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.

Europe prides itself on being a leader in sustainability, but ironically, its textile recycling sector is on the verge of collapse. This critical industry is struggling under the weight of policy inertia, economic unsustainability, and severe structural fragmentation. A recent visit by EU Commissioner Jessika Roswall to the Evadam sorting plant, part of the Boer Group, highlighted a reality: the ambitious vision of a textile-to-textile recycling system is dangerously close to unraveling. Yet, symbolism alone won't rescue an industry teetering on the brink.

The disconnect of legislation vs. operational reality

European textile recyclers are caught in a paradoxical bind. They are expected to build a robust circular ecosystem, but without the essential policy framework or financial incentives to do so. While mandatory separate collection of post-consumer textiles began across the EU in 2025, crucial legislation for minimum recycled content or harmonized Extended Producer Responsibility (EPR) remains pending. This gap means recyclers are collecting more textiles than ever, but lack sustainable—or profitable—outlets for them.

The high cost of policy gaps

The struggles of major players in the textile recycling sector underscore the urgent need for systemic change.

Sweden’s Renewcell: From market darling to bankruptcy

Renewcell, once hailed as a pioneer in textile-to-textile recycling with its patented Circulose pulp, filed for bankruptcy in February 2024. Despite a Nasdaq listing in 2020 and partnerships with major brands like H&M and Levi’s, the company could not secure consistent feedstock or sufficient offtake commitments to remain viable.

Table: Renewcell’s losses

"We built a world-class factory. What we lacked was a world that was ready to use it." — Patrik Lundström, former CEO, Renewcell. The core issue: despite initial buzz, brands failed to commit to regular offtake agreements, leaving the plant underutilized and financially unsustainable.

Germany’s Soex shrinking in silence

Soex Group, one of Europe’s largest textile sorters and recyclers, has quietly scaled down operations in multiple countries over the past two years. This is primarily due to rising costs and tightening margins. While not bankrupt, the group has halted planned expansions, citing a lack of regulatory clarity and falling resale values of used garments. As a Soex executive points out, without predictable legislation and incentives for fiber-to-fiber innovation, they can't justify capex.

Table: Soex groups falling investments

Cheap fashion or system failure? A false binary

Much public and policy ire has landed on Chinese ultra-fast fashion giants like Shein and Temu. Their ultra-low-cost, high-turnover products have flooded the EU market, raising concerns about overconsumption and waste. But critics argue this focus oversimplifies the problem. European brands, too, have long relied on low-cost overseas manufacturing and design garments with little regard for recyclability. "Blaming imports ignores a homegrown crisis: we don’t value durability, and we’ve never built an infrastructure to support circularity," said a sustainability analyst with the European Environmental Bureau.

No business model, no future

Beyond blame, the core challenge remains brutally economic. Most collected textiles are chemically treated, made of mixed fibers (like cotton-poly blends), or embedded with elastane, making fiber recovery expensive and technologically complex. Virgin fibers remain cheaper, especially in the absence of regulatory pressure to change.

Policy paralysis, fragmented and faltering

Europe's textile recyclers are currently navigating a policy swamp, with inconsistent rules and patchwork regulation from one country to another. “What we need is policy that matches ambition—not just in words, but in enforceable rules and incentives,” said a policymaker from DG Environment.

Table: EU policies

From crisis to opportunity

For textile recycling to become a cornerstone of Europe's green economy, a fundamental systemic shift is required, not merely symbolic gestures.

Design for circularity: Mandate circular product design (e.g., mono-fibers, no elastane, removable trims) by 2028. If garments cannot be easily recycled, they should not be sold.

Link EPR to real infrastructure: Require EPR funds to be directed specifically to approved recyclers. Mandate long-term procurement contracts between brands and recyclers to ensure stable feedstock and demand.

Replace trade barriers with innovation grants: Instead of high import tariffs, offer EU-wide grants or low-interest loans to Small and Medium-sized Enterprises (SMEs) focused on automated sorting, chemical recycling, and closed-loop fiber technologies.

True cost accounting: Develop consumer-facing labels that display the "true cost" of fashion, including carbon footprint, water usage, and recyclability index, to encourage responsible consumption.

Europe’s choice, collapse or breakthrough?

Thus the European textile recycling industry's struggles are not due to a lack of intent but rather a severe structural misalignment between policy, economics, and technology. The downfall of pioneers like Renewcell proves that vision alone is insufficient.

