China's US apparel share fell to 11.3% in Oct 2025, down from 19.8%

China's dominance of US apparel imports has declined sharply. Data from the Office of Textiles and Apparel (OTEXA) show that China's share of US cotton apparel imports dropped from 19.8 per cent in October 2024 to 11.3 per cent in October 2025, an 8.5 percentage point fall in twelve months. The shift marks the continuation of a multi-year trend but has accelerated in 2025, forcing brands and retailers to reconfigure sourcing strategies that have relied on Chinese manufacturing for decades.

The volume did not vanish. It moved to Vietnam, Bangladesh, India and Central American countries that benefit from preferential trade agreements with the United States. For fashion companies, the reallocation brings immediate procurement challenges but also strategic questions about cost, compliance, speed to market and exposure to future tariff changes. The October 2025 figures offer a clear snapshot of how supply chains are being redrawn in real time.

This analysis examines where the sourcing volume migrated, which competitive factors are driving the shift, what risks remain and what fashion executives should do now to manage a more fragmented and volatile supplier landscape.

Why did China's US apparel share fall so quickly?

Three forces converged. First, tariff uncertainty and additional duties imposed on Chinese goods under Section 301 raised the landed cost of apparel from China, eroding its price advantage. Second, Chinese labour costs have risen steadily over the past decade, narrowing the gap with competitors in South and Southeast Asia. Third, brands faced pressure from investors, regulators and advocacy groups to demonstrate supply chain transparency and diversify country concentration, especially after pandemic-era disruptions highlighted over-reliance on single sources.

The decline did not begin in 2025. China's share of total US apparel imports has been falling for years as brands opened factories in Vietnam, Bangladesh and Cambodia. What changed in 2025 was the pace. The October 2024 to October 2025 drop of 8.5 percentage points in cotton apparel is steeper than the annual declines recorded in previous years, suggesting that brands accelerated plans already in motion and that new tariff threats or compliance requirements tipped the balance.

Where did the sourcing volume go?

Vietnam has been the primary beneficiary. Industry reports and customs data indicate that Vietnam's share of US apparel imports has grown steadily, capturing volume in categories such as knit and woven cotton garments, activewear and casualwear. Bangladesh remains the second-largest supplier of apparel to the US market, particularly for basic wovens and denim, and has expanded capacity in response to brand demand. Central American countries, including Honduras, Nicaragua and El Salvador, benefit from the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), which allows duty-free access for qualifying garments and shortens lead times for US retailers.

India has also increased its share, especially in higher-value categories such as embroidered and printed apparel, home textiles and sustainable fibres. Smaller volumes have shifted to Pakistan, Indonesia and African nations with preferential access under the African Growth and Opportunity Act (AGOA), though capacity constraints and infrastructure gaps limit rapid expansion in these markets.

Which countries are gaining market share in US apparel imports?

Vietnam has emerged as the dominant alternative. According to data from the US International Trade Commission and industry trackers, Vietnam's apparel exports to the United States have grown every year since 2020, and the country now rivals or exceeds China in certain product categories. Vietnamese factories offer competitive pricing, established expertise in synthetic and blended fabrics, and proximity to raw material suppliers in China and elsewhere in Asia.

Bangladesh continues to expand despite infrastructure challenges and past compliance crises. The country's garment sector employs more than four million workers and benefits from duty-free access to the European Union under the Everything But Arms scheme, though it pays standard tariffs to the US. Nonetheless, brands have increased orders for basic knits, t-shirts, trousers and denim because unit costs remain lower than in China.

Central American suppliers have gained share in replenishment-driven categories where lead time matters. CAFTA-DR allows tariff-free entry for garments made from US-origin or regional fabric, and shipping times from Honduras or Nicaragua to the US East Coast can be as short as one week compared with four to six weeks from Asia. Retailers restocking fast-moving basics, seasonal items or promotional goods have shifted volume to these regional suppliers.

What role do tariffs and trade policy play?

Tariffs have been a decisive factor. Section 301 duties, first imposed in 2018 and maintained or adjusted since, added 7.5 to 25 per cent tariffs on many categories of Chinese goods, including apparel and footwear. Even after some exclusions and reductions, the landed cost of Chinese-made garments remained higher than competitors not subject to those duties. Brands responded by diversifying orders, negotiating price concessions from Chinese suppliers or absorbing the cost, but the incentive to shift volume grew stronger as tariff uncertainty persisted.

Trade agreements have shaped the destination of redirected volume. CAFTA-DR, the US-Mexico-Canada Agreement (USMCA) and bilateral accords with countries such as Jordan offer preferential or zero tariffs for qualifying apparel, making those sources more attractive when all-in costs are calculated. Conversely, the absence of a US-Vietnam free trade agreement means Vietnamese apparel still pays standard most-favoured-nation (MFN) tariffs, but the base cost and efficiency advantages have been sufficient to outweigh that burden.

How are fashion brands responding in practice?

Several companies have publicly disclosed sourcing shifts and capacity reallocations. In March 2025, VF Corporation, the parent of brands including Vans, The North Face and Timberland, reported in its fiscal year 2025 earnings that it had reduced its China-sourced finished goods from approximately 20 per cent of total production in fiscal 2023 to less than 15 per cent by the end of fiscal 2025. The company stated that it expanded manufacturing partnerships in Vietnam, Bangladesh and Central America to offset the decline.

