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Fashion made possible by global trade

Fashion made possible by global trade

Fashion made possible by global trade

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  • HGI: Sourcing Diversification 2.0: Benchmarking Study Identifies Longer-Term Strategies

    On a 27 July deadline, Hertzmann Global Initiative reports on recent findings from USFIA's Benchmarking Survey 2026 regarding sourcing diversification:

    Lauren Parker | July 27, 2026

    Key Insights

    • Brands are sourcing across more regions while consolidating vendors and taking a more targeted approach to China.
    • With tariffs the new normal, companies are shifting from short-term workarounds to long-term strategies.
    • Flexibility, compliance, traceability and AI are becoming key sourcing differentiators, while nearshoring growth remains constrained by limited investment.

    Diversification is no longer about quantity, but quality.

    U.S. fashion companies are no longer just adding more sourcing countries to spread out risk, but taking a more strategic and nuanced approach to get the right suppliers. These decisions are driven by tariffs, geopolitical uncertainty, compliance requirements and long-term supply chain resilience, and they mark a new approach.

    This shift is illustrated by the findings of the 2026 U.S. Fashion Industry Benchmarking Studybased on a survey of 30 major fashion companies representing an industry cross-section. In a webinar hosted by the United States Fashion Industry Association (USFIA), Dr. Sheng Lu, professor of Fashion and Apparel Studies at the University of Delaware, and Emilie Delaye, graduate instructor, noted a “significant evolution” in sourcing strategy that they call Sourcing Diversification 2.0.

    The report found that U.S. companies are focused on a range of strategies:

    Vendor consolidation

    “Even though companies still maintain a geographically diverse sourcing base, they’re consolidating their existing sourcing base, especially at the vendor level,” Dr. Lu said, describing the approach as “more measured and targeted.”

    Asian countries still dominate the top sourcing destinations, but in-country vendor rates dropped. Meanwhile, non-Asian sourcing regions—notably Guatemala, Egypt and Jordan—gained market share, reflecting a “regional balancing.”

    Mexico and CAFTA-DR aren’t necessarily reaping the rewards, however. Despite tariff and geographic advantages, respondents showed “limited plans to significantly increase sourcing from the Western Hemisphere,” and the region needs “more investment to move beyond T-shirts.” Africa also has headwinds, where the short-term renewal of the African Growth and Opportunity Act (AGOA) has created investment uncertainty.

    Tariff relief

    Ever-evolving tariffshave proven to be the “single most influential challenge” driving Sourcing Diversification 2.0.

    “The impact of tariffs goes far beyond just cost,” Dr. Lu said, and companies are responding differently to tariffs than they did a year ago. Instead of shifting production around to avoid tariffs, they’re leaning in on how to manage this more permanent situation. This includes medium- and long-term strategies like applying for duty refunds, using First Sale programs and restructuring sourcing operations within existing tariff rules.

    Supplier reporting capabilities

    The study also found that sourcing decisions are increasingly shaped by supplier capabilities, not just cost. Flexibility, agility and compliance capabilities have grown in importance as brands navigate expanding traceability, ESG reporting and forced labor requirements. Companies only want to work with the most capable vendor, one who can provide not just a product, but also the data needed to eventually report to a variety of stakeholders.

    “And these vendors definitely need to have this compliance capability,” said Delaye.

    The China factor

    While companies continue pursuing diversified sourcing portfolios, “significantly fewer” respondents now plan to reduce sourcing from China compared with previous years. Dr. Lu, however, cautioned against interpreting this as a return to previous sourcing patterns.

    “I still don’t see brands and retailers planning to substantially move their finished garment sourcing back to China, but China is always relevant,” he said, noting the country’s competitive flexibility, raw materials and vertically integrated production, and low minimum order quantities (MOQs).

    AI solutions

    To help countries navigate all these issues, artificial intelligence is becoming a more important sourcing tool. Survey respondents reported using it for demand forecasting, inventory planning, sustainability tracking, shipping optimization and product development.

    “Sourcing diversification 2.0 is really going to leverage these technologies, and AI is going to play an important part,” Dr. Lu said.

    Looking ahead, the outlook is anything but rosy. More than half of respondents expect sourcing volumes to increase in 2026, but most anticipate only modest growth amid forecasts of essentially flat U.S. apparel retail sales.

    “None of the challenges [the industry] faced last year are gone,” Dr. Lu said. “They’re still there, and somehow have become even worse. Businesses hate uncertainty.”

