The report highlighted that between 2017 and 2024, China’s share of US textile and apparel imports declined by 14 percentage points.

Apparel and textile supply chains have become increasingly vulnerable to shifting trade dynamics, with nearly 45 per cent of the sector’s trade value exposed to potential disruption from changes in trade corridors, according to a report by McKinsey & Company.

The report highlighted that between 2017 and 2024, China’s share of US textile and apparel imports declined by 14 percentage points, while other Asian economies collectively gained 10 percentage points. Many of these emerging suppliers for US imports, however, have simultaneously deepened their sourcing links with China. This, McKinsey noted, points to a complex rerouting of the value chain rather than a complete decoupling.

McKinsey projected that if geopolitical fragmentation accelerates, the trend of indirect trade could not only persist but intensify. Its models factored in a 20 per cent tariff on trade between geopolitically distant economies, with no extra tariffs applied when goods are routed through intermediary nations. As a result, China is expected to continue shipping intermediate goods to Southeast Asia and India, where these are finished and exported to Western markets—preserving trade volumes while reshaping trade routes.

In contrast, McKinsey suggested that a diversification scenario, in which countries deliberately lessen reliance on any single partner, would curtail China’s dominance in both intermediate and finished products. This would likely lead to an overall reduction in trade volumes across the industry.

The report further warned that by 2035, anywhere from a third to more than half of global trade could face heightened volatility, largely influenced by geopolitical developments. It identified long and complex value chains in manufacturing sectors such as electronics, textiles, and machinery as particularly exposed to these risks.

However, McKinsey observed that not all trade corridors are equally susceptible. Trade routes between emerging markets might be better positioned to endure a breakdown of the global trading system. Of the 50 largest trade corridors worldwide, 16—mainly linking emerging economies—are expected to see robust growth even amid fragmentation. Conversely, nine corridors that connect advanced economies with China and Russia could witness significant contraction, while the remainder may follow mixed trajectories.

The report concluded that while global companies revisit their sourcing strategies, the textile and apparel sector may not necessarily shrink but could instead reconfigure its trade networks.