The European textile and apparel industry, a major contribute to the continent’s manufacturing ecosystem, is grappling with mounting uncertainty following the US' imposition of a 20 per cent tariff on EU textile and clothing exports. The decision, announced in April 2025 as part of a broader reciprocal trade response, has sent shockwaves through a sector already battling rising costs and fierce global competition.

A €7.5 bn trade at risk

The European Union annually exports nearly €7.5 billion worth of textile and clothing products to the US. The newly enforced 20 per cent import duty could translate into an estimated €1.5 billion in additional customs costs, severely eroding the competitiveness of European products in the US market.

“We’re entering dangerous territory,” warned Dirk Vantyghem, Director General of EURATEX (European Apparel and Textile Confederation). “This is not just about tariffs; it's about the ripple effects on jobs, investment, and transatlantic trade cooperation.”

Table: Estimated impact of 20% tariff on EU exports to the US

Metric Value Annual EU textile/apparel exports to U.S. €7.5 billion Imposed U.S. tariff 20% Estimated additional customs duties €1.5 billion Number of European companies affected Over 143,000 (EURATEX)

Losing market share at home and abroad

The tariffs could prompt a rerouting of supply chains globally. With US buyers potentially shifting away from EU suppliers due to higher prices, Asian exporters—many of whom are facing US restrictions—might increasingly target Europe as an alternative outlet for their surplus production. This could result in increased Asian clothing imports into the EU, heightening competition for already strained European manufacturers.

“We’re not just losing market share in the US,” noted an executive at an Italian knitwear brand. “We might also be swamped at home by redirected Asian production.”

Euratex has urged the European Commission to consider safeguard mechanisms to prevent a sudden surge of third-country imports—particularly from China—which could destabilize local industry capacity utilization and employment.

Already a rocky road

Even before the tariffs, the European textile industry was facing formidable structural headwinds. Rising energy costs following geopolitical tensions and supply shocks post-Ukraine war. Compliance with the EU Strategy for Sustainable and Circular Textiles (2022), which mandates eco-design, extended producer responsibility, and recycling obligations. Persistent labor shortage in some regions and lack of investment in digitization was also an issue.

Table: Existing challenges for EU textile sector (pre-tariff)

Challenge Description Energy prices Up by over 25% between 2021–2024 Green compliance costs Estimated at €10–15 billion over 5 years (EURATEX, 2024) U.S. tariffs before April 2025 Ranging from 11% to 32% on various products (e.g., suits, t-shirts, sewing thread) Global competition Increasing from low-cost producers in Asia

Blow to European trade aspirations

For years, European manufacturers and trade bodies had lobbied for zero-duty access and simplified rules of origin in US markets. They envisioned transatlantic trade reforms that would unlock opportunities for small and medium-sized enterprises (SMEs), foster innovation-driven exports, and offer more choices to American consumers. The April 2025 tariffs are seen as a regressive move, undoing years of diplomatic efforts.

“We had hoped for mutual modernization of textile trade rules—not a tit-for-tat tariff war,” said a EURATEX policy advisor. “It undermines predictability, which is essential for long-term sourcing and investment planning.”

Dialogue or decoupling?

Euratex is pushing for urgent bilateral dialogue, cautioning that the situation could escalate into a lose-lose spiral. If retaliations continue, the impact could extend beyond textiles to broader EU-US trade relations, potentially affecting machinery, chemicals, and automotive sectors.

The European Commission is also weighing retaliatory tariffs and incentives for reshoring production or diversifying into untapped markets such as Latin America and Africa. At a recent EU Council briefing, trade ministers emphasized the need to defend strategic sectors like textiles, which employs over 1.3 million people across the EU and is essential to regional economies in Italy, Portugal, Germany, and Eastern Europe.

Table: European textile industry snapshot (2025)

Key Indicator Value Total sector turnover €162 billion (EURATEX, 2024) Total employment 1.3 million Number of SMEs 99% of all textile and clothing firms Top EU exporters to U.S. Italy, Germany, France, Spain Share of exports to U.S. 12% of total extra-EU textile exports

Thus the European textile sector is at a defining crossroads. As the tariff standoff with the US unfolds, the industry must navigate a fine balance between protecting domestic capabilities and maintaining global competitiveness. While calls for dialogue grow louder, there is also a silent shift underway: brands and suppliers are reassessing supply chains, investing in nearshoring options, and exploring trade pacts beyond traditional partners. The hope remains that pragmatism will prevail over protectionism—but for now, uncertainty looms large.