Although it is expected that the global economy will maintain a similar growth rate in 2025 as in 2024, the economic slowdown in the United States and China may bring new challenges to clothing procurement, including weakened demand and intensified price competition.
As for the macroeconomic environment in 2025, it will set the tone for clothing procurement. The International Monetary Fund (IMF) and the World Bank estimate that the global economic growth rate in 2025 will be around 2.7-3.2%, almost unchanged from the previous year. Similarly, the World Trade Organization (WTO) predicts that global commodity trade will grow by 3.3% in 2025, slightly higher than the 2.6% in 2024.
Despite this gradual improvement, the world's two largest economies - the United States (with a GDP growth rate of 2.2% in 2025, lower than 2.8% in 2024 and 2.9% in 2023) and China (with a GDP growth rate of 4.5% in 2025, lower than 4.8% in 2024 and 5.2% in 2023) - are expected to experience a slowdown in economic growth in the new year. This slowdown means that global clothing manufacturers, especially those in developing countries that produce large quantities of basic clothing, may continue to face a shortage of orders in 2025 due to weak overall import demand.
What is even more worrying is that as China struggles to cope with the decline in domestic sales, the global clothing market may see an influx of more low-cost Chinese products, especially through new e-commerce channels.
It is worth noting that less than half of China's clothing production is used for export, indicating that its export capacity has not been fully developed. In addition, although China's wage levels are higher than many other Asian clothing producing countries, the unit price of clothing imported by the United States from China (in US dollars per square meter equivalent ($/SME)) has decreased by more than 21% from 2018 to 2024 (as of October). In contrast, the price of clothing imported by the United States from other parts of the world increased by 7.8% during the same period. Related to this, it is often overlooked that even Shein, a "super fast fashion" retailer known for its highly competitive prices, has not established a presence in the Chinese market due to concerns about fierce price competition. In other words, even without considering Trump's new tariffs, trade tensions in the US market and other regions over Chinese products may escalate by 2025. At the same time, fashion companies may continue to use procurement diversification to mitigate risks due to concerns about escalating global geopolitical tensions and uncertainty over trade policies during Trump's second term. However, the "reduce dependence on China" and procurement diversification movements have not yet brought substantial benefits to nearshore or emerging procurement destinations such as the Western Hemisphere and sub Saharan Africa (SSA). This result is mainly due to fashion companies using China to procure various products, while Western Hemisphere and SSA suppliers can only produce a few basic categories.
For example, the latest research shows that in the first nine months of 2024, even excluding major platforms such as Shein, Amazon, and Temu, American fashion companies purchased over 60000 clothing inventory units (SKUs) from China. In contrast, India and Vietnam each supplied about 15000 SKUs, Cambodia and Bangladesh each contributed 3000 SKUs, Mexico only provided 2000 SKUs, and CAFTA-DR and AGOA member countries each supplied about 200 SKUs. Therefore, even if fashion companies report purchasing from more countries, they may continue to source from Asian countries with export capabilities and structures closer to China. Meanwhile, the total value or volume of trade may not fully reflect the full picture of procurement diversification. Even if there are new tariff upgrades, this trend may continue until 2025.
The current fashion industry is highly globalized and heavily relies on the frequent flow of cross-border goods and services. Therefore, the uncertainty and protectionist nature of US trade policy during Trump's second term may pose significant challenges to the fashion industry in 2025. What is particularly worrying is that Trump's new tariff measures will increase the procurement costs of fashion companies, create additional inflationary pressure, reduce the purchasing power of American consumers for clothing, and trigger retaliatory trade measures from American trading partners, ultimately harming the US economy. It is worth noting that in 2018, when the United States imposed a 7.5% 301 tariff on some Chinese clothing products, the growth rate of the US Consumer Price Index (CPI) was relatively low, at 1.9%. However, imposing a 20% global tariff, a 60% tariff on Chinese products, and the existing 15% -30% conventional tariff on clothing when CPI is at a historical high is like adding fuel to the fire.
In addition to tariffs, by 2025 or even earlier, American fashion companies and many global e-commerce suppliers will closely monitor how Congress and the new Trump administration reform the minimum rules, which currently exempt tariffs and most customs procedures for small goods worth less than $800. With Trump's new tariffs looming, some believe that filling the minimum "loophole" has become even more urgent as it creates more economic incentives to use the rule to circumvent tariff increases. At the same time, the proposal under consideration suggests completely removing textile and clothing products from the minimum level, which may cause an "earthquake" for fashion companies that heavily use the rule.
Trump's attitude and philosophy towards traditional trade agreements and trade preference programs in 2025 are also worth paying attention to. During his first term, Trump initiated several bilateral trade negotiations, including talks with the UK, Japan, and Kenya. At the time, Trump believed that the bilateral agreement would provide the United States with more leverage to reach a better 'deal'. In terms of clothing procurement and trade, two flagship US trade preference programs - the African Growth and Opportunity Act (AGOA) and the Haitian Hope/Help Act - will expire in September 2025. It is uncertain whether the new Trump administration will support early renewal of these two trade preference programs with minimal changes, or would prefer to renegotiate and add new bilateral elements.
In addition, although the new Trump administration may not prioritize addressing climate change, it is an irreversible trend for fashion companies to allocate more resources to comply with upcoming or newly implemented sustainability and environmental related legislation (whether in the EU or US states). Unlike in the past where being more sustainable only meant increasing operating costs or paying "one-time fees," today's new generation of sustainability focused regulations such as Extended Producer Responsibility (EPR) require companies to shift their mindset and demonstrate continuous improvement. Interestingly, recent studies tracking sustainability statements for clothing products indicate that vague terms such as "sustainable" and "environmentally friendly" are gradually being replaced by more neutral, fact based keywords such as "recycled," "textile waste," and "low impact.
At the same time, providing "sustainable" clothing products and products using "preferred sustainable fibers" can provide fashion companies with new opportunities to diversify their procurement base and expand their supplier network. For example, research has shown that in the US market, China and many other Asian countries may not necessarily be the main suppliers of clothing made from recycled materials. On the contrary, due to the uniqueness of such products, countries in Europe, the Western Hemisphere, and even Africa have unique procurement advantages and capabilities. Therefore, in 2025, we can expect closer collaboration between the design, product development, sales, procurement, and legal teams within fashion companies, working together to meet the growing demand for sustainable clothing and ensure compliance with constantly changing regulations.