the U.S. – Beijing Trade Relationship. “USTR continues to keep the door open to conversations with the PRC, including on its Phase One commitments. However, USTR acknowledges the Agreement’s limitations. USTR’s strategy is expand beyond only pressing Beijing for change and includes vigorously defending our values and economic interests from the negative impacts of the PRC’s unfair economic policies and practices.”

#4 Strengthen enforcement of US trade policy. For example, USTR sees enforcement “a key component of our worker-centered trade policy.” USTR is “upholding the eligibility requirements in preference programs,” such as the African Growth and Opportunity Act (AGOA). As many enforcement tools were “were crafted decades ago,” USTR will be “reviewing our existing trade tools and working with Congress to develop new tools as needed.”

(This blog post is not open for comment)

An Inside Look at Textiles “Made in the USA”: FASH455 Exclusive Interview with Elizabeth Davelaar (UD&FASH MS17), Co-owner of Maker’s Way Fiber Mill

About Elizabeth Davelaar

Elizabeth Davelaar is a Co-Owner of Maker’s Way Fiber Mill in Brandon, SD, which opened in October 2021. The mill is a family-run business, with Elizabeth’s sister, Erin, and her mother, Kari, as other co-owners. Elizabeth began her career in the fashion industry at the University of Minnesota, where she graduated with a BS in Apparel Design from the College of Design. She then went to the University of Delaware, where she graduated with an MS in Fashion and Apparel Studies and a Graduate Certificate in Sustainable Apparel Business.

Elizabeth served as a project manager for a non-profit fashion brand in St. Louis and taught sewing to immigrant women in St. Louis and women in Ethiopia. She then moved to Vi Bella Jewelry in Sioux Center, IA, working her way from Shipping Manager to VP of Operations, Sustainability and Design. She then opened Maker’s Way Fiber Mill in 2021 with her family and has been working with local fiber producers to grow the yarn industry in South Dakota and surrounding areas.

Interview Part

Sheng: What inspired you to start your fiber mill business? What makes it special and exciting?

Elizabeth: The mill was born out of the need to solve a problem. I became interested in natural dye at the University of Delaware under Professor Cobb. Once I moved back to the area where I grew up, COVID hit, and I was able to dive deeper into the natural dye and use local plants as a dye source. This also led to being curious about local natural fibers. South Dakota isn’t a state that grows cotton, and the hemp industry is currently small, but it has an abundance of sheep. According to statistics from the US Department of Agriculture, South Dakota has 235,000 sheep and is home to one of the nation’s largest wool co-ops. However, there are only 2 working fiber mills in the area that provide custom processing, which makes yarn made from local fiber very hard to find.

This led to the opening of Maker’s Way Fiber Mill. We are a full-service, custom fiber mill and make yarn, felt, roving, and home goods products from primarily wool and alpaca fiber. Approximately 90% of our time is spent processing for clients who own the animals and use the yarn themselves or sell it, with the other 10% processing yarn that we sell online via our website and in-person at events. The vast majority of our customers are local (within 4-5 hrs) and sell locally to crafters. We take pride in knowing where the fiber we use comes from, sourcing from local farms or using fiber from vintage or second-hand sources.

Hats made from 80% alpaca/20% Wool (both sourced from SD) with a small amount of recycled sari silk blended in. Photo courtesy of Elizabeth Davelaar

Sheng: According to Maker’s Way Fiber Mill’s website, sustainability is a critical feature of your products. Why is that, and how do you make your products sustainable?

Elizabeth: We believe that we are stewards of the earth and should be conscious of how the products we make are grown, created, and then how they can be disposed of. The fashion industry, from creating the product to end life, is a huge polluter. The current market for wool is not great for producers, and there isn’t a good avenue for alpaca producers. We work very hard to ensure that our products are sourced from people that we know and trust or are from vintage or second-hand sources. We also work to ensure our products are made from natural fibers, thus they are biodegradable.

We also work to limit the waste in our mill. Although we try our absolute best to reduce loss in the process, each step produces some loss in fiber. This fiber is swept up and either rewashed and added to our Millie line or added to our bird nest starters. The Millie line is yarn spun up from the scraps, and we end up running about four batches of this a year. Each batch is unique because of the different blends of fiber we run. The bird nest starters use fiber that either falls out of our carder or is swept off the floor. These are then put outside in the spring for birds to use for nesting. The fibers are short enough that the baby birds don’t get tangled in them as they would with yarn and because they are natural animal fibers, the nests will biodegrade, unlike acrylic yarns that are sometimes used.

Sheng: Maker’s Way Fiber Mill’s products are 100% locally made in South Dakota. From your perspective, what are the opportunities and challenges for manufacturing textiles in the US today?

