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Fitch Solutions Macro Research, a research branch of rating agency Fitch Solutions, recently published a report that the tension in U.S. -China trade has made the procurement risk of fashion industry more and more obvious. American apparel companies have begun to implement strategies to reduce dependence on China and expand production supply chains to Southeast Asia and other places. Vietnam's apparel manufacturing industry will be the main beneficiaries.
According to the report, China is the main source of supply for clothing and footwear products in the United States. Last year, 38% of clothing and footwear products were imported from China by the United States. However, this proportion has been gradually declining since 2010, when almost half of the clothing and footwear products imported from China in the United States (48%) and the rising wages in China were the main reason for the decrease in China's imports. The US-China trade war is accelerating this trend. Data for the first quarter of this year show that U.S. imports of clothing and footwear products from China fell by 1% annually, accounting for 34.5%.
Earlier this month, President Trump suddenly announced that he would impose a 10% tariff on the remaining $300 billion (including clothing and footwear) of Chinese goods on September 1, but he also looked forward to continuing active dialogue with China on trade issues.
Fitch reported that in recent years, major clothing retailers in the United States have gradually reduced their dependence on China's supply chain, which is more urgent as trade risks become more apparent.
In response to the threat of a 10% tariff increase and further tariff increases in the United States, it is expected that U.S. fashion retailers will reconsider their purchasing channels, which may further reduce Chinese imports and accelerate diversified purchases, the report said. For example, U.S. sports brand Under Armour (UAA.N) had previously said it planned to reduce the proportion of Chinese purchases from 18% in 2018 to 7% in 2023, and American casual wear brand Gap Inc (GPS.N) from 25% in 2016 to 21% in 2019.
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