With the upcoming US elections in November, there is growing concern over how future trade policies might impact Asian nations, particularly in terms of their exports and manufacturing costs. If a ban or severe restrictions are placed on trade links with China, industries such as textiles could face indirect but notable effects. While the textile trade might be only marginally impacted, Donald Trump's proposed 20 per cent blanket tariff could have significant repercussions for a wide range of exports, affecting all trading partners. Additionally, Kamala Harris’ climate policies, with a focus on sustainability, could indirectly raise production costs in exporting countries, thereby reducing their competitiveness in the US market.
Asian countries’ competitiveness in the US
China dominates nearly all sectors in the US market, including textiles, where it remains the leading exporter. However, several emerging nations are gaining ground and demonstrating increasing competitiveness, both with China and among themselves. Countries like Vietnam, Indonesia, Cambodia, and India are rapidly expanding their presence in the global textile and apparel trade. Due to their growing supply chain capabilities, these nations have the potential to become top exporters in the world. The following provides insight into how these countries are competing in textile exports to the US, a key consumer market.
Table 1: Asian countries’ textile exports to the US as a percentage of total textile exports
Source: ITC Trade Map, F2F Analysis
In 2023, the US was the top importer of apparel in the world, accounting for 18 per cent of total apparel imports, followed by Germany, France, and Japan. The US is the largest consumer market for apparel and textile products, including home textiles, followed by the EU and Australia.
Vietnam is the largest exporter of apparel to the US, accounting for 41 per cent of textile exports to the US, followed by Indonesia, Cambodia, and India. Donald Trump's import policies could disrupt the US economy.
The Export Similarity Index (ESI) is used to calculate the degree of competitiveness between the exports of two countries in a third country, which is the consumer market—in this case, the US. The ESI revealed some interesting trends for the top emerging exporting countries.
Table 2: ESI of India with other textile-exporting countries
Source: ITC Trade Map, F2F Analysis
India stands as a textile powerhouse in Asia, with its exports to the US accounting for 27 per cent of its total textile exports. When comparing India's textile export competitiveness with other countries like China, Vietnam, and Cambodia, the landscape has shifted notably. The competitive gap between China and India has significantly diminished, largely due to US sanctions on Chinese textile exports, which have heavily impacted China’s trade in this sector. Meanwhile, India’s competitiveness with Vietnam, Cambodia, and Indonesia remains on similar terms. A recent change of just 3 per cent in the Export Share Index (ESI) indicates a gradual increase in the competitiveness between the two nations with the US as a common market.
Table 3: ESI of Vietnam with different textile-exporting countries
Source: ITC Trade Map, F2F analysis
If we look at the ESI of Vietnam's textile exports to the US in comparison with different countries, Vietnam's competitiveness with Cambodia and Indonesia is higher than with China and India. The reason is that all three countries have textiles accounting for a significant portion of their exports, and they compete within the continent based on raw material sourcing, while also competing in nearly all segments, including fabrics, apparel, and home textiles. With Cambodia, the competition is particularly strong in apparel exports. In addition to conventional apparel, Cambodia also exports denim apparel and workwear made from various fabrics. However, out of the three countries, Vietnam benefits the most in terms of apparel exports due to its Bilateral Trade Agreement (BTA) with the US.
Table 4: ESI of Cambodia with other textile exporting countries
Source: ITC Trade Map, F2F analysis
Cambodia’s textile exports face stiff competition from other major textile-exporting nations, particularly Indonesia and Vietnam. While its competitiveness with China is increasing marginally, Cambodia is also contending with significant competition from India, Bangladesh, Indonesia, and Vietnam. Politically and economically, Cambodia's relations with the US have become strained recently, yet its garment exports remain unaffected as garments and footwear were excluded from the GSP exemption list. Competition with Bangladesh has eased somewhat over time, though both nations still compete on similar factors such as labour, raw material sourcing, and the variety of textiles produced. However, Cambodia retains an advantage with its lower labour costs, a factor where Bangladesh is comparatively less competitive.
Table 5: ESI of Bangladesh with other textile-exporting countries
