The Tamesis
Egypt, Jordan and Pakistan are also “really big winners” when it comes to U.S. apparel purchases, Herman said. Both Egypt and Jordan benefit from the Qualified Industrial Zone (QIZ) program, which allows clothing and textiles to enter the United States duty-free provided they use certain levels of Israeli inputs. “A lot of companies are suddenly coming back to these countries, especially for apparel, not shoes or accessories,” Herman said.
U.S. apparel imports from Egypt increased by 12% last year, but its share still accounts for less than 2% of total U.S. apparel imports. However, Atlas Apparel founder and CEO Eugene Havemann said there’s huge potential for growth there. Atlas Apparel, a new knitwear manufacturing company, has established a vertical sourcing solution in Egypt to take advantage of this opportunity.
“There are a lot of opportunities,” he said. “If you understand the U.S. market and its needs, you can build your product in a way that solves a lot of the challenges that people face because they can no longer buy small quantities from China, they can no longer get shorter delivery times that only China could do before. Egypt is now evolving to be able to provide you with those solutions.” Huffman likened this period in Egypt to Bangladesh in the mid-1980s, when the country’s factories exploded due to the right mix of free trade agreements, low-cost labor and ready labor. Perhaps more importantly, Huffman said, relations between the U.S. and Egypt are “on the friendlier side” in an environment where politics plays a large role in the push for tariffs, and he doesn’t expect the QIZ agreement to be tampered with or canceled.
It’s hard to predict these days and factories have to be more flexible than ever. MAS Holdings is one of South Asia’s major apparel manufacturers with operations in 14 countries, and Brad Ballentine, chief executive of MAS Acme USA, the strategic arm of the parent company, said determining the direction of development has been an “ongoing” challenge. Last year, when India imposed a 25% tariff on clothing exported to the United States, the company pivoted. “We have to start paying more attention to [shipping to] “Our European partners, because the EU trade deal is really, really good,” he said. Previously, India could export clothing to the EU subject to tariffs of 9% to 12%, but the agreement reached in January is expected to completely eliminate these tariffs. The United States signed its own trade deal with India this month, which could result in the country’s imports rising more than last year’s 7%.
The U.S.-Taiwan trade agreement was also recently signed, and the African Growth and Opportunity Act (AGOA) and the Haiti HOPE/HELP trade preference program were just extended for one year, so the procurement landscape will continue to change in the coming year. What happens there could create further uncertainty given that the EU has suspended its trade deal due to Trump’s imposition of new 15% tariffs.
Is nearshoring the answer?
Nearshoring has become an even more important topic in the fashion industry in recent years, as tariffs have made location both a risk and a cost factor. Now, where a company makes its clothes has a direct impact on profits, speed and, frankly, survival. The idea behind nearshoring, or moving closer to a home country, is that companies can benefit from saving on shipping costs, minimizing the political and trade volatility that can tie up goods in various ways, and taking advantage of trade agreements that are largely more favorable between neighboring countries.
