Survey: Sourcing Costs Are U.S. Apparel Industry's Top Challenge as Tariffs Loom
We've been paying close attention to the tariffs President Trump has put in place. Even last month, it was announced that the Trump administration is pushing for an increase on tariffs to 25 percent. While the administration hopes that new tariffs will convince China to change its trade practices, China instead responded that if the U.S. goes through with its threats, China's government would retaliate.
As a result of this potential trade war, U.S. apparel companies are left scrambling to ensure their sourcing is covered. According to spendmatters.com, U.S. apparel companies are working to diversify their sourcing strategies to shift production away from China in case the trade war heats up. In the past, China accounted for 30 to 50 percent of U.S. apparel sourcing. Now, the country accounts for 11 to 30 percent, according to a recent survey from the U.S. Fashion Industry Association.
The survey also found that U.S. trade issues are the top problem for the fashion industry. Behind that, U.S. apparel companies listed e-commerce competition and increasing production and sourcing costs as their additional woes.
You can check out the infographic here.
The sourcing issue seems to be much less of a problem for large apparel companies (more than 1,000 employees). More than two-thirds of those large companies reported that they source from at least 11 different countries. On the other hand, only 50 percent of companies with fewer than 1,000 employees source from more than 10 countries. In 2017, that number was 10 percent, so it appears apparel companies are moving to diversify their sourcing.
Spendmatters.com added that each country poses its own pros and cons for U.S. apparel companies. Mexico has the close proximity factor. But, Bangladesh and Vietnam offer more competitive pricing.
The survey also showed that 85 percent of respondents said they plan to devote more resources to sustainability measures and social compliance.
Read the full survey here.