    Read the full article here. 

  • Modaes: U.S. Restructures Sourcing: China’s Share Drops to 9.7%, Slips to Third Place

    On a 6 August deadline, Modaes reports on recent findings on shifting sourcing trends from USFIA's Benchmarking Survey 2026:

    Pablo Bueno | August 6, 2026

    China continues to lose ground in supplying the U.S. fashion market, but companies are no longer simply shifting production to a single alternative market. U.S. companies are opting for a much broader diversification of their supplier network, incorporating new countries and spreading the risk across a greater number of sources, according to the 2026 Fashion Industry Benchmarking Study conducted by the United States Fashion Industry Association (USFIA) and the University of Delaware.

    The most significant finding of the study is that China’s share of U.S. fashion imports fell to 9.7% by value during the first five months of 2026, down from 16.7% a year earlier. This marks the first time in several decades that China has fallen behind both Vietnam, which holds a 22.2% share, and Bangladesh, with 11.3%. At the same time, only 12% of the companies surveyed now source more than 30% of their supplies from China, compared to 19% in 2025 and 22% in 2024.

    For the first time, China (9.7%) trails Vietnam (22.2%) and Bangladesh (11.3%) as a supplier of fashion to the United States

    However, the report emphasizes that reducing dependence on China no longer means shifting orders to one or two specific countries, as had been the case in previous years. Vietnam and Bangladesh are also losing relative importance among U.S. companies: the percentage of companies that purchase more than 10% of their products from Vietnam has fallen from 76% to 58%, while that from Bangladesh has dropped from 56% to 47%. Instead, new destinations are emerging that are absorbing a growing share of orders, particularly Cambodia and other Asian markets, as part of a much broader regional diversification strategy.

    This trend is also reflected in the number of markets from which U.S. companies source their products. In 2026, respondents reported sourcing from 49 countries, up from 46 a year earlier, while 65% of large companies now source products from ten or more different markets. However, the strategy is also shifting toward greater optimization of existing supply networks, with less interest in adding new suppliers and a greater emphasis on strengthening relationships with strategic partners that provide flexibility, production capacity, and traceability.

    In 2026, orders from U.S. fashion companies to countries such as Cambodia, Guatemala, Egypt, and Jordan have increased

    Although Asia remains the world’s leading manufacturing hub, the study identifies a growing shift toward other markets. Guatemala, Egypt, and Jordan are among the countries seeing the sharpest increase in use by U.S. companies, while the share of imports from regions outside Asia has reached its highest level in more than a decade. In the first five months of 2026, Asia’s share of U.S. fashion imports fell to 70.8%, down from 72.6% the previous year.

    Despite this decline in prominence, China retains competitive advantages that make it difficult for international companies to completely abandon the country. The report notes that many companies believe they have already achieved their desired level of exposure to China and are now focusing their efforts on optimizing their overall supply chain. Respondents continue to particularly value China’s cost competitiveness, production flexibility, ability to handle small minimum order quantities, and the high degree of vertical integration in its textile industry.

    In 2026, Asia will continue to account for nearly 71% of U.S. fashion imports, down from 73% in 2025

    According to the study, the ongoing process of decoupling from China is driven less and less by economic factors and more by geopolitical, regulatory, and compliance issues. Trade uncertainty, the risk of new U.S. restrictions, and concerns related to forced labor are emerging as the main factors redefining the global supply chain landscape for the fashion industry.

    Who Benefits from the U.S.’s New Sourcing Strategy? The gradual shift of orders away from China is not benefiting a single country, but rather an increasingly broad group of markets. The USFIA study identifies Cambodia as one of the main beneficiaries of this trend, consolidating its position as an alternative for labor-intensive apparel manufacturing. Alongside Cambodia, Guatemala, Egypt, and Jordan are seeing growing interest from U.S. companies, driven both by their trade agreements with the United States and by the pursuit of greater geographic diversification.

    The report also highlights the growing appeal of the countries that are part of the CAFTA-DR agreement (the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua), which are gaining prominence due to their proximity to the U.S. market and the tariff advantages they offer. For many companies, these markets allow them to reduce lead times and diversify risks without relying exclusively on Asia—a strategy that is gaining importance in a context marked by trade and geopolitical uncertainty.

    Read the full article here. 

