In the first five months of 2026, US textile and apparel imports totaled $39.13 billion, down 8.92% year-on-year. Yet beneath the headline decline lies a structural shift: China and India lost a combined $4.5 billion in order share, while ASEAN's import share rose to 20.83%. A rebalancing of the global textile supply chain is underway.
Data Behind the Divergence The decline was not uniform. In Q1, imports fell 11.6% to $21.4 billion, reflecting intense destocking pressure. But May saw a 2.8% year-on-year increase to $8.46 billion, halting four consecutive months of decline. This suggests consumer demand has not collapsed; rather, brands were working through inventories.
More telling is the shift in supply sources. The combined $4.5 billion loss by China and India exceeded the overall market contraction, meaning other suppliers not only filled the gap but also took share. ASEAN emerged as the primary beneficiary, with its share rising to 20.83% from roughly 18% a year earlier, demonstrating strong order-taking capacity.
This shift is not accidental. Over the past two years, US brands have deliberately diversified sourcing away from China toward Southeast Asia, attracted by tariff advantages and lower labor costs. Vietnam, Cambodia, and Indonesia absorbed significant apparel orders. But this window of opportunity is now tightening.
Tariff Rule: A Double-Edged Sword for ASEAN On July 24, a new US tariff rule took effect, affecting Vietnam, Cambodia, Indonesia, Bangladesh, Pakistan, and India. Different countries fall into different tariff tiers, widening cost gaps among competitors. For an industry with razor-thin margins, any tariff increase can directly alter brand sourcing decisions.
ASEAN's cost advantage is being diluted. Brands will reassess the overall value proposition of each origin, potentially triggering another round of order reallocation within the year. Countries with lower tariffs may gain orders, while those with higher tariffs face idle capacity.
For Chinese exporters, this carries dual implications. Direct apparel exports to the US remain under pressure, especially in mid-to-low-end categories. However, order migration does not mean full industrial relocation—many Southeast Asian garment factories still rely heavily on Chinese fabrics, yarns, and accessories. This preserves structural opportunities for Chinese intermediate goods exporters.
Survival Rules in a Reconfigured Supply Chain Whether May's recovery persists depends on US consumer sentiment and brand inventory progress. But the July tariff rule is the biggest variable, ending the stable procurement dividends for Southeast and South Asian origins. Competition among origins will intensify.
Chinese companies should shift focus from lamenting lost apparel orders to strengthening high-value intermediate products such as functional fabrics and differentiated yarns. Additionally, staying attuned to tariff differentials can help clients optimize sourcing structures, transforming suppliers into solution providers.
The global textile supply chain will not anchor to any single region. Compliance capability, cost control, and industrial chain integration will determine each economy's trajectory. For buyers, diversifying risk and flexibly switching origins are key; for exporters, deepening intermediate goods exports and binding to Southeast Asian factory demand may be the most pragmatic path forward.