As COVID-19 started to spread around the world in the first two months of the year and began to reach the U.S. in February, its impact on apparel imports was staggering.
Apparel imports to the U.S. from the world declined 11 percent in February to $5.91 billion compared to the same month last year, according to the Commerce Department’s Office of Textiles & Apparel (OTEXA). Apparel imports from China–still the top supplier but falling fast–plummeted 46 percent in the same comparison to $1.08 billion, OTEXA reported, as the nation’s factories shut down to stem the spread of a coronavirus outbreak that has since become a full-blown pandemic.
China’s shipments to the U.S. have generally been weak since the trade war between the two countries erupted, but not to this degree. Similar or worse numbers are expected for March because, while Chinese factories began to open up, myriad U.S. and European stores shut down, severely diminishing demand.
Among the Top 10 suppliers, there were increases from Asian and Western Hemisphere countries and decreases from others. Second-place supplier Vietnam saw its apparel shipments to the U.S. increase 2.8 percent in February compared to a year earlier to $1.06 billion, while imports from No. 3 Bangladesh rose 4.8 percent to $528.48 million.
According to the annual Kearney U.S. Reshoring Index, U.S. companies in 2019 sourced substantially fewer manufactured goods from 14 traditional Asian trading partners, seemingly as a direct result of aggressive U.S. government trade policies. The ongoing trade war sent the Reshoring Index to a record high in 2019.
Kearney, a global management consulting firm that calculates the index, attributed much of the big 2019 shift to a 17 percent decline in U.S. imports of manufactured goods from China, which has long been the leading choice for offshore production, especially for apparel and footwear. At the same time, manufactured imports from Vietnam and Mexico both increased last year, illustrating that U.S. companies were starting to significantly adapt their sourcing strategies even before the COVID-19 crisis began disrupting global supply chains early in 2020, Kearney said.
“Much of China’s loss was Vietnam’s gain,” said Patrick Van den Bossche, Kearney partner and co-author of the study. “Of the $31 billion in U.S. imports that shifted from China to other Asian LCCs, 46 percent) was absorbed by Vietnam, which exported $14 billion more manufactured goods to the U.S. in 2019 than it did in 2018.”
Looking at year-to-date apparel imports among the other major Asian suppliers, Indonesia’s fell 1.85 percent to $786 million, India’s inched up 0.9 percent to $760 million, Cambodia’s jumped 24.81 percent to $524 million and Pakistan’s dipped 0.04 percent to $238 million.
Among the major Western Hemisphere suppliers, imports from Honduras increased 4.16 percent in the first two months of the year to $376 million and shipments from El Salvador were up 2.9 percent to $271 million. Apparel imports from Mexico, on the other hand, dropped 11.54 percent in the period to $441 million.
In a separate report from the U.S. Census Bureau and Bureau of Economic Analysis, the U.S. trade deficit declined $5.5 billion to $39.9 billion in February. February exports were $207.5 billion, or $800 million less than January exports, and February imports were $247.5 billion, or $6.3 billion less than the prior month.
This reflected a decrease in the goods deficit of $5.9 billion to $61.2 billion and a decline in the services surplus of $400 million to $21.3 billion.
The trade deficit with China decreased $4 billion to $19.7 billion in February. Exports fell $300 million to $7.5 billion and imports declined $4.2 billion to $27.2 billion.