US apparel companies are increasingly looking away from China and sourcing from countries such as Vietnam, India, Bangladesh and Indonesia. Vietnam is the biggest beneficiary of changed sourcing. Bangladesh remains the most popular sourcing destination, but continues to face major challenges. It has to compete with other leading suppliers in the region, particularly Vietnam, India and Indonesia.

For the Trans-Pacific Partnership (TPP), the US apparel industry is seen as a critical stakeholder. Many US apparel companies source from Vietnam, Peru, Mexico and Malaysia and expect TPP’s implementation to impact business practices. They are likely to source more textiles and apparel from TPP partners following the implementation of the agreement, or strategically adjust or redesign their supply chain based on TPP.

The one sticking point, however, is the restrictive rules in the agreement, which companies believe could limit its potential. They want the short-supply list to be expanded. The proposed yarn-forward rule of origin is also cited as a major hurdle to the industry realising real benefits from TPP.

US fashion companies are continuing to express interest in expanding sourcing in the US over the next two years as they diversify their sourcing. However, there is no evidence companies are actually shifting their business models back to manufacturing.