The fact that the American economy is in a state of flux resulting in a drop in citizens’ confidence in economic stability in 2023 is perhaps the main reason why American consumers are being forced to prioritize their spending. They are trying to shore their disposable income for rainy days. And this has impacted both apparel retail sales and import of clothes. 

The fashion industry’s sales are on a roller-coaster ride. This in turn has led them to be cautious about import orders for fear of clogged inventories. As per stats between January and April 2023, the US imported $25.21 billion worth of garment from around the world, 22.15 per cent lower than same period last year when the figure was $32.39 billion.  

Survey indicates lower orders to continue

In fact, the import scenario is likely to continue for some time. The United States Fashion Industry Association conducted a survey between April and June 2023 amongst 30 leading fashion companies, most of whom are sizeable as they have over a thousand employees. While the new economic scenario according to governmental statistics showed last year inflation rate was 9.1 per cent, in late April 2023 it dropped to 4.9 per cent however, customer confidence hasn’t returned, said the 30 brands who participated in the survey. 

This indicates the chances of them increasing orders are slim this year. The 2023 fashion industry benchmarking study found inflation and the economic outlook in the US was now the top concern of respondents. Further, bad news for Asian garment exporters is that only 50 per cent respondents said they ‘might’ consider increasing their sourcing value compared to 90 per cent in 2022. 

The situation in the US is in keeping with the rest of the world as globally, the garment sector is predicted to shrink by 30 per cent in 2023 -- the global market size of apparel was $640 billion in 2022, which is expected to drop to $192 billion by the end of this year.

China loses to fellow Asian suppliers

The other factor affecting American garment imports is the US ban on garments associated with Xianjiang cotton. Almost 61 per cent of survey respondents no longer use China as their top supplier in 2023, a major shift from about quarter of those surveyed before the pandemic. Some 80 per cent said they plan to reduce apparel sourcing from China over the next two years. 

Currently, Vietnam is the next most utilized supplier after China, followed by Bangladesh, India, Cambodia and Indonesia. Garment exports from China, the largest clothing supplier worldwide, to the US declined 32.45 per cent to $4.52 billion in January-April of this year compared to the corresponding period last year, reveals OTEXA stats. Although Vietnam gained from the Sino-US standoff, it too experienced a huge exports decline to the US almost 27.33 per cent to $4.37billion in January-April period of current year compared to the same period last year.

Bangladesh and India feel the heat

The US is Bangladesh’s second largest RMG export destination and as the current scenario indicates, Bangladesh is facing a continuous uphill challenge in the RMG sector. According to OTEXA, Bangladesh earned $4.09 billion during January to May 2022 from exporting RMG to the US but in the corresponding period this year, earning dropped to $ 3.30 billion. Similarly, figures from India report negative growth. Indian RMG export to US dipped 11.36 per cent to $4.23 billion in Jan-June 2023 from $4.78 billion in Jan-June 2022.