The USFIA Fashion Benchmark Study 2026 was based on a survey of executives from 30 leading US fashion companies from April to June 2026. The study incorporated a balanced mix of respondents representing various business types in the US fashion industry.
This year’s survey found that in 2026, US fashion companies continue to operate in a highly uncertain business environment shaped by elevated tariffs, rising sourcing costs, geopolitical tensions, and increasingly complex regulatory requirements.
But compared with 2025, respondents looked to be moving beyond short-term crisis response and are instead increasingly adopting longer-term strategies focused on supply chain optimisation, compliance capabilities, and operational resilience.
Here are the four trends to watch over the next two years.
1. Optimising supply chain networks
There won’t be any dramatic swings in sourcing; instead, there will be a quiet reshuffling and strengthening of existing supplier networks. Over the next two years, the priority will be greater emphasis on supplier consolidation, strategic partnerships, and improving operational resilience, rather than simply expanding into additional sourcing countries or increasing the number of suppliers or vendors.
The survey shows only 21.1% of respondents plan to source apparel from more countries through 2027, down sharply from 58.8% in the 2025 survey. Likewise, only about 26.3% plan to source from more suppliers or vendors, also down from 41.2% in 2025. By comparison, nearly half of respondents (47.4%) plan to source from fewer suppliers or vendors over the next two years, almost three times the share reported in the 2025 survey (17.6%).
2. Regional balancing strategy over broad expansion
Buyers are concentrating sourcing across several countries in a region, particularly those outside Asia. Every company surveyed, on average, planned to increase apparel sourcing value or volume from about four countries over the next two years, down from five countries in the 2025 survey. This result again signals that while US fashion companies are not reversing sourcing diversification, the expansion has entered a more targeted and measured phase.
The specific countries that respondents planned to increase sourcing from also shifted, and “rising stars” were no longer concentrated in Asia. In 2026, Indonesia (53.3%), Bangladesh (46.7%), and Guatemala (40.0%) were the three most-cited destinations for increased apparel sourcing over the next two years. This is a noticeable reshuffle compared with previous years, when Asian countries consistently topped the list.
Likewise, about one-third of respondents planned to increase sourcing from Mexico, Egypt, and Honduras, the same share as those planning to expand sourcing from Vietnam, India, and Pakistan. These results suggest that regional rebalancing, rather than a continued concentration on Asia, is emerging as a more prominent trend in the sourcing strategies of US fashion companies.
There is no clear evidence that US fashion companies have fundamentally shifted away from their strategy of “reducing China exposure” or “de-risking”. But the survey results indicate US apparel sourcing from China could become relatively more stable over the next two years. Notably, the share of respondents planning to reduce sourcing from the country declined sharply from more than 80% in 2024 and 2025 to 40% this year.
Meanwhile, about 20% of respondents planned to increase sourcing from China, up from just 6% in 2025. One possible explanation was that many leading US fashion companies have already substantially reduced their reliance on China, leaving China’s sourcing share at a historical low as of 2026. As a result, some companies may now be seeking to rebalance their sourcing portfolios, particularly those that view China as a strategically important sales market.
Another possible explanation is that companies are placing greater emphasis on sourcing flexibility and agility, areas in which China continues to offer significant competitive advantages with no perfect alternatives. Consistent with this view, US fashion companies’ sourcing of apparel from China appeared to remain highly responsive to shifts in market conditions. For example, after several consecutive months of significant decline, US apparel imports from China suddenly rebounded by 18.1% in May 2026, well above the 2% world average
3. Western Hemisphere shows promise, but it’s limited
US apparel sourcing from the Western Hemisphere has promising growth potential but persistent bottlenecks, such as limited product diversification, may continue to constrain further expansion.
Despite US fashion companies expressing interest in expanding nearshoring from the Western Hemisphere, the region’s share of US apparel imports, including CAFTA-DR members and Mexico, has remained largely stagnant over the past decade. Notably, despite enjoying a 20–35 percentage-point tariff advantage over many competing suppliers since 2025, the region has not achieved a meaningful increase in its share of US apparel imports, whether measured by value or quantity.
Notably, over the next 2–3 years, surveyed US fashion companies planned to continue concentrating their apparel sourcing from the Western Hemisphere in a relatively narrow range of product categories.
For imports from CAFTA-DR countries, the most frequently cited categories included T-shirts (67%), activewear and athleisure (33%), and bottoms (27%). For imports from Mexico, the leading categories were T-shirts (47%) and bottoms (20%). In contrast, few respondents plan to expand sourcing of higher-value or more complex products, such as dresses, outerwear, and sweaters, from the region. This pattern was consistent with findings from previous surveys and suggested that limited product diversification remained a major constraint on the future growth of US apparel sourcing from the Western Hemisphere. Industry stakeholders attributed this challenge to the region’s limited textile manufacturing capacity and the restricted flexibility to use non-originating textile inputs under existing CAFTA-DR and USMCA apparel rules of origin.
Most respondents (over 65%) further indicated that access to duty-free benefits was among the most important incentives for sourcing apparel from CAFTA-DR members and Mexico. This finding underscores that exempting CAFTA-DR and USMCA-qualified apparel products from additional tariffs imposed by the Trump administration and avoiding policy uncertainty will be essential to supporting US fashion companies’ nearshoring efforts under the current business environment. Meanwhile, consistent with the region’s revealed competitiveness, respondents identified speed to market as a critical advantage of sourcing from CAFTA-DR members and Mexico. In addition, approximately a quarter of respondents cited lower geopolitical risks as another important incentive. By comparison, the region’s sustainability and compliance advantages have not yet emerged as major drivers of sourcing.
4. AI to be instrumental in apparel sourcing
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.
AI tools and their applications have already been integrated into US fashion companies’ apparel sourcing and various business operations. On average, each surveyed company reported using AI for three different areas. The most frequently cited AI use was “demand forecasting and inventory planning” (56.3%), followed by “sustainability tracking, risk management,” “risk management” and “sourcing strategy and cost optimisation” (50.0% each).
Meanwhile, 43.8% of respondents reported using AI to support customs, trade compliance, and tariff optimisation, reflecting the growing importance of managing an increasingly complex global trade environment. As AI technologies continue to advance quickly, they are likely to play an even more significant role in helping US fashion companies improve supply chain visibility, optimise sourcing decisions, strengthen supplier management, and enhance supply chain resilience.
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