Sharp decline of US apparel imports in Q2 2023 weighs on multiple Asian countries

In the second quarter of 2023, the apparel imports of the United States dropped by 29%, consistent with the decline in the previous two quarters. The contraction in import value was even more pronounced, with a decline of 26.5% following drops of 8.4% and 19.7% in the previous two quarters.

The situation in the United States aligns with the rest of the world, as the apparel industry is forecasted to shrink by 30% in 2023. The global market size of apparel was $640 billion in 2022 and is expected to decrease to $192 billion by the end of this year.

Another factor impacting apparel imports in the United States is the prohibition of apparel related to cotton production in Xinjiang of China. By 2023, nearly 61% of fashion companies stated that they no longer considered China as their primary supplier, marking a significant change compared to around a quarter of respondents before the pandemic. Around 80% of respondents stated that they planned to reduce apparel procurement from China in the next two years.

Looking at import value, the US imports from China in the second quarter plummeted by 23%. China is the world's largest apparel supplier, and although Vietnam has benefited from the US-China trade tensions, its exports to the US also decreased significantly by 29% compared to the same period last year.

Moreover, compared to five years ago, the US apparel imports from China have still decreased by 30%, partially due to the deflationary trend slowing down unit price growth. In contrast, imports from Vietnam and India increased by 18%, Bangladesh by 26%, and Cambodia by 40%.

Currently, Vietnam ranks as the second-largest apparel supplier after China, followed by Bangladesh, India, Cambodia, and Indonesia. As the current situation indicates, these countries also face ongoing challenging prospects in the ready-made garment industry.

Data shows that in the second quarter of this year, US apparel imports from Bangladesh decreased by 33%, from India by 30%, from Indonesia by 40%, and from Cambodia by 32%. Imports from Mexico were supported by near-shore outsourcing, resulting in a milder decline of 12%. However, imports under the Central America Free Trade Agreement decreased by 23%.

The United States is the second-largest export destination for ready-made garments from Bangladesh. According to OTEXA data, Bangladesh earned $4.09 billion in revenue from exporting apparel to the United States between January and May 2022, but the revenue dropped to $3.3 billion during the same period this year.

Similarly, data from India also shows negative growth. India's exports of ready-made garments to the United States decreased from $4.78 billion in January-June 2022 to $4.23 billion in January-June 2023, marking an 11.36% decline.