In May 2025, Gap Inc. told investors during its first-quarter earnings call that the company had decreased its exposure to China-based suppliers and increased orders from Vietnam and India. Gap noted that the shift required upfront investment in supplier qualification, quality assurance and logistics coordination but expected the changes to reduce tariff exposure and improve supply chain resilience over the medium term.

Nike has also adjusted its sourcing footprint. In the company's fiscal 2025 annual report, published in July 2025, Nike disclosed that Vietnam and Indonesia together accounted for more than half of its global footwear production and a growing share of apparel manufacturing. The company stated that it had reduced reliance on any single country or region and invested in long-term partnerships with factories in multiple markets to manage geopolitical and operational risk.

What are the risks and limitations of shifting sourcing away from China?

China retains significant advantages that competitors struggle to match. Chinese factories offer unparalleled scale, vertical integration, advanced automation and deep expertise across the full range of apparel categories, from basic to technically complex. The ecosystem of fabric mills, trim suppliers, dye houses and finishing plants in regions such as the Pearl River Delta and Yangtze River Delta allows faster sampling, shorter production runs and greater flexibility than many alternative locations.

Lead times can lengthen when production moves to less developed markets. Bangladesh and Cambodia, for example, often lack the local supply of specialised fabrics, zippers or buttons, requiring imports that add days or weeks to the production calendar. Vietnam has built a stronger upstream supply chain but still depends on Chinese yarn and fabric for many categories. Infrastructure bottlenecks, port congestion and power outages in some markets introduce variability that Chinese suppliers have largely eliminated.

Quality control and compliance costs rise with a fragmented supplier base. Brands that once concentrated orders with a handful of large Chinese vendors must now manage dozens of smaller factories in multiple countries, each with different labour laws, environmental standards and audit requirements. The administrative burden and cost of monitoring increase, and the risk of quality lapses or compliance failures grows.

Currency volatility and political instability add uncertainty. The Bangladeshi taka, Vietnamese dong and Central American currencies have all experienced fluctuations against the US dollar, affecting landed costs. Political unrest, regulatory changes or sudden tariff adjustments in any sourcing country can disrupt supply, as brands discovered during protests in Bangladesh and border closures in Myanmar in recent years.

How are Chinese suppliers responding to market share losses?

Chinese manufacturers have pursued several strategies to retain clients and adapt to the new landscape. Some have opened or acquired factories in Vietnam, Cambodia, Bangladesh and other countries, allowing them to offer clients production in multiple locations under unified management. This so-called China-plus-one strategy enables brands to continue working with familiar partners while diversifying the geographic footprint of their orders.

Others have moved up the value chain, focusing on higher-margin categories such as performance fabrics, technical outerwear, premium knitwear and complex construction that require advanced machinery and skilled labour. These segments face less price competition from low-cost markets and play to China's strengths in automation, research and development, and process innovation.

A third response has been to target markets beyond the United States. Chinese apparel exporters have increased sales to the European Union, Japan, Australia and emerging markets in Africa and Latin America, offsetting some of the lost US volume. Domestic consumption in China has also grown, with local brands and e-commerce platforms absorbing capacity previously dedicated to exports.

What does the future hold for US apparel sourcing?

The trajectory is clear. China's share of US apparel imports will likely continue to decline, though the pace may slow as the easiest volume to move has already shifted. Vietnam, Bangladesh and regional suppliers will capture additional share, but growth will eventually hit limits imposed by capacity, infrastructure and labour availability. Automation, digital design and on-demand manufacturing may reduce the importance of labour cost differentials over the next decade, but in the near term, brands will continue to chase the most favourable combination of price, quality, speed and tariff treatment.

Trade policy remains the wild card. Changes in US tariffs, new free trade agreements or geopolitical developments could accelerate or reverse current trends. Fashion executives must monitor legislative and regulatory developments, maintain flexibility in their sourcing networks and plan for multiple scenarios rather than assume the current equilibrium will hold.

The October 2025 OTEXA data confirm that the shift is not hypothetical or distant. It is happening now, and companies that move decisively to understand the new landscape, qualify alternatives and build resilient, diversified supply chains will be better positioned to manage cost, risk and opportunity in the years ahead.

What should fashion companies do now?

1. Audit country concentration risk Map the percentage of total production and critical categories sourced from each country, and identify single points of failure in the supplier network.
2. Qualify alternative suppliers immediately Begin factory audits, sample trials and capacity assessments in Vietnam, Bangladesh, India and Central America, even if current suppliers meet volume and quality needs.
3. Model tariff scenarios and landed cost Build financial models that incorporate current tariffs, potential future duties, freight costs and lead time trade-offs to compare the true all-in cost of each sourcing option.
4. Invest in upstream visibility Map the origin of fabrics, yarns and trims used by all tier-one suppliers to identify hidden exposure to Chinese inputs and ensure compliance with rules of origin.
5. Negotiate flexible terms with suppliers Seek contract clauses that allow volume shifts, shared tariff burdens or price adjustments if duties change, and require suppliers to disclose factory locations and subcontractors.
6. Strengthen quality and compliance systems Increase the frequency of factory audits, invest in third-party inspection services and train internal teams to manage a larger, more complex supplier base.
7. Explore nearshoring for speed-to-market categories Test Central American or Mexican production for replenishment items, basics and seasonal goods where shorter lead times offset higher unit costs and reduce markdown risk.