US textile and apparel imports experienced a deep correction in early 2026, but the May rebound reveals a market that is not uniformly shrinking. From January to May, total imports fell to $39.13 billion, down 8.92% year-on-year, with the first quarter dropping 11.6%. After four consecutive months of decline, May imports rose 2.8% to $8.46 billion. This turning point suggests that brand destocking pressures are easing and end-demand remains intact, yet the structural shifts run deeper than surface numbers.
Share Shift: Who Loses, Who Gains
China and India together lost $4.5 billion in import share, exceeding the overall net decline of the US market. Even with a contracting market, the losses are not fully explained by weak demand but rather by deliberate order diversion. ASEAN emerged as the largest beneficiary, with its import share climbing to 20.83%, bolstering the supply chain positions of Vietnam, Cambodia, and Indonesia.
However, this window of opportunity is tightening due to policy. The new US tariff rules effective July 24 impose differentiated tariff tiers on Vietnam, Cambodia, Indonesia, Bangladesh, Pakistan, and India. For an industry with razor-thin margins, higher tariff costs directly alter brand sourcing calculations. Orders once won on cost advantages are now subject to re-evaluation.
Industrial Impact: Cost Pass-Through and Order Reallocation
Tariff differentiation is widening cost gaps among competitors. For instance, Vietnam and Bangladesh fall into different tariff tiers, meaning the landed cost of a garment can differ by several percentage points. Sourcing teams will need to recalculate comprehensive costs—including tariffs, lead times, and compliance risks—potentially triggering a new wave of order reallocation.
For Chinese trading firms, these signals require layered interpretation. Competition in the direct-to-US apparel segment will remain intense; however, as orders shift, opportunities for upstream fabrics, yarns, and accessories are expanding. Many relocated garment factories in Southeast Asia still depend on external supply chains for materials, preserving a niche for Chinese producers. In fact, some companies are already pivoting export structures from finished garments to intermediate goods to mitigate tariff exposure.
Practical Recommendations
For Buyers - Reassess total landed costs across origins, incorporating tariff differences into long-term sourcing models rather than comparing ex-factory prices alone. - For origins like Vietnam and Cambodia under new tariffs, consider negotiating price adjustment mechanisms with suppliers or diversifying orders to lower-tariff countries. - Monitor compliance capabilities of ASEAN factories to avoid additional costs from incorrect certificates of origin or tariff classifications.
For Trading Firms - Strengthen supply of fabrics and accessories to Southeast Asian garment factories, using intermediate goods exports to hedge against declining apparel orders. - Track tariff rule details and adjust HS code declarations for different destinations to minimize misclassification risks. - Enhance compliance, quality, and supply chain responsiveness to retain clients amid intensifying origin competition.
Looking ahead, whether May's rebound translates into sustained recovery depends on US consumption sentiment and brand inventory digestion. But the July tariff rules are the biggest variable, eroding the stable sourcing dividends of Southeast and South Asian origins. The global textile supply chain will not anchor to one region; the combined capabilities of compliance, cost, and supporting industries will dictate future market trajectories.