Egypt, Jordan, and Pakistan have also been “really big winners” when it comes to US apparel sourcing, Herman says. Both Egypt and Jordan benefit from a Qualified Industrial Zones (QIZ) program that allows for garments and textiles to enter the US duty free provided they use a certain level of inputs from Israel. “A lot of companies, all of a sudden, are returning to those countries, particularly for garments, not for shoes or accessories,” Herman says.
The US imported 12% more clothing from Egypt in the last year, though its share still accounts for less than 2% of total US apparel imports. The potential for growth there, however, is significant, says Eugene Havemann, founder and CEO of Atlas Apparel, a new knit manufacturing company establishing a vertical sourcing solution in Egypt to capitalize on the moment.
“There are so many opportunities,” he says. “And if you understand the US market and its needs, you can structure your offering in a way that it can solve a lot of those challenges that people have because they can no longer buy the smaller quantities out of China, they can no longer get the shorter lead times, the things that previously only China could do. Well, Egypt is now evolving to where it’s going to be able to give you those solutions.” Havemann likens this period in Egypt to the mid-’80s in Bangladesh when the country’s factory count ballooned thanks to the right mix of free trade agreements, low-cost labor, and a ready workforce. Maybe even more importantly, in a climate where politics plays a big part in how tariffs get pushed around, relations between the US and Egypt are “on the friendlier side”, according to Havemann, who doesn’t expect the QIZ agreement to be tampered with or eliminated.
It’s hard to predict much these days, and factories have had to be more nimble than ever. For MAS Holdings, one of South Asia’s major apparel manufacturers with operations in 14 countries, figuring out where to develop has been a “constant” challenge, says Brad Ballentine, CEO of MAS Acme USA, the strategic arm of the parent company. When India got hit with a 25% tariff on US-bound apparel last year, the company pivoted. “We had to start focusing more on [shipping to] our European partners because the EU trade deal was really, really favorable,” he says. India was previously able to export clothing to the EU, paying duties between 9% and 12%, but the agreement the two sides reached in January is expected to eliminate those tariffs entirely. The US signed its own trade deal with India this month, which could see imports from the country climb more than the 7% it grew in the last year.
A US-Taiwan trade deal was also signed recently, and the African Growth and Opportunity Act (AGOA) and the Haiti HOPE/HELP trade preference programs were just extended for one year, so the sourcing map will continue to shapeshift in the coming year. The EU paused its trade deal in light of Trump’s new 15% tariff, so what happens there could introduce further uncertainty.
Is nearshoring the answer?
Nearshoring has become an even more critical conversation for fashion in recent years, as tariffs have made geography both a risk and a cost factor. Where companies make clothes now directly affects margins, speed, and, frankly, survival. The idea with nearshoring, or making closer to a home country, was that companies could benefit from saving on shipping costs, minimizing political and trade volatility that can tie goods up in various ways, and tapping into trade agreements that have largely been more beneficial between neighboring nations.