US Fashion Industry Association Survey Finds Buyers Reducing China Exposure, but Not by Much
About 83 percent of respondents to a United States Fashion Industry Association survey say they'll reduce the amount of apparel they source from China in the next two years -- a strong increase from the 67 percent who said they planned to do that last year. But given that only 6.7 percent said their reductions in Chinese sourcing would be significant, it appears that Section 301 -- and the uncertainty of whether more apparel will be affected -- has had somewhat muted effects on the industry.
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Every person who answered the survey buys in China now. More than 80 percent said that the cost of production or buying apparel is rising, and 63 percent explicitly said that Section 301 increased their firms' sourcing cost. "As companies are moving sourcing orders to Bangladesh, Vietnam, and India, the average price of U.S. apparel imports from these countries -- the main alternatives to China -- have all gone up by more than 20 percent" in the first five months of 2019, compared to the same period of 2018, according to the report, which was released July 22.
The report said there's no evidence that firms are moving significant purchases to Central America, Mexico and Haiti in response to the trade war. But more than half of the respondents said NAFTA is important to their business, and they want a seamless transition from NAFTA to the U.S.-Mexico-Canada Agreement. Buyers are using free trade agreements more in 2019, the report said, especially the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) and the initiative under the Caribbean Basin Trade Partnership Act. About 57 percent of respondents said they buy from more than 10 countries.