45% of textile-apparel trade value may be exposed to corridor shifts

Textiles and apparel are not considered critical, but given their distinct dynamics, 45 per cent of trade value in the sector may be exposed to shifts in trade corridors, according to McKinsey & Company.

In fact, shifts in trade between geopolitically distant economies are already underway. For example, China’s share of US textile and apparel imports fell by 14 percentage points (pps) between 2017 and 2024. In their place, imports from other Asian economies rose by 10 pps, the company noted.

Notably, some of these economies increased their textile imports from China.

Textiles and apparel aren’t considered critical, but 45 per cent of trade value in the sector may be exposed to shifts in trade corridors, McKinsey & Company said.
Trade routes in general face high variability in growth under different scenarios, with one-third of global trade potentially exposed to volatility by 2035, it noted.
Corridors among emerging economies could be among the safest bets.

In a fragmentation scenario, this pattern could persist or even intensify, McKinsey said in an insights piece.

A McKinsey model indicates that as a result, total textile-apparel trade volume under fragmentation remains close to the baseline—and even exceeds that of diversification.

“This is because our model assumes a 20-per cent tariff between geopolitically distant economies, but no additional tariffs when trade flows through ‘connecting economies’,” it noted.

As a result, China continues exporting intermediates to connecting economies, particularly in Southeast Asia and India, which then assemble and ship final goods to advanced economies. This rerouting preserves overall textile-apparel trade value, McKinsey observed.

In the diversification scenario, rerouting is not expected. Even many emerging economies would shift away from China, limiting its ability to export both intermediates and finished textile and apparel products. Trade volume would fall as a result, it noted.

Trade routes in general face high variability in growth under different scenarios, with one-third of global trade potentially exposed to volatility by 2035, according to the company’s analysis.

Trade corridors among emerging economies could be among the safest bets. Of today’s 50 largest corridors, 16 would grow strongly, even in a fragmentation scenario, while nine corridors—primarily linking advanced economies to China and Russia—would shrink sharply. The rest fall somewhere in the middle.

Trade in electronics could see the biggest shifts, followed by textiles and machinery. These manufacturing value chains bridge geopolitically distant economies, so they’re more susceptible than others to fragmentation.

Fibre2Fashion News Desk (DS)