  • Modaes: US Fashion Resists Tariff Hikes: Only 10% Boosts Local Output

    On a 19 August deadline, Modaes reports on recent findings on the effects of tariff hikes on local output from USFIA's Benchmarking Survey 2026:

    Pablo Bueno | August 19, 2026

    Tariffs are shaping the strategies of U.S. companies, but the return of production to the United States remains minimal. They are hurting the bottom line for 85% of companies, and 74% are facing higher procurement costs.

    U.S. tariffs are not leading to a massive return of fashion production to the country. Only 10% of U.S. companies surveyed by the United States Fashion Industry Association (USFIA) report that they have increased their sourcing of “Made in USA” products in response to the tariff hikes. This finding reinforces one of the main conclusions of the 13th edition of the Fashion Industry Benchmarking Study: protectionism is disrupting supply chains, but it is not leading to a significant reshoring trend.

    The impact of tariffs, however, is directly affecting companies’ bottom lines. Eighty-five percent of respondents say that tariff increases have harmed their companies’ finances, up from 78% the previous year, while 74% report having incurred higher procurement costs as a result, up from 72% in 2025. The study also notes that various research studies estimate that the decline in annual gross margins for U.S. fashion companies since 2025—due to increased tariffs and sourcing costs—ranges from 120 to 360 basis points.

    Companies’ strategy is thus shifting toward managing the impact of tariffs rather than moving manufacturing to the United States. Among the main responses are applying for tariff refunds, using the “first sale” doctrine, renegotiating contracts with suppliers, and diversifying sourcing. At the same time, more than half of respondents say that tariffs have reduced the resources available for other areas considered critical, such as sustainability and product innovation, compared to 39% in 2025.

    56% of the companies surveyed by USFIA report sourcing from the United States in 2026, compared to 40% in 2025 and 2024

    There is an increase in domestic sourcing, but the study itself qualifies its scope. 56% of the companies surveyed report sourcing from the United States in 2026, compared to 40% in 2025 and 2024. However, all of these companies also purchase from more than ten countries, and U.S. products account for less than 10% of their total procurement volume or value. USFIA concludes that the increase in domestic sourcing should be interpreted as one component of a diversification strategy, rather than as a substitute for imports or a return of production to the country.

    Nor is this trend limited to the United States. Companies are maintaining a geographically diversified network while focusing their relationships on strategic suppliers capable of offering flexibility, production capacity, and regulatory compliance. In 2026, the companies participating in the study report sourcing from 49 countries, up from 46 in 2025, and 65% of companies with more than 1,000 employees purchase from at least ten markets.

    Rather than moving production to the U.S., companies are managing tariffs by requesting refunds, renegotiating contracts, and diversifying their suppliers

    As part of this strategy, nearshoring and the Western Hemisphere are gaining ground, although they still face limitations compared to Asia. Seventy-six percent of respondents report sourcing from CAFTA-DR countries (up from 64% in 2025), and the percentage sourcing more than 10% of their products from this region has risen from 14% to 24%. The advantages of geographic proximity, lower compliance risk, and trade agreements partially offset higher sourcing costs and reduced production flexibility.

    The shift in strategy also reflects the fact that companies have stopped simply seeking new countries to replace previous ones. The report notes that, looking ahead to the next two years, U.S. companies plan to place greater emphasis on supplier consolidation, strategic alliances, and operational resilience than on continuing to expand the number of markets and suppliers. The goal is to maintain geographic diversity while working more closely with partners considered strategic.

    Tariff policy remains, in fact, the primary business challenge for the U.S. fashion sector in 2026. And companies do not appear to view increased trade protection as the solution to their competitiveness issues: 100% of respondents support exempting textile and fashion products from new tariff increases, as well as maintaining the United States-Mexico-Canada Agreement (USMCA) and establishing incentives to boost textile and apparel production in the Western Hemisphere.

    Read the full article here. 

  • Taiwan Textile Federation: Tariffs and trade policies are the most pressing issues for fashion sourcing executives in 2026.

    On a 23 July deadline, the Taiwan Textile Federation highlights USFIA's 2026 Benchmarking Study:

    July 23, 2026

    The following is translated into English via Google Translate from the original source. 

    According to the 13th Annual Fashion Industry Benchmarking Study 2026 released by the U.S. Fashion Industry Association (USFIA), amid continued volatility in the global trade environment, U.S. fashion companies are accelerating adjustments to their procurement strategies to cope with the impact of tariffs, including renegotiating contract terms with suppliers, diversifying their sourcing sources, and strengthening supply chain resilience.

