In the first five months of 2026, US textile and apparel imports fell 8.92% year-on-year to $39.13 billion, but beneath the overall contraction lies a dramatic shift in market share. China and India together lost about $4.5 billion in orders, while ASEAN's share climbed to 20.83%. This contrast signals that US procurement logic has shifted from volume expansion to structural rebalancing, redrawing the supplier landscape.
Signals Behind the Data
Imports in Q1 dropped 11.6% to $21.4 billion, with four consecutive months of decline. However, May saw a 2.8% rebound to $8.46 billion. This 'decline-then-rebound' curve is not a sign of end-demand recovery but rather the tail end of brand destocking. For domestic suppliers, this means deferred orders may gradually release, but the competitive focus has shifted from grabbing capacity to securing cost advantages under new compliance rules.
The combined $4.5 billion loss for China and India nearly equals the net decline of the entire US market, indicating that orders are not disappearing but flowing to ASEAN. Vietnam, Cambodia, and Indonesia have benefited directly from brands' 'China+1' strategies. Yet this window of opportunity is now facing policy headwinds, as new US tariff rules effective July 24 will directly impact these major sourcing destinations.
Tariff-Driven Differentiation
The new tariffs impose differentiated rates across countries, leading to cost stratification within Southeast Asia. Countries that previously relied on low tariffs to secure orders may lose competitiveness if rates rise, while those with lower rates could attract more diverted orders. This differentiation will force brands to reassess the total landed cost of each source, including logistics, compliance, and supply chain capabilities.
For an industry with razor-thin margins, higher tariff costs can directly undermine sourcing decisions. Brands may accelerate 'supplier diversification' or even consider nearshoring. Notably, most Southeast Asian garment factories still rely on imported fabrics and accessories, which preserves a channel for Chinese intermediate goods. Fabric, yarn, and other upstream products may achieve 'indirect exports' to ASEAN even as garment orders shift away.
Implications for China's Supply Chain
Direct garment exports to the US will face sustained pressure, but opportunities are emerging upstream. Chinese fabric suppliers can expand sales to Vietnam, Cambodia, and other countries by leveraging the expansion of Southeast Asian garment capacity. Meanwhile, the tariff uncertainty may prompt some brands to return high-value orders to China to avoid risks. Therefore, domestic companies should focus on product upgrading rather than merely chasing order volumes.
Whether May's rebound turns into sustained recovery depends on US consumer sentiment and brand inventory digestion. The July tariff rules will be the biggest variable in the second half. Competition among sourcing countries will intensify, and compliance capability, cost control, and supply chain responsiveness will collectively determine future market trajectories.