Europe now faces a critical choice: lead with decisive action or risk languishing in paralysis, watching vital infrastructure erode while legislation lags. As Commissioner Roswall’s visit underscored, the crisis is undeniable. However, this moment of crisis could also serve as the catalyst for transformative change. The future of circular fashion in Europe hinges not on assigning blame, but on bold, grounded, and collaborative reform.

When the latest KPMG and Circular Fashion Federation report landed, it made an immediate splash: a projected €31.3 billion opportunity in Europe’s circular fashion economy by 2030 and more than 88,500 new jobs in the offing. In sustainability circles and C-suites alike, the number has become gospel. It promises growth, green credentials, and renewed relevance in a fast-changing consumer landscape.

But numbers — even ones that large — can be deceptive. Beneath the surface of this economic projection lies a far more consequential battle: the fight for brand ecosystem ownership. In the world of circular fashion, it’s not just about participating in reuse, repair, or recycling. The real advantage belongs to brands that own the entire loop — shaping not only their environmental footprint but also the lifespan of their customer relationships.

From tear to trade-in a story of ownership

Imagine this: A customer buys a sleek, premium denim jacket. Three years in, a sleeve rips. Instead of tossing it, they log into the brand’s platform and schedule a repair. A year later, they want something new. The same platform offers a trade-in and credits them for the jacket, which the brand then refurbishes and resells, or responsibly recycles into next season’s collection.

This is not a hypothetical future. It’s the emerging blueprint for circular success — a closed-loop model that extends the customer lifecycle, fosters loyalty, and keeps value creation firmly within the brand’s orbit.

Circularity as relationship infrastructure

The crux of circularity isn’t in the margin from a second-hand sale or a repair fee. It’s in what those touchpoints represent: repeated engagement. Each interaction — a repair, a trade-in, a resale — is a chance to remind the customer: ‘We’re still here, and we still value you’.

Research consistently backs this. A 5 per cent improvement in customer retention can result in 25 to 95 per cent profit growth. Sustainable initiatives are no longer optional: 79 per cent of global consumers, according to Capgemini, are changing purchasing preferences based on environmental concerns. And 88 per cent, reports Forbes, show stronger loyalty to companies that act on social or environmental issues.

Circularity, therefore, isn’t a CSR project. It’s infrastructure for emotional equity.

The illusion of piecemeal efforts

Some brands are still treating circularity like a patchwork quilt: a recycled capsule here, a resale partnership there. While well-intentioned, these fragmented efforts often result in value leakage — with third-party marketplaces reaping the benefits of consumer engagement and transaction data.

In such models, the brand risks becoming just a product supplier, while someone else becomes the customer relationship owner. In today’s loyalty-driven market, that’s not just inefficient — it’s dangerous.

Environmental impact meets brand value

The sustainability argument is undeniable. The fashion industry emits nearly 10 per cent of global carbon emissions, and 11.3 million tons of textiles are landfilled in the US each year. Circular models can slash this dramatically.

But what elevates this from climate activism to boardroom strategy is how these practices feed directly into brand equity. One pair of pre-loved jeans and a T-shirt can save the water equivalent of 20,000 plastic bottles. That’s not just resource conservation — it’s a story brands can own, market, and make personal to each consumer.

The software backbone: Owning the loop at scale

Of course, turning this circular vision into reality isn’t as simple as launching a new tab on a website. It requires a robust software engine to track, manage, and optimize the full product lifecycle.

Brands have three main options:

• Build custom software: Total control, high cost (often €100,000+), long timelines (6–12 months).

• Partner with a marketplace: Fast, low-cost, but zero control over customer experience or data.

• Deploy white-label circularity platforms: Balance of agility and control, with deployment in 2–3 months and moderate investment.

Table: Brand’s trade-offs in cost, time, control, and flexibility

For brands serious about owning the loop, white-label solutions are increasingly the strategic sweet spot — offering scalability, brand consistency, and full data ownership.

What the leaders are doing

Several forward-looking brands are already proving how powerful circular ownership can be.

• Patagonia’s worn wear: Patagonia has long been a leader in circularity. Their Worn Wear program offers repair services, guides for DIY repairs, and allows customers to trade in used Patagonia gear for credit. This entire ecosystem reinforces their brand message of durability and extends the life of their products, fostering deep loyalty. While not explicitly stated as a white-label software, their integrated approach suggests a sophisticated internal or tailored system managing these complex operations. This program directly enhances their brand image and reduces environmental impact by diverting clothing from landfills.

