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China Denim Exports to the US Plunged 17%. Here’s Who’s Winning Instead.

The erosion of China as a supplier of jeans for American brands continued in September, while Mexico maintained the top spot it achieved the prior month when it leapfrogged China for the first time in recent memory.

At the same time, imports of blue denim apparel, the vast majority of which are jeans, surged among top tier suppliers Vietnam and Pakistan. In the second tier, the diversification of denim sourcing was apparent in substantial increases of shipments from Egypt, Nicaragua and Jordan.

With the U.S.-China trade war and resulting tariffs causing major sourcing shifts to avoid risk and higher prices, such as the tariffs that went into effect on Sept. 1, year-to-date jeans imports from China dropped 17.02 percent to a value of $564 million. For the year through September, China’s U.S. import market share declined 11.67 percent to 21.22 percent.

Discussing the impact of the U.S.-China trade war on Guess’s business, CEO Carlos Alberini recently said, “For next year, we expect to reduce the estimated tariff risk from China production into the U.S. to only 12 percent of our total apparel production. We are still working on this to further reduce our dependency on China.”

Imports from Mexico, which saw a precipitous drop in overall apparel shipments in the month, rose 5.56 percent in the first nine months of the year to $625.84 million worth of goods. For the year, Mexico held a 21.98 percent market share, up 6.73 percent from the same period in 2018, a sign that while some companies might be seeking lower-cost Western Hemisphere production for more basic apparel, their longstanding relationships with Mexican factories remain critical.

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This is likely particularly true in a somewhat soft cycle for jeans. Imports from the world were up just 0.43 percent to $2.83 billion for the first nine months of the year. For the 12 months through September, denim apparel imports grew 2.81 percent to $3.87 billion in value.

It was a mixed picture among the major Asian suppliers. Imports from Vietnam spiked 28.52 percent in the year to date to $263.05 million, Pakistan’s shipments increased 8.97 percent to $194.95 million and Bangladesh imports ticked up 0.46 percent to $420.36 million. But Cambodia’s shipments declined 3.49 percent to $85.17 million and imports from Indonesia fell 9.51 percent to $56.04 million.

Nicaragua was a winner in the period with a gain of 25.83 percent to $94.19 million, as were Egypt, up 13.29 percent to $130.63 million, and Jordan, increasing 11.12 percent to $47.18 million.

The desire for closer-to-market production and generally tariff-free trade helped boost the Western Hemisphere to a 5.36 percent increase in the nine months to $790.84 million, including a 21.38 percent gain from Central American Free Trade Agreement countries for a value of $122.71 million.

Sub-Saharan African countries continue to present duty-free alternative sourcing opportunities, with a 4.16 percent increase in the period to $117.1 million. The region was led by gains by Madagascar, Kenya, Ethiopia, Mauritius and Tanzania.