
Outlook bleak for companies in China
Demand from the USA has not collapsed, even as tariff barriers have tightened but de minimis exemption in May will bite going forward.
28th August 2025
Innovation in Textiles
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China
China’s textile and garment exports have so far shown surprising resilience in 2025 ,despite the escalation of trade tensions and tariffs with the United States.
In the first six months of the year, China’s cumulative exports of textiles, garments and accessories reached about $144 billion, a modest increase of 0.8% compared with the same period of 2024, according to China’s General Administration of Customs (GAC).
Exports of textile products including yarn and fabric grew by 1.8% to 70.5 billion dollars, while garment and accessory exports slipped only slightly, down 0.2 percent to $73.5 billion.
The picture remained broadly stable when extending the timeframe through July. By the end of the first seven months, total exports had reached $170.7 billion, up 0.6% year on year. Within this, textiles accounted for $82.1 billion, a 1.6% increase, while garments and accessories totalled $88.6 billion, a marginal decline of 0.3%.
In other words, while garments are under mild pressure, the overall trade balance suggests that China’s core textile and apparel exports have not been significantly derailed by the trade war so far.
Diversification
A key reason lies in market diversification. Although shipments to the USA have slowed, China has been able to offset much of the drag by maintaining strong exports to the European Union, Japan, South Korea and emerging markets such as Brazil, Indonesia and Vietnam. Even with exports to the USA, the story has been mixed. In the first quarter of 2025, Chinese textile and apparel exports to the US actually climbed by 8.2% year on year, with March alone seeing a 17% surge. This indicates that demand has not collapsed, even as tariff barriers tightened.
At the same time, there are signs of strain beneath the surface. In Guangzhou’s so-called ‘Shein Village’, dozens of small garment factories supplying the fast-fashion sector have already closed since the US scrapped its de minimis exemption in May. That change brought all shipments into US customs duty and sharply reduced orders from American buyers. Tariffs on Chinese goods now run as high as 145%, with China retaliating at 125%, and proposals circulating in Washington could push duties on fashion goods to as much as 245%. These moves are adding to costs, creating uncertainty and pushing some global brands to consider relocating parts of their supply chains away from China.
The overall picture then, is one of continued success in the face of accelerating pressure. China’s upstream textile exports have continued to grow and total trade in garments and textiles remains slightly ahead of last year’s levels. Yet the industry cannot afford complacency. Smaller producers tied heavily to US fast-fashion demand are already suffering and with tariff escalation and shifting sourcing strategies, the stability seen in the first half of 2025 may be harder to sustain in the months ahead.
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