• IKEA’s buy-back service IKEA's initiative to buy back used furniture from customers and resell it, alongside their spare parts program and furniture rental trials, showcases a commitment to owning the product lifecycle. Their robust logistics and online platforms are crucial to managing this volume, highlighting the need for scalable software solutions to track, assess, and re-circulate items.

• Eileen Fisher Renew This program allows customers to return worn Eileen Fisher garments, which are then cleaned, repaired, and resold. What makes this a strong example of owning the loop is their meticulous process of valuing, repairing, and reselling, ensuring quality control and maintaining brand standards throughout the product's extended life. This requires detailed inventory management and a strong customer interface, likely enabled by specialized software.

These aren’t just side projects. They’re strategic extensions of brand identity.

The bigger payoff

Circularity isn’t just a sustainability upgrade — it’s an economic reinvention. According to the Ellen MacArthur Foundation, the industry’s shift to circularity could unlock $560 billion globally by reducing raw material costs, opening new revenue streams, and boosting brand loyalty.

Compare that with the traditional “take-make-dispose” model — dependent on endless new production and customer churn — and the case for circularity becomes a no-brainer.

Table: Circular vs. Linear Models: Economic Implications

Business Model Key Advantage Primary Revenue Streams Challenges Linear ("Take-Make-Dispose") Simplicity, historically low initial costs New product sales High raw material dependency, waste management costs, environmental impact, limited customer retention beyond initial sale Marketplace (e.g., The RealReal, Vestiaire Collective) Speed to market for brands, broad selection for consumers Commission on sales Loss of brand control, limited customer data, potential brand dilution, customer loyalty directed to platform, not brand Brand-Owned Circularity (via White-Label Software) Full brand control, enhanced loyalty, new revenue streams New product sales, repair service fees, resale margins Initial software investment, operational complexity, need for robust logistics

Owning the future

The €31.3 billion opportunity may be the headline, but the deeper truth is this: brands that truly own the circular loop aren’t just reducing waste — they’re rewriting the rules of fashion loyalty. This isn’t just a trend. It’s a paradigm shift. A move from products to platforms, from transactions to trust, and from sales to lifelong relationships.

In the battle for circular dominance, the victors won’t be those who do the most recycling — but those who build ecosystems that customers never want to leave. The time to stake your claim is now.

Despite prevailing global economic headwinds, Bangladesh's RMG exports grew by 8.84 per cent to $39.35 billion in FY25. This robust performance underscores the country's pivotal role in the international apparel market.

The European Union (EU) remained the dominant destination for Bangladeshi RMG, accounting for a substantial 50.10 per cent of total exports, valued at $19.71 billion. Netherlands led by 21.21 per cent growth in exports followed by Sweden at 16.41 per cent, Poland 9.77 per cent, and Germany 9.47 per cent export. Germany emerged as the largest individual EU market, with imports worth $4.95 billion worth of Bangladeshi RMG.

Bangladesh’s exports to the United States also increased by 13.79 per cent to $7.54 billion. Imports by Canada's grew by 12.07 per cent to $1.30 billion, while the UK experienced a more modest 3.68 per cent growth, totaling $4.35 billion.

Beyond traditional markets, Bangladesh's RMG exports to non-traditional markets expanded by 5.61 per cent, reaching $6.44 billion. Notably, exports to Turkey increased by 25.62 per cent, India by 17.39 per cent, and Japan by 9.13 per cent. However, some non-traditional markets like Russia, Korea, the UAE, and Malaysia saw a decline in Bangladeshi apparel exports.

Within the apparel industry itself, the knitwear sector showed remarkable growth at 9.73 per cent, with the woven sector also contributing positively with a 7.82 per cent increase. Industry insiders note, the global landscape, particularly since the COVID-19 pandemic, has presented continuous new challenges, yet Bangladesh's export performance in traditional markets remains robust, holding an impressive 84 per cent share of total apparel exports.

While non-traditional markets currently account for a more modest 16 per cent, the International Trade Centre (ITC) highlights that the global apparel market reached approximately $500 billion in 2024, with non-traditional markets comprising about $150 billion. Bangladesh, with its current 6 per cent share in this segment, holds significant potential for further expansion.