    The report points out that although trade policy remains the most pressing issue for fashion industry executives in 2026, many companies have gradually shifted from short-term crisis response to long-term supply chain planning, focusing on supply chain optimization, compliance building, and operational resilience enhancement to cope with the increasingly complex global economic and trade environment.

    This study was conducted by Professor Sheng Lu and Research Assistant Emily Delaye of the Department of Fashion and Apparel Studies at the University of Delaware. The survey was from April to June of this year 2026, and interviewed senior executives of 30 major fashion brands retailers importers and wholesalers in the United States.

    The survey results show that 92% of the surveyed companies believe that protectionist trade policies and related policy uncertainties (including tariff shocks) are one of the two most pressing challenges facing companies this year, followed by inflation and the overall economic outlook in the United States.

    Among the overall operational risks faced by businesses, geopolitical management ranked fifth. Respondents pointed out that ongoing or emerging geopolitical tensions, such as the Russia-Ukraine war, Middle East conflicts, and U.S.-China relations are increasingly affecting global procurement, logistics, and business operations; among them, the U.S.-Iran conflict was listed as one of the major sources of risk that could disrupt the garment supply chain this year.

    Compared to 2025, businesses are significantly more concerned about several challenges this year. Among them, rising production or procurement costs has jumped to the third largest challenge, while foreign protectionist trade policies and policy uncertainty continues to rank high. In addition, the importance of addressing the risk of forced labor has also increased significantly, rising four places from last year, indicating that businesses are paying increasing attention to supply chain compliance requirements.

    Regarding the actual impact of U.S. tariff policies, more companies reported a negative impact on their financial performance compared to a year ago, not only increasing procurement costs but also reducing resources invested in sustainable development and product innovation. However, companies are also actively taking various countermeasures, including applying for tariff refunds, renegotiating supplier contract terms, and accelerating the diversification of procurement sources to mitigate the impact of tariffs.

    USFIA President Julia Hughes stated that it is “not surprising” that trade policy and tariffs have become the most pressing issues for businesses this year. She pointed out that the biggest difference this year is that Brands and retailers are shifting their strategies for dealing with tariffs and trade uncertainty, with successful sourcing models moving from an emphasis on “diversification” to “consolidation.”

    Qu stated that as tariff challenges will continue to impact corporate costs and supply stability in the foreseeable future, companies are committed to maintaining a diversified geographical sourcing layout integrating their sourcing networks and establishing closer, long-term partnerships with overseas strategic partners who possess sourcing flexibility and strong legal compliance capabilities.

    Julia Hughes further pointed out that fashion brands and retailers generally believe that the Trump administration's tariff policies have had a direct and significant negative impact on their business operations, including impacts on financial performance, increased procurement costs, and reduced resources available for new products development and innovation. She stated that compared to the past focus on “avoiding” tariffs, companies are now more inclined to manage tariff costs through diversified strategies, with the primary measure being applying for carefree funds under the international emergency economic Powers Act (IEEPA).

    Furthermore, the United States has continued to escalate its tariff measures recently. On July 15th, the office of the United States trade representative announced a 25% tariff on Footwear imported from Brazil; meanwhile, on July 20th, president Trump announced a 50% tariff on Canadian imports (including apparel and textiles), indicating that the United States protectionist trade policies are continuing to intensify, and the global fashion supply chain will continue to face greater uncertainty and adjustment pressure in the future.

    Read the full article here

About

The United States Fashion Industry Association (USFIA) is dedicated to fashion made possible by global trade.

USFIA represents brands, retailers, importers, and wholesalers based in the United States and doing business globally. Founded in 1989, USFIA works to eliminate tariff and non-tariff barriers that impede the fashion industry’s ability to trade freely and create jobs in the United States.

Headquartered in Washington, DC, USFIA is the voice of the fashion industry in front of the U.S. government as well as international governments and stakeholders.  With constant, two-way communication, USFIA staff and counsel serve as the eyes and ears of our members in Washington and around the world, enabling them to stay ahead of the regulatory challenges of today and tomorrow. Through our publications, educational events, and networking opportunities, USFIA also connects with key stakeholders across the value chain including U.S. and international service providers, suppliers, and industry groups.

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News

The State of Tariffs

President Trump has made sweeping changes to U.S. tariffs since he began his second term in January 2025. From the Liberation Day tariffs to the various Section 122 and 301 investigations and tariffs, U.S. trade has shifted more in the past year than almost anytime in history. USFIA is pleased to provide the following resources to those wanting to learn more about the state of tariffs in 2026.

