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Trade War ‘Uncertainties’ Scramble Denim Sourcing Map

Mexico has leapfrogged China as the top supplier of denim apparel to the U.S., according to new data from the Commerce Department’s Office of Textiles & Apparel (OTEXA), as the impact of the trade war with the U.S. caused major shifts in sourcing even before 10 percent tariffs on Chinese apparel went into effect on Sept. 1.

Imports of the blue denim apparel, 97 percent of which are jeans, from China fell 13.47 percent to a value of $517.78 million in the year to date through August compared to the same period in 2018, OTEXA reported. In the same period, jeans imports from Mexico increased 8.84 percent to $558.86 million.

For the 12 months through August, denim apparel imports from Mexico were up 8.8 percent to $863.02 million, while China’s shipments declined 6.93 percent to $856.19 million. This left Mexico with a 22.14 import market share compared to China’s 21.97 percent share. A month earlier, China’s jeans market share was 22.48 percent, just a tick above Mexico’s 22.27 percent, according to OTEXA.

“The trade disputes and tariffs have created a lot of uncertainties in the denim market,” Jun Fang, president of China’s Seazon Textile and Garment Co., said. “As one of the major players in the U.S. market with a sustainability focus, we have started to see a lot of inquiries regarding lead time of fabrics shipping to various Asian countries that are not affected by the new tariffs.”

Several Top 10 jeans suppliers to the U.S. saw increases in year-to-date shipments, while others saw declines. This sourcing shift came as overall denim apparel imports to the U.S. were sluggish, an indication of softness in the market since little jeans production exists in the country.

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Jeans imports were up just 1.65 percent in the first eight months of the year to a value of $2.46 billion. For the year through August, U.S. denim apparel imports rose 4.55 percent to $3.9 billion.

Looking at sourcing shifts among the key production centers, No. 3 supplier Bangladesh, with a 14.81 percent market share, posted a 2.01 percent increase for the eight-month period to $365.15 million. This was followed by a 28.07 jump in jeans imports from Vietnam to $227.32 million and an 8.88 percent market share, and a 9.93 percent gain in shipments from Pakistan to $170.88 million and a 6.72 percent share.

Fang said Seazon has expanded its Bangladesh office “to accommodate shipping many more fabrics to these Southeast Asian countries.” He said due to the extra time needed to ship fabrics to these countries, “we are trying to shorten our production lead time to help these factories to improve their overall lead time for their customers without compromising on quality.”

As indicated by Mexico’s gains in the category, the Western Hemisphere has solidified its position as a jeans supplier for U.S. brands with closer-to-market logistics and quick-response capabilities. Denim apparel imports from the hemisphere rose 7.65 percent so far this year to a value of $702.03 million and a 27.89 percent market share.

In addition to Mexico, leading the way in the region were Nicaragua, with an increase of 25.77 percent to $80.87 million, and Guatemala, with a gain of 7.92 percent to 23.65 million.

Among other notable suppliers, imports from Egypt were up 12.24 percent to $116.41 million and Jordan’s shipments rose 12.25 percent to $42.71 million. Joining China among the top production countries losing ground were Cambodia, with imports down 8.64 percent to $71.75 million, and Indonesia, with a decline of 10.42 percent to $49.36 million.