By Dr. Seshadri Ramkumar
The global trade landscape, especially for textiles, is undergoing a transformative phase marked by policy uncertainty and rising geopolitical tensions. A recent WTO report reveals that global trade volumes are projected to shrink by 0.2% in 2025—a stark contrast to earlier growth expectations. Much of this downturn is driven by ongoing tariff confrontations, particularly between the U.S. and China, the world’s largest exporter and importer of goods, respectively.
In 2024, China led global merchandise exports with $3.58 trillion, while the U.S. topped imports at $3.36 trillion. In services, however, the U.S. was the largest exporter, but the EU outpaced it collectively. The continuing trade tensions between the U.S. and China remain central due to their massive global trade roles.
Textiles and Apparel in Trade Focus
As trade uncertainty increases, its ripple effects are felt across GDP and sectoral trade globally. Even before the April 2nd policy changes under President Trump’s second term, the U.S. experienced a rising trade deficit. March 2025 saw a jump to $140.5 billion, up from $123.2 billion in February.
Textiles and apparel are among the top U.S. imports. In the first quarter of 2025 alone, these sectors accounted for $30 billion in imports, with $22 billion in apparel alone. Footwear, rubber goods, and paper products also contribute significantly.
Tariffs and Domestic Manufacturing Policy
The U.S. has enacted a 10% tariff on all imports, with an added 20% on Chinese goods—blamed partly on illicit Fentanyl flows. These tariffs, while aimed at rebalancing trade and curbing manufacturing job losses, have intensified the push to revive U.S. manufacturing.
However, officials like Treasury Secretary Scott Bessent have clarified that reviving commodity textile manufacturing (e.g., T-shirts, shoes, furniture) isn’t a priority. Instead, strategic focus is on advanced manufacturing sectors—defense, health, AI, sustainable materials, etc.
Strategic Role of Advanced Textiles
Functional and industrial textiles—used in defense and healthcare—are gaining traction due to their critical role. The COVID-19 pandemic revealed the vulnerability of relying on foreign supply chains for PPE and essential materials. U.S.-made masks showed better filtration efficacy, underscoring the need for quality domestic production.
Life-saving textiles like respirators, anti-ballistics, and electromagnetic shielding materials are essential, justifying government support and procurement funding. Programs such as AFFOA and North Carolina’s Textile Innovation Engine ($160M over 10 years) highlight this growing priority.
Onshoring vs. Global Economics
Despite policy support, reviving basic textile production faces hurdles. Cost competitiveness remains a major challenge. In the U.S., textile labor costs average $24.26/hour compared to $0.70–$1.10/hour in India. Raw material abundance alone doesn’t make U.S. production viable for low-end garments.
India, with its abundant labor, fiber availability, and policy support, stands to gain. As the U.S. shifts away from Chinese imports, countries like India, Bangladesh, and Vietnam could fill the gap—especially if tariff structures and trade deals align favorably.
Trade Diplomacy and Future Prospects
India is actively negotiating favorable trade terms. A recent trade delegation led by Commerce Minister Piyush Goyal aims to finalize a deal with the U.S., potentially lowering textile tariffs in exchange for reduced Indian duties on American agricultural goods like cotton.
This could lead to increased exports of Indian textiles and imports of U.S. raw materials, boosting trade ties and technical collaboration in advanced materials such as superabsorbents and composites.
Conclusion
The global textile trade is entering a new era shaped by policy shifts, economic realignments, and security priorities. While commodity textile manufacturing in the U.S. faces economic challenges, advanced and functional textiles offer growth potential. For countries like India, this shift represents a strategic opening to expand their footprint in global trade, particularly in the U.S. market. The evolving trade order may thus strengthen industrial ties and foster geopolitical alliances across the South Pacific and South Asia.
