United States year-end review 2023: A challenging year

The US textile industry employs more than half-a-million people and is thus crucial for the health of the American economy. The country is also the largest importer of textiles and apparel globally. However, it had a challenging 2023 owing to macro- as well as micro-economic factors.

Q1, 2023

The exports of textiles and apparel from the United States went up by 4.05 per cent in the month of January 2023. The value of exports stood at $1.895 billion compared to $1.821 billion in January 2022. Category-wise, apparel exports increased 14.97 per cent year-on-year to $575.443 million, while the exports of yarn valued at $340.260 million and fabric valued at $683.212 million increased by 0.53 per cent and 4.06 per cent, respectively. However, made-ups and miscellaneous article exports decreased by 9.09 per cent to $296.490 million.

To its top ten markets, the shipment of textiles and apparel from the US increased by 130 per cent to $32.739 million. The exports increased to Netherlands (69.25 per cent), United Kingdom (48.46 per cent) and Dominican Republic (14.24 per cent). However, the shipment to Mexico, Canada, China, and Japan witnessed a decline. The US supplied $550.629 million worth of textiles and apparel to Mexico in January, followed by $424.778 million to Canada and $100.851 million to Honduras.

On the other hand, during the first calendar quarter from January to March, US’ imports of textiles and apparel decreased in value terms, falling 19.98 per cent to $25.874 billion compared to $32.331 billion during the same period in 2022. China remained the largest supplier of textiles and clothing to the US, holding a 23.78 per cent market share, followed by Vietnam with a 14.75 per cent share. In Q1 2023, online clothing and accessories sales grew 2 per cent over Q1, 2022 but remained 32 per cent lower than Q4 2022.

April-May turbulence

April 2023 was a tumultuous one for the US economy with many banks failing and national debt in crisis mode. Consequently, apparel imports during the month were 19-months down at $5.8 billion, which was 28 per cent lower than in April 2022, and 21 per cent lower on YTD basis. Still, April managed to outperform March marginally. China’s share in the US market reduced by 5 per cent since 2021, whereas India’s share rose 2 per cent. Despite reduced share, China continued ruling the roost at 18 per cent with Vietnam catching up at 17 per cent. US’ near-shoring was evident as other supplier countries formed the bulk at 42 per cent.

The imports of cotton, wool, man-made fibre, silk blends, and non-cotton vegetable fibre textile and apparel products totalled 7,896.7 million square metre equivalents (MSMEs) in April 2023 (22.7 per cent lower than April 2022), in which imports of textiles and apparel stood at 6,124.6 MSMEs (18.7 per cent down) and 1,772.1 MSMEs (down 34.1 per cent), respectively. On YTD comparison, combined imports of textiles and apparel in April were 27,630.9 MSMEs, showing a decline of 23.8 per cent in comparison to 2022. While textiles YTD imports were 20,033.5 MSMEs, declining 20.7 per cent, apparel YTD imports were 7,597.4 MSMEs, down 31.1 per cent.

In May, the US monthly apparel store sales were estimated at $18.5 billion – 1 per cent more than May 2022 and 4 per cent higher than 2022 on YTD basis. On the other hand, the home furnishings showed negative sales and were down 9 per cent month-on-month.

Eight-month review

For six-month period from January to June, US’ textiles and apparel imports dropped 22.7 per cent to $51.2 billion. In the seven-month period inclusive of July, US apparel imports decreased 22.3 per cent to $45.74 billion against $58.85 billion in 2022. In quantity terms, the decrease was 28 per cent – the worst performance since the pandemic. During the same period, the US’ textiles and apparel exports eased 4.5 per cent to $13.8 billion. As a silver lining, the price of US apparel imports stabilised though inflation remained an issue for the US economy. When compared to June, the apparel imports in July increased 0.9 per cent in value and 2 per cent in quantity but the trade volume decreased about 17-18 per cent y-o-y. When measured in value, China, ASEAN, and Bangladesh accounted for over 64 per cent of total US apparel imports in July – a notable increase from 61 per cent in June and 58 per cent in May. Overall, most exporting countries saw a drop during the seven-month period: Bangladesh ($4.56 billion against $5.69 billion in 2022), Vietnam ($8.21 billion against $10.91 billion), India ($2.91 billion against $3.69 billion), Indonesia dropping 27.26 per cent to $2.47 billion, and Cambodia dipping 32.1 per cent to $1.79 billion.

With US Consumer Confidence Index falling again in August, the economic uncertainties continued. Overall, US apparel imports fell from $69.21 billion to $53.45 billion in the January to August period of 2023, registering a decrease of 22.77 per cent. In terms of volume, US apparel imports fell from 22.53 billion units to 16.49 billion units – a decrease of 26.80 per cent.

As of US fashion companies, they continued diversifying their sourcing base to mitigate supply chain risks amidst rising geopolitical tensions, bringing down their clothing import from China to $9.12 billion from $12.8 billion in 2022, owing to the adverse business environment. The HHI (Herfindahl-Hirschman Index, wherein a smaller value represents higher degree of market diversification) for US apparel imports during seven-month period dropped to 0.097 from 0.106 recorded last year, indicating a more diverse import sourcing.

Apple’s foray into textiles

The tech giant Apple made its intent of venturing into the world of futuristic textiles public when it filed patent application in the third quarter. The US tech company intends to explore the “smart fabric” concept by embedding touch controls and motion detectors into fabric. The patent application mentioned a ‘fabric-sensing device’ idea that would enable Apple to incorporate touch controls and motion sensors seamlessly into textiles, thus creating a more versatile and free-flowing design against traditional rigid touch screens with limited form factors. The various use cases stated in the application included articles of clothing, clothing accessories, handbags, upholstered items, household and other items of textile component or element.

Apple had earlier explored touch-sensitive textiles and also introduced Fine Woven – a sustainability-focused leather case for its iPhone 15, which received a lukewarm reception.

Drive against illegal imports

US Customs and Border Protection (CBP) released Textile Enforcement Statistics for FY23 in October. CBP protects American workers and legitimate importers by taking action against unlawful textile imports that attempt to circumvent US Trade Laws, including those related to US Trade Agreements. In FY23, the statistics reported, CBP seized more than 5,000 textile shipments valued at more than $129 million, issued approximately $19.3 million in commercial fraud penalties, and conducted audits that identified over $2 million in additional duty owed to CBP. Additionally, CBP conducted laboratory analysis on 323 shipments, 42 per cent of which were found to be mis-declared or mis-described when arriving to the United States. CBP even conducts verification visits internationally to factories that export textiles and apparel to the United States to verify origin and ensure compliance with preferential duty treatment claimed on imports. During the fiscal, CBP conducted 57 such factory verification visits through its Textile Production Verification Team programme resulting in approximately $340,000 in duties recovered and potential additional enforcement actions.

Source: CBP

Given its mission to protect US industries and businesses from unfair trade practices, CBP takes all trade violation allegations seriously. CBP reported receiving 30 textile related e-allegations. Since the textile sector is critical to the nation’s economy it forms one of the seven Priority Trade issues for CBP. Textiles typically carry a higher duty rate compared to other US imports, with some as high as 32 per cent. To escape these duties, the violators try to circumvent them using tactics like misrepresenting the country of origin of textile imports, mislabelling and undervaluing shipments, among other illegal ways. CBP works to check these types of frauds that undermine legitimate trade and threaten US jobs.

ALCHEMPro News Desk (WE SB)