While there might not be much U.S. denim fabric or apparel manufacturing left in the U.S., the Western Hemisphere is becoming a more important alternative to Asian sourcing, particularly in light of the U.S.-China trade war and the threat of 25 percent tariffs on jeans imports from the country.
Countries such as Mexico, Nicaragua and Guatemala are leading growth in the region as a more local, faster-turn and generally duty-free option to sourcing from the Asian production giants like Vietnam, Bangladesh and Pakistan.
Denim apparel imports from the Western Hemisphere increased 13.41 percent in the first four months of the year to reach a value of $323.68 million. This represented a 27.4 percent market share of all U.S. imports of denim apparel, 97 percent of which is jeans, according to the Commerce Department’s Office of Textiles & Apparel (OTEXA). The market share gained 8.17 percent for the year through April.
Robert Antoshak, managing director at Olah Inc., the company behind denim show Kingpins, said, “I’ve observed a strong interest in U.S. sources of fabric. I’ve been working with a startup, Vidalia Mills, in Louisiana, that’s going to be one of the few sources of premium denim in the United States.”
Vidalia, Antoshak said, is on a path to be begin production of vertical ring spun denim fabric by the fourth quarter of 2019, using 100 percent E3 cotton.
“I think there’s renewed interest in general in this hemisphere,” Antoshak said. “Mexico is always a player… [and] overall, the Western Hemisphere is doing very well in finished goods jeans.”
Imports from Mexico were up 17.44 percent in the year-to-date through April, to $261.23 million in value compared to the year-ago period, OTEXA reported. The threat of tariffs on imports from Mexico, which President Trump dropped on Friday, served to highlight the importance of the country as a key supplier.
Kim Glas, president and CEO of National Council of Textile Organizations (NCTO), said, “The magnitude of the trading relationship with Mexico is significant for the U.S. textile industry, representing $12.2 billion in two-way textile and apparel trade in 2018. The U.S. textile industry alone exported $4.7 billion in yarn and fabrics to Mexico last year and had a net export surplus of $3.8 billion.”
As a result, Mexico is the single largest market for U.S.-made textile exports. Mexico and Canada together are the U.S. textile industry’s two largest export markets worldwide. In 2018, according to NCTO, the U.S. ran a combined $3.8 billion surplus in textiles and apparel with those two North American Free Trade Agreement (NAFTA) trading partners.
“Under the NAFTA agreement, the U.S. has benefited as a result of strong rules of origin that require the use of regional yarns and fabrics,” Glas said. “As a result, the U.S. industry has made significant investment–$22.8 billion from 2006 to 2017–to help grow the manufacturing of fiber, yarns and fabrics in the United States. NCTO supports the passage of the pending U.S.-Mexico-Canada Agreement (USMCA) because it is a critical trade agreement that will strengthen the industry’s supply chain representing approximately $20 billion in three-way trade.”
Levi Strauss & Co., which said it was prepared to mitigate the impact of the tariffs if they had been imposed through various measures, said Mexican production represents approximately 8 percent of its U.S. imports
Antoshak said several Western Hemisphere countries have become important denim apparel suppliers. Nicaragua’s jeans shipments to the U.S. jumped 23.57 percent in the period to $32.38 million, while imports from Guatemala rose 36.58 percent to $10.77 million.
The two countries are part of the Central American Free Trade Agreement (CAFTA), which allows duty-free treatment under certain input stipulations and has boosted exports for U.S. yarn and fabric manufacturers. Jeans imports from the CAFTA countries rose 26 percent to $43.75 million in the first four months of the year compared to the year-ago period.