Asian garment exporters are in a tizzy because of sharp drop in US apparel imports almost 25.35 per cent on a year-on-year basis in the last eight months, after having remained almost constant for the last decade. Although the slight drop from 74.2 per cent in 2020 to 72.8 per cent in 2021 from the ASEAN countries was attributed to the pandemic but is worrying is that the figure is increasing and there is not much change.
Worrying trade stats
During the first 8-month of 2023 from January to August, the US imported apparel worth $15.98 billion, falling massively by around 25.35 per cent on a year-on-year, reveals US trade department Office of Textiles and Apparel (OTEXA) stats. This translates to a value loss of around $5.43 billion in imports in just one year and greatly affects the post-Covid business momentum of 2022 that was picking up. In this $15.98 billion segment, the share of cotton apparels was $6.77 billion of total imported value which dropped 29.51 per cent, while man-made fiber (MMF) apparels saw a 23.41 per cent drop to $8.58 billion during this period.
In August, US textile and apparel imports were around 8.62 billion sq. mt. down 5.7 per cent year-on-year and 4.8 per cent month-on-month. Import value stood at $10.09 billion which is 23.4 per cent year-on-year but still up 0.6 when calculated month-on-month in this review period. However, the accumulated import value was 62.55 billion sq. mt. a cumulative decrease of 17.8 per cent, which was far more than the usual over the last decade.
Reasons for decline
A study on the patterns of US apparel imports by Sheng Lu, Associate Professor, Department of Fashion & Apparel Studies at the University of Delawar identifies, many reasons for the decline. First, is while US apparel imports has gradually recovered, the overall import demand remained weak, with trade volume still experiencing a decrease of approximately 17-18 per cent as compared to 2022. Although the price of US apparel imports is more stabilized, inflation issues still rule the US economy.
Second, due to its seasonal pattern, the market share of some countries has been higher since June. China, ASEAN countries and Bangladesh have over 64 per cent of total US apparel imports in July 2023 which is a notable increase from earlier. The US fashion companies are currently concentrating on expanding their sourcing base to reduce supply chain risks and geopolitical tensions.
Sheng Lu in his analysis says, the third factor for the recent decline is that in spite of an apparent rebound in exports to the US, China has continued to experience a decline in market share mainly due to the adverse business environment which was 3 per cent lower at 24.1 per cent in July this year as compared to 27.2 per cent in July 2022. Fourth reason is, the US apparel imports from CAFTA-DR members of the free trade agreement between the US and a group of smaller developing economies has remained stagnant or worsened with US apparel imports from CAFTA-DR in 2023 being about 20 per cent lower than that of 2022.
However with the Christmas and New Year festivities around the corner, ASEAN garment exporters remain hopeful the recent fall in US textile and apparel imports will smoothen out and the usual trade figures will be back on track again.