In April 2025, the United States announced a new round of tariff hikes on Chinese textile and apparel products, raising average rates to 25%-35% across cotton yarn, man-made fibers, fabrics, and garments. This directly threatens China's roughly $60 billion annual textile and apparel exports to the US. The China National Textile and Apparel Council (CNTAC) swiftly issued a statement expressing firm opposition, arguing the move violates WTO rules and will destabilize global supply chains.
Cost Pass-Through and Order Diversion
The core impact of the new tariffs lies on the cost side. For cotton knitwear such as T-shirts and polo shirts, the combined tariff rate will jump from about 20% to over 45%. Given the industry's average profit margin of 5%-8%, absorbing the full tariff would push most companies into losses. Consequently, many orders face either price increases or relocation.
Man-made fiber fabrics are also under pressure. Polyester filament and nylon fabrics, which account for 15%-20% of US-bound exports, will see an additional cost of $0.3-$0.5 per meter. For small and medium-sized weaving mills with thin margins, this burden is unsustainable. Traders in clusters like Shengze and Keqiao report that US buyers are already requesting to shift orders to Vietnam and India, demanding that Chinese exporters bear the tariff cost on an FOB basis.
Industrial Cluster Reactions and Capacity Adjustments
In response to the tariff hike, China's textile clusters are showing clear stratification. Home textile enterprises in Nantong are accelerating the relocation of final garment assembly to Southeast Asia while keeping grey fabric and greige production domestic. Dyeing and printing mills in Shaoxing are adopting a 'China+1' strategy by setting up finishing plants in Cambodia and Bangladesh to leverage their duty-free access to the US.
In the cotton sector, Xinjiang cotton faces even greater headwinds. The US Customs' intensified traceability checks on Xinjiang cotton, combined with the new tariffs, have nearly halted exports of Xinjiang cotton products to the US. Some mills are redirecting Xinjiang cotton yarn to domestic markets or Belt and Road countries, but the capacity cannot be fully absorbed in the short term.
Policy Offsets and Industry Self-Help
CNTAC's statement emphasized support for legal challenges through WTO channels and called on the government to introduce measures such as export tax rebate adjustments and credit support. Historically, during the 2018-2019 trade friction, China's textile exports to the US fell by about 10%, but overall exports did not collapse due to expansion into the EU and ASEAN markets.
Currently, industry self-help focuses on three areas: accelerating digitalization and smart manufacturing to reduce labor cost ratios; developing functional and differentiated fabrics to enhance pricing power; and leveraging RCEP rules to set up assembly capacity in Vietnam and Indonesia, using rules of origin to circumvent tariffs.
Practical Recommendations
For Buyers - Re-evaluate supplier structures, explicitly include tariff clauses in contracts, and adopt a 'cost-plus-tariff' floating pricing mechanism. - Monitor quality and delivery stability of Southeast Asian alternatives; consider small trial orders before scaling up. - For high-value-added products (e.g., functional sportswear, recycled fabrics), accept moderate price increases as these items lack ready substitutes in the US.
For Exporters - Immediately audit current and pending orders; add tariff-sharing clauses to US-bound contracts to avoid absorbing all new costs alone. - Use China-ASEAN FTA and RCEP cumulation rules to relocate some sewing processes to member countries and obtain zero-tariff status. - Intensify efforts in non-US markets, focusing on the Middle East, Africa, and Latin America to diversify export risk.
China's textile industry resilience lies in its complete supply chain and rapid adaptability. While tariffs are an external shock, they also accelerate the industry's shift from 'scale expansion' to 'value competition'. Over the next three years, companies that can flexibly adjust global capacity layouts and master core fabric technologies will take the lead in the upcoming reshuffle.