U.S. trade policy is clearly having an impact on sourcing trends, with China–caught in a trade war with the Trump administration–feeling the heat.
Still the top supplier to the U.S. despite erosion of its numbers and tariffs being levied on goods between the world’s two largest economies, China saw its apparel exports to the U.S. in June decline 0.83% to 4.84 million SME (square meter equivalents), as companies undoubtedly sought to limit their exposure in light of rising tensions. On a dollar basis, apparel imports from China dipped 0.2% to $2.2 billion worth of goods, according to the monthly report from the Commerce Department’s Office of Textiles & Apparel (OTEXA).
China’s combined apparel and textile shipments increase 4.7% in June from a year earlier to 2.89 billion SME. This came as overall apparel and textile good coming into the U.S. increased 3.1% to 5.72 SME in June compared to a year earlier, led by a 5.4% rise in textile shipments to 3.49 billion SME, according to OTEXA. But apparel imports were down 0.3% in the month on a year-to-year basis.
Vietnam, the No. 2 apparel supplier to the U.S. saw its apparel shipments rise 6.6% in value to $970.34 million and were up 2.6% to 303.91 SME. Among other major suppliers, apparel imports from Bangladesh rose 9.9% in value to $481.62 million, while unit volume was up 1.2% to 167.45 million SME. Cambodia’s shipments increased 8.4% in value to $159.29 million and were up 4.5% to 61.13 million SME.
Smaller, but established, suppliers on a growth path included Haiti, El Salvador, the Dominican Republic, Lesotho, Ethiopia, Italy and Maylasia. Even Myanmar more than doubled to $8.72 million worth of goods exported to the U.S., as companies look to diversify their sourcing.
A new benchmark study from the U.S. Fashion Industry Association said, “As the fashion industry becomes more globalized and fast-paced, it is increasingly important for companies to strike a balance between sourcing cost, speed, reliability, flexibility and risk control.”
Most respondents continued to maintain a relatively diverse sourcing base, with 60.7% sourcing from more than 10 countries or regions, up from 57.6% in 2017 and 51.8% in 2016, the study noted. As part of the continuous quest for sourcing diversification, close to 80 percent of respondents said they plan to source from as many, or more, countries in the next two years.
While 100 percent of respondents currently source from China, roughly 67 percent plan to somewhat decrease their sourcing value or volume from the country over the next two years—a significant increase from 46 percent in 2017. In comparison, only 26 percent expect to maintain their current sourcing value or volume from China through 2020, which marks a substantial decrease from 47 percent last year.
OTEXA’s analysis showed that among the Top 10 apparel and textile suppliers that posted year-to-year declines in imports, India’s shipments to the U.S. dropped 3.2% to 423.5 million SME, Mexico’s dipped 1 percent to 224.7 million SME amid ongoing attempts to renegotiate the North American Free Trade Agreement, and Indonesia’s decreased 11.2% to 122.7 million SME.
Top 10 countries with increases in apparel exports to the U.S. were led by South Korea’s 26 percent hike to 174.2 million SME, Vietnam’s 6.3% increase to 425 million SME and Cambodia’s 5.6% gain to 70.1 million SME. Other countries in the group posting increases were Pakistan, up 2.7% to 208.4 million SME; Bangladesh, up 0.5% to 197.4 million SME, and Canada, with 0.2% percent growth to 90.1 million SME.
U.S. exports of apparel and textiles rose 4.33% to $23.18 million in value, with growth in key destinations such as NAFTA partners Mexico and Canada, and Central American Free Trade agreement partners El Salvador, the Dominican Republic, Nicaragua and Guatemala.