In the first five months of 2026, US textile and apparel imports fell 8.92% year-on-year to $39.13 billion, but this aggregate decline masks a deeper structural shift: China and India together lost approximately $4.5 billion in procurement share, nearly matching the entire net contraction of the US market. ASEAN's share rose to 20.83%, making it the biggest winner in this adjustment. However, the new tariff policy effective July 24 is casting a shadow over this window of opportunity, potentially triggering another reshuffling of global textile supply chain orders.
Background
US import data shows a clear pattern of decline followed by recovery. In the first quarter, imports fell 11.6% year-on-year to $21.4 billion, but after four consecutive months of decline, May imports rebounded to $8.46 billion, up 2.8% year-on-year, signaling a halt to the downturn. This trend suggests the early-year contraction was more a result of inventory destocking by brands rather than a collapse in final demand—buyers began replenishing after clearing stocks, but the sustainability of the recovery remains uncertain.
On the supply side, the shift in market share is far more pronounced than the aggregate change. China and India together lost $4.5 billion in orders, while ASEAN's share rose to 20.83%, essentially absorbing most of the relocated capacity. Factory utilization rates in Vietnam, Cambodia, and Indonesia have notably improved, with some orders even facing tight scheduling. This is not the first such shift, but its speed and scale are unprecedented, driven by brands' urgent pursuit of supply chain diversification.
Industry Impact
The new tariff is the biggest variable of uncertainty. The policy effective July 24 covers major sourcing countries including Vietnam, Cambodia, Indonesia, Bangladesh, Pakistan, and India, with different tariff tiers widening cost gaps among competitors. The textile industry operates on thin margins, and every percentage point increase in tariffs can alter brand sourcing decisions—some orders may flow back to less-affected origins, while others may shift to lower-tariff countries. A new round of order reallocation is imminent.
For Chinese foreign trade enterprises, this signal has dual implications. On one hand, direct apparel exports to the US will face sustained competitive pressure, especially in mid-to-low-end products squeezed by Southeast Asia. On the other hand, many garment factories relocated to Southeast Asia still rely on external fabric and accessory supplies, preserving an export window for China's upstream industry chain. Data shows that local content ratios in ASEAN countries remain generally low, with strong demand for yarn, grey fabric, and lining materials. Chinese suppliers who can seize this segment may protect profit margins amid order outflows.