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China’s Plunging Denim Exports to the US Show Tariffs’ Taxing Toll

The tariffs on U.S. apparel imports from China keep taking a bigger toll on the country’s role as a denim supplier, while other countries such as Vietnam, Egypt and Nicaragua gain ground.

China’s shipments of blue denim apparel, the vast majority of which are jeans, declined 21.97 percent to a value of $615.04 million for the year to date though October, according to new data from the Commerce Department’s Office of Textiles & Apparel (OTEXA). China’s market share of imported jeans for the 12 months through October fell 18.98 percent to 20.05 percent, reflecting a similar picture for overall apparel, OTEXA data showed.

China’s declines were most dramatic in September and October, as 15 percent tariffs were imposed on Sept. 1 and many companies took action to get goods in under the wire in July and August, said Julia Hughes, president of the U.S. Fashion Industry Association.

While companies such as Guess and G-III Apparel Group recently said they’re sticking with Chinese production and have been able to negotiate with factories there to mitigate price increases from tariffs, PVH is reducing its exposure, chairman and CEO Manny Chirico said.

“U.S sourcing out of China will be about 10 percent of our overall sourcing mix and I think that compares to three or four years ago we were close to 35 percent to 40 percent,” Chirico said. “So I think we’re moving strategically as we plan.”

Mexico held onto the top spot as a jeans supplier to U.S. companies, with its imports increasing 2.88 percent to $696.38 million for the year to date and its market share growing 4.45 percent to 21.98 percent. No. 3 suppliers Bangladesh posted a slim 1.48 percent gain in the period for a value of $487.73 million and a 15.05 percent market share.

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While sourcing executives are concerned that Vietnam will soon run into capacity problems, that scenario hasn’t yet come to fruition. U.S. imports from the Southeast Asian country jumped 23.23 percent to $305.86 million in the period and its market share rose 24.17 percent to 9.3 percent.

Among other Asian Top 10 suppliers, Pakistan’s shipments in the first 10 months of the year rose 5.04 percent to $216.39 million and Cambodia’s were up 2.37 percent to $101.42 million, while imports from Indonesia were down 13.96 percent to $60.03 million.

Elsewhere among the top suppliers, imports from Egypt increased 16.47 percent to a value of $149.15 million, shipments from Jordan rose 6.46 percent to $50.73 million and imports from Nicaragua gained 24.29 percent to $109.78 million.

Mexico and Nicaragua led the Western Hemisphere to a 3.46 percent increase year to date to $884.9 million. The region’s market share for the year through October rose 5.15 percent to 28.02 percent, as Guatemala also posted a solid gain, up 8.29 percent to $29.13 million.

Overall denim imports were down 1.52 percent to $3.18 billion in the first 10 months of the year, illustrating what vendors have been saying is a soft market, as well as actions taken by brands and retailers to reduce inventories.

Monica Betancur, South American commercial director at Kaltex America, said at last month’s Kingpins NYS show, “Business is tough right now. Companies are being cautious, especially about China,” which has brought fresh interest in Kaltex’s Mexican manufacturing.

“There’s definitely a slowdown overall in denim, which is cyclical,” Tricia Carey, director of global business development for apparel at Lenzing Fibers, said.