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10
Current baseline tariff on all trading partners

Imposed under Section 122, these temporary tariffs are set to expire on July 24, 2026.

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60
Countries threatened with Section 301 forced labor tariffs

A new 10% or 12.5% tariff on 60 U.S. trading partners under USTR's Section 301 forced labor investigation.

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121.7
in potential and certified refunds accepted in CAPE

CBP has accepted over a hundred billion in potentials and certified refunds since opening CAPE as of July 10, 2026.

Read our latest stories on tariffs

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Reports

2026 USFIA Fashion Industry Benchmarking Study

The 2026 USFIA Fashion Industry Benchmarking study is now available to the public! Key findings from the report include:

  • The top business challenges facing U.S. fashion companies continue to center on the Trump Administration’s tariff policies, though concerns over inflation and increasing costs have also risen since 2025. 
  • 92% of respondents rated “Protectionist U.S. trade policies and related policy uncertainty, including the impact of the Trump tariffs” as one of their top two business challenges in 2026.
  • Among business concerns, managing forced-labor risks emerged as a significantly higher priority, rising from tenth place in 2025 to sixth place in 2026 and illustrating the industry's commitment to eradicating forced labor from their supply chains.
  • The job market is a bright spot. About 87% of companies plan to increase hiring over the next five years, up from last year and tying the highest level since the pandemic. Demand is expected to be strongest for data scientists, trade compliance specialists, and environmental sustainability specialists
  • AI is becoming increasingly integrated into apparel sourcing and business operations. 56% utilize AI for "demand forecasting and inventory planning," while 50% use it for "sustainability tracking," "risk management" and “sourcing strategy and cost optimization.”

Download the 2026 study here.

If you're interested in sharing your company's perspective for our 2027 study, fill out the interest form.

 Benchmarking 2026 top business challenges

Higher tariffs continue to trigger ripple effects across supply chains.

Figure 1-3 U.S. fashion companies reported deepened economic impacts of tariff hikes and policy uncertainties on their sourcing and business operations

Figure 1-4 U.S. fashion companies explored various methods to mitigate the evolving impacts of tariff hikes and policy uncertainties

 

Trends to watch: 

AI use could become increasingly prevalent in apparel sourcing as companies seek new technologies to improve operational efficiency and navigate a more complex, uncertain sourcing environment.Figure 2-24 AI is increasingly integrated into apparel sourcing and business operations

 

2026 Sourcing Trends & Outlook

USFIA's 2026 Sourcing Trends & Outlook is out with data from the full year of 2025. Members can log-in to the website to download it here. 

This is the thirteenth USFIA Sourcing Trends & Outlook Report, our annual look at the sourcing landscape for the fashion industry. 2025 will be remembered as the year of the Trump tariffs. U.S. imports fell as brands and retailers had to navigate a new level of uncertainty for sourcing and for costs. The reciprocal tariffs affected all countries, except for USMCA-qualifying production from Canada and Mexico.

As we look ahead to 2026, there still is a lot of uncertainty. The reciprocal tariffs were struck down by the Supreme Court, but the Trump Administration still is committed to impose tariffs above the MFN rates. The global tariffs imposed under Section 122 expire on July 24th and Administration officials say they will use other trade laws such as Section 301 and Section 232 to authorize more tariffs.

Even with the tariff disruptions, some of the major sourcing trends remain the same as in recent years. Asian suppliers continue to dominate apparel sourcing. The top seven apparel suppliers are China, Vietnam, Bangladesh, Cambodia, India, Indonesia, and Pakistan, and they ship 78% of apparel imports.

The top 5 sourcing trends in the report are:

  1. Asian apparel suppliers continue to dominate sourcing.
  2. China maintains its role as the top apparel supplier by quantity, and Vietnam is the top supplier by value.
  3. Average unit values for textiles and apparel imports had only modest increases.
  4. Some of the fastest growth in 2025 comes from major apparel suppliers.
  5. Despite tariff disruptions, FTAs and preference programs remain underutilized. CAFTA remains the major duty-free supplier.

 

While U.S. apparel imports decreased from many suppliers, there still are some clear winners from the tariff disruptions. Five of the top ten suppliers had double digit increases. Some of the fastest-growing suppliers are Asian-based apparel industries that took market share from China.

sourcing2026 fastest growing apparel suppliers

 

sourcing2026 applied tariff rates

Chart courtesy of Dr. Sheng Lu, Professor in the Department of Fashion and Apparel Studies, University of Delaware.

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