The US-China trade tension has led to a significant drop in China’s textile and apparel exports to the US. Overall, US textile and apparel importers are apparently shifting sourcing orders away from China mainly because of concerns over trade tensions rather than their usual business considerations.

Also, China’s export competitiveness is shifting from apparel to textiles. Even before the tariff war, the competitiveness of China’s apparel exports was weakening. In comparison, China is exporting more yarns and fabrics to the US in recent years. Between 2016 and 2018, China’s yarn and fabric exports to the US enjoyed a 13.1 per cent and 2.6 per cent compound annual growth respectively, compared with a 0.6 per cent decline of apparel. The changing product structure of China’s textile and apparel exports to the US also has an impact on trade flows. For example, as estimated, China lost around $20.4 million apparel exports to the US in the first quarter of 2019 because the sourcing orders shifted towards those product categories with relatively lower market growth. In comparison, the commodity structural effect has favored China’s made-up textile exports to the US market, resulting in more exports in the first quarter of 2019 than otherwise.