The shift of textile supply chains away from China is already well underway, driven by ongoing changes in US trade policy since 2025. Although US textile tariffs now appear to have reached a more stable phase, the competitive landscape among garment-producing nations continues to evolve rapidly. In 2025, Coface released a study identifying the most competitive textile manufacturing countries outside China. This ranking has now been updated to reflect the latest US tariff developments.
Changes to the US tariff framework are altering the ranking of the most competitive countries in the clothing and footwear sectors.
They could strengthen the position of several Asian and African suppliers, whilst confirming that diversification away from China remains a long-term structural trend,
says Eve Barre, sector economist at Coface.
China’s Dominance Faces Growing Competition
China remains the leading global exporter of apparel and footwear, yet its share of worldwide exports continues to decline. Rising labor costs and increasing efforts by multinational companies to diversify sourcing locations are accelerating this trend. To determine which countries are best positioned in this evolving market, Coface has updated its apparel and footwear competitiveness index based on four key pillars:
- business settings
- access to a skilled and cost-competitive workforce,
- social and environmental sustainability criteria,
- strength of the textile manufacturing ecosystem
An additional factor related to US tariffs has also been incorporated into the assessment. Recent changes to the American tariff framework have significantly influenced the relative competitiveness of textile-producing nations. Despite the removal of certain duties, Chinese exports still face higher tariff burdens than those of several competing countries. Over time, this shift could redefine the global map of apparel and footwear production.
Lesotho and Madagascar Emerge as Potential Standout Performers
Bangladesh continues to hold the number one position in the ranking. The most notable change is the stronger competitiveness of Lesotho and Madagascar, both of which now rank among the leading sourcing destinations after being absent from the previous edition released in summer 2025.
This improvement is largely attributed to the removal of additional duties that had significantly restricted access to the US market. Several Asian manufacturing economies are also strengthening their positions, including Cambodia, Pakistan, and Sri Lanka, while Vietnam and Indonesia have successfully entered the Top 20.
A New Global Map for Textile Sourcing
The latest ranking highlights a broader transformation within the textile and apparel sector: global competitiveness is no longer determined solely by labor costs. Market access, trade policy, industrial ecosystem depth, and economic stability now play equally critical roles in sourcing decisions.
As trade tensions continue to rise and businesses prioritize more resilient supply chains, companies are increasingly selecting countries that offer the right balance of cost competitiveness, manufacturing capability, and access to major consumer markets. Recent adjustments to US customs tariffs clearly demonstrate how quickly shifts in trade policy can redistribute competitive advantages across apparel-producing nations.
Apparel and Footwear Industry Competitiveness Score (z-score)
Data used for the graph in .xlsx format
> Explore our updated textiles and clothing sector risk assessment.