Elizabeth: I see two big challenges in the natural animal fiber side of the U.S. textile industry: Lack of consumer knowledge of where clothing comes from and lack of infrastructure. But both also present big opportunities!

First, we have found with our mill that people don’t have a good understanding of how many steps there are in creating yarn in general, let alone clothing. We have people who question our pricing because they don’t understand what it means to make yarn in the United States. From start to finish, it takes eight different steps to get raw fiber from producers to yarn ready to sell. Our consultations for new clients tend to be very educational because even fiber producers don’t necessarily know all the steps. As we open the mill for tours and talk to people at events, they start to understand and respect how much work is behind the yarn we create, and that is when we see buy-in – when people start to see the whole process, as well as the people.

The second challenge I see is the overall lack of infrastructure. We are one of approximately 200 small-scale / artisan-style mills in the country (this number is approximate – there is not a good database) and do not run near the quantity compared to the larger manufacturers. As of 2018, there aren’t any small-scale fiber mill equipment manufacturers in the US, so all of the equipment available to us is either used or has to be imported from Canada or Italy. Wait time for most small producers to get their fiber made into yarn is approximately 8-12 months at many mills, some run up to 18 months out. Our mill currently runs about 6 months out and we have been open for just over a year.

For producers who want to sell their wool to larger manufacturers and not have it custom processed, as far as our research has shown, there is one large-scale scouring (wool washing) facility in the states and most of the large-scale spinners use fiber from this facility to spin into yarn and then send the fiber off to other finishing companies for knitting. Otherwise, all of the wool is shipped overseas, and producers are earning approximately $1.66/lb of wool (in 2020). We have heard of many producers that have stockpiles of wool because they are waiting for higher wool prices. Coops also won’t accept wool that isn’t white, so all dark colors of wool get thrown away as there isn’t a market for it.

We also see this as an opportunity. We have noticed the “buying local” trend extending past food also to include yarn. People also see value in making their own clothing and being intentional through knitting/crocheting. There is a growing market for it. We have also seen some demand for the addition of another large-scale scouring facility that could meet the needs for wool insulation and other home applications.

Sheng: Like other fashion programs in the US, most of our FASH students take job opportunities from fashion brands and retailers, not necessarily textile mills. How to raise the young generation’s interest in pursuing a career in textile and apparel factories? Do you have any suggestions?

Elizabeth: I definitely never intended to start a fiber mill when I was in school. I only took one textile class and am pretty sure only one of my design projects used wool. UD was really what fed the sustainability bug in me and I started to realize that sustainability starts at the very beginning of the lifecycle of clothing. Whether or not something can be biodegradable, recyclable, or repurposed starts with what fiber makes up the clothing. UD also showed me how global apparel is and how much carbon footprint it makes.

Working in a fiber mill is not an easy job. It is dirty, we tend to put in long days, and we are constantly learning new things. I am a very hands-on person, and I love being able to create things from nothing, so this job is a great fit for me. The part I loved most about being in design school was being able to create things, and my current job is that all day, every day. We split the mill into “zones” and between myself, Erin and our mom, we all specialized in a specific part of the process. I am in charge of skirting and cleaning fleeces, which means cleaning off all of the hay and visibly dirty areas (aka manure) and then washing the fiber in 140-180 degree water to get the dirt and lanolin out of the fleece. I then pick and card the fiber, which opens up and organizes the fiber into a long tube that is then drafted, spun, plied, and put into skeins. While most days tend to include the same things, each day is never the same as the last. Each animal fleece we run acts differently, so we are always learning new and better ways to run the equipment we have. It is challenging but also a labor of love. Because we work directly with producers, we know the names of most of the animals and love knowing that their fleeces are being used instead of being discarded! We also love connecting with local people who love purchasing from local producers and makers.

One of the biggest things I believe fashion programs can do to help open up students to different options in the fashion industry is to expose them to different opportunities and allow them to follow whatever passion they have and emphasize that there isn’t a “right” path in the industry. My classes opened me up to labor issues around the world and that then led me to Delaware. And the opportunities I was given at UD to follow my passions are a huge reason I am doing what I am doing now. One of the things I think UD does right is having many different professors with varying backgrounds in the FASH department and I think other universities would do well to implement that too.

Sheng: Any other key issues or industry trends you will watch in 2023?

Elizabeth: One of the key trends we are watching is the local craft movements and knowing where your clothing comes from. We saw a crafting resurgence happen during COVID and people are still pickup up their knitting needles and crochet hooks to create items to wear and love. We also see some carryover of the local food scene into the local fiber scene. We believe that this will continue to grow!

–The END–

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