What U.S. Trade Data Says About Sourcing From China

Jasmin Malik Chua
·5 min read

Almost two years after the Uyghur Forced Labor Prevention Act, or UFLPA, took effect in the United States, its impact on trade patterns is palpable, new research has found.

It’s not just China that cotton-sourcing companies are swerving, either, said Sheng Lu, associate professor of fashion and apparel studies at the University of Delaware, but Asia in its entirety.

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Only 71.6 percent of U.S. apparel imports hailed from Asia in 2023, the lowest in five years, according to data from the International Trade Administration’s Office of Textiles and Apparel, better known as OTEXA. The number dovetails with the results of a U.S. Fashion Industry Association benchmarking survey, which revealed in July brands and retailers’ overwhelming desire to diversify their sourcing away from the continent amid increasing geopolitical strain, particularly the increasing economic and national security rivalry between the United States and China.

The same trade data shows a progressive decline in the share of cotton-containing apparel landing on American shores from China, from 26.5 percent in 2018 to 11.8 percent in 2023. Between 2018 and 2022, cotton imports from other Asian countries rose from 47.6 percent to 59.3 percent as companies scrambled for alternatives to China in response to increasing scrutiny over the Xinjiang Uyghur Autonomous Region, which the UFLPA targets with a rebuttable presumption. In 2023, they fell to 58.8 percent—an early sign, Lu said, that enforcement on shipments from neighboring nations such as Vietnam, which has superseded China in rejected shipment value, is having an effect.

He said that China also “deliberately” decreased the percentage of cotton products in its apparel exports to the U.S. market, dropping from nearly 40 percent in 2017 to only 25 percent in 2023. In comparison, cotton apparel consistently represented roughly 45 percent of total apparel imports to the United States during the same period.

There are two trends worth watching in 2024, Lu said. First, with growing calls for bolstering the UFLPA’s enforcement, could U.S. fashion firms “substantially reduce” man-made fiber or other non-cotton apparel imports from China? “Notably, China is also ambitiously expanding the Xinjiang region’s capacity to make polyester and viscose fibers, which are widely used in clothing products,” he said.

Second, other Asian countries may begin or accelerate efforts to shore up local textile industries that are less dependent on China’s raw material supply. These new investments “could also strengthen these countries’ competitiveness in offering sustainable apparel products, including those made from recycled textile materials,” Lu added.

So far, Asia’s contracted market share has not benefited nearshoring in the Western hemisphere “much,” he said. In 2023, some 14.6 percent of U.S. apparel imports originated from United States-Mexico-Canada Agreement and Dominican Republic-Central America Free Trade Agreement members, nearly the same as the 14.3 percent logged in 2022. Instead, U.S. apparel imports from countries outside Asia and the Western hemisphere, including some emerging European and African suppliers such as Turkey, Romania, Morocco and Tunisia, perked up from 9.8 percent in 2022 to 11.4 percent in 2023.

“We could highly expect the sourcing diversification strategy to continue in 2024 as many companies regard the strategy as the most effective to mitigate various market uncertainties and sourcing risks,” Lu said.

But will American companies end up blanking China? No, Lu said. Though shipments from China may no longer make up the bulk of apparel imports for many U.S. fashion companies—trade data shows that they hit a “new low” of 20 percent in value and 25.9 percent in quantity in 2023—the Asian superpower remains highly competitive with its sheer breadth of offerings.

“The export product diversification index…shows that few other countries can match China’s product variety,” Lu said. “Likewise, product-level data collected from industry sources indicates that China offered far more clothing styles, measured in SKUs, than its competitors in 2023.”

Rather than trying to identify one or two “next Chinas,” American brands and retailers appear to be tapping “category killers,” say Vietnam for outerwear and swimwear, India for dresses and Bangladesh for high-volume basic knits.

What else?

Zooming out, U.S. apparel imports suffered the most significant decline since the pandemic in 2023, plunging by 22 percent in quantity and value versus 2022, with none of the top 10 suppliers experiencing positive growth. There was a slight bounceback in December, however, due to the holiday season and some measure of improvement in the U.S. economy. Seasonally adjusted U.S. apparel imports in December 2023 were 4.5 percent or so higher in quantity and 4.2 percent higher in value than the previous month. The Consumer Confidence Index, which saw an uptick from 67.2 in November to 76.4 in December, also suggests that American households were more willing to shell out during this time.

Even so, an International Monetary Fund forecast in January still predicts a throttling of U.S. Gross Domestic Product growth from 2.5 percent in 2023 to 2.1 percent in 2024, meaning that whether American apparel import volumes can continue to maintain growth after the holiday season “remains a big question mark,” Lu said.

2024 could pose another year of financial challenges for many U.S. fashion companies, he said, adding that while the “pace of sourcing cost increases has slowed, the costs and financial pressure facing U.S. fashion companies are far from over.” At 106, the price index of U.S. apparel imports showed no change between January and December 2023.

Coupled with mounting costs due to the Red Sea shipping crisis, which was not reflected in the December price data, and an apparel retail price index that has declined since August, U.S. fashion companies may have to “sacrifice their profits to attract consumers to the stores,” Lu said.

Per J.P. Morgan, during the week of Jan. 25, container shipping rates from China to East and West Coasts saw a “significant spike” of 120 percent and 140 percent from November 2023, respectively. “Even worse, there is no sign that the Red Sea crisis will soon be solved,” Lu added.