Shortly after President Donald Trump first unveiled his reciprocal tariffs in early April, SanMar (asi/84863) CEO and Counselor Power 50 member Jeremy Lott announced that the WA-based apparel company would shift production away from high-tariffed countries to regions with lower rates, like Honduras, where it already produces two of its T-shirt brands.

The Counselor Top 40 supplier is one of many apparel companies that’s been geographically broadening its supply chain in the last decade – a move heightened by Trump’s sweeping second-term trade policy.

Promo suppliers say they’ve moved production out of the country in recent years and anticipate increasing imports from countries such as Vietnam, India and Mexico, according to ASI Research.

U.S. import data from the International Trade Administration echoes these sentiments, showing a 10-year decline in Chinese apparel imports and rising levels for Central American countries, which may be picking up steam from a competitive edge due to lower tariff rates.

“We are out of China and have no plans to go back to China,” Lott tells ASI Media. “We’re working really hard to adjust our sourcing strategy on the backside and do everything we can to lower our costs in this new world so that we can minimize future price increases as much as possible.”

Apparel Imports by the Numbers

In May, the value of apparel imports from China to the U.S. dropped to its lowest monthly level in more than two decades, according to International Trade Administration data.

Trump levied tariffs on China during his first term in 2016 with a 25% rate on certain goods from industries like aerospace, machinery and medical. He escalated this strategy when he took office again in January, adding new heightened tariffs on China of 145%, which was later lowered to its current rate of 30%. (The cumulative total tariff rate on China from Trump’s first and second terms is 55%.)

But apparel sourcing from China started declining before Trump’s second term. Import levels reached a peak in 2015 and have since dropped by almost 20%. In 2006, close to 42% of all apparel imports to the U.S. were from China. Last year, they only accounted for about 36%.

The percent of promo suppliers that import from China mirrors this trend, decreasing by nearly 10% since 2021, according to ASI Research.

Dilip Bhavnani, chief operating officer of Counselor Top 40 supplier Sunscope (asi/90075), says five years ago, 99% of the company’s production was coming from China. Today, less than 50% stems from the country as it moves to facilities in areas like Bangladesh, Cambodia and Vietnam. The supplier specializes in hard goods and bags but also has a custom apparel division.

“We felt that there was going to be a big backlash against Chinese-made goods, which is what we saw. It came to the forefront,” he says. “We didn’t want to have all our eggs in one basket. … We’ve invested a lot of money in Bangladesh, we’ve invested money in India, we’ve invested money in Vietnam and Cambodia.”

Lott says tariffs on China were relatively predictable ahead of Trump taking office because of the administration’s former trade policies. He says the company aimed to move out of China before Trump took office.

“We had very much prepared for China tariffs and had basically moved out of China prior to the election of President Trump,” Lott says. “But we were surprised by the breadth and the magnitude of these tariffs. That set us on a scramble.”

A Shift to Other Countries

While China’s dominance as the top U.S. apparel importer has slowly loosened, Asian countries still account for a majority of apparel sourcing.

Countries like China, Vietnam, Bangladesh and India made up about 75% of all apparel imports to the U.S. last year. Each of these countries are subject to reciprocal tariffs, many of which snapped into effect in August. Trump imposed a 25% tariff on India earlier in August and an additional 25% tariff on the country for buying oil and weapons from Russia. The combined 50% rate will go into effect on Aug. 27.

“We are out of China and have no plans to go back to China.” Jeremy Lott, SanMar (asi/84863)

Lott says higher-value items like polos, jackets and headwear will likely continue being produced in the Asian promotional products supply chain, while basics like T-shirts and sweatshirts will stem from Central American countries like Honduras, Guatemala and El Salvador.

Overall apparel import data shows rising numbers this year for top exporters in North and Central America, including Mexico, Honduras and Nicaragua – which in general have lower tariff rates – and more varied levels for top Asian exporters.

The top six North and Central American apparel exporters last year in terms of value imported to the U.S. were Honduras, Nicaragua, Mexico, El Salvador, Guatemala and Haiti. With the newest tariffs that went into effect on Aug. 7, Mexico has the highest rate at 25%, followed by Nicaragua at 18%. The other top exporters all only have the 10% baseline.

Top Asian apparel exporters to the U.S. include China, Vietnam, Bangladesh, India, Cambodia and Indonesia.

Brett Barthel, vice president of sales at Counselor Top 40 supplier Workwear Outfitters (asi/98258), says the company has produced out of manufacturing plants in Mexico and Honduras since the late ’90s.

“The simple answer is speed,” he says. “They’re our own assets, we can control the production, we can control the schedule.”

Domestically Produced Apparel

As some suppliers shift to other countries abroad, others are looking toward domestic production.

Bhavnani says Sunscope has used more U.S.-grown cotton for its apparel products and now has a team dedicated to sourcing with cotton farmers.

“If we’re using made-in-U.S. cotton, potentially you can save money on the import just by breaking out the cost of what you’re doing and being able to not pay tariffs on the U.S.-sourced part of that production,” he says.

Hauppauge, NY-based distributor Royal Apparel (asi/83731) has produced garments in the United States for more than 30 years. Glen Brumer, Royal Apparel’s sales director, says he’s seen an influx in business this year, estimating roughly a 15% increase in sales.

“We buy the yarn, but we’re vertical after that. We cut the fabric, we sew it, finish the garment and ship it,” he says. “As soon as the tariff conversation started, we did notice an increase in inquiries. Sales have gone up.”

But it may be harder to make that switch for the apparel industry as a whole, which imports an estimated 98% of the clothing sold in the U.S. from other countries.

Randall Holcombe, an economics professor at Florida State University, says while tariffs are meant to support U.S. manufacturing, the lack of a widespread domestic textile industry and available workers make it especially difficult for the apparel industry to produce in the country. The apparel manufacturing workforce has declined since 2015 and still hasn’t reached pre-pandemic levels, according to data from the U.S. Bureau of Labor Statistics.

“We’re in uncharted territory,” Holcombe says. “If it’s cheaper to produce goods overseas, it’s cheaper for Americans to buy imported goods than produce them themselves.”

Barthel, of Workwear Outfitters, says the supplier moving to more domestic production simply isn’t feasible because labor is too expensive in the U.S.

“We’d love to be domestic,” he says. “It’s just, a lot has to change to do that, and I don’t see that happening.”