The U.S.-China Textile and Apparel Trade: A Trade Competitiveness Analysis for the Period 1992-2022

Abstract

This study looks at how the U.S. and China have interacted in the textile and apparel sector over a thirty-year period, from 1992 to 2022, and tries to make sense of the structure and nature of that relationship. Instead of focusing only on trade volumes, the paper uses three different tools “TCI (the trade complementarity index), ESI (the export similarity index) and Balassa’s RCA (revealed competitive advantage, RCA)” to see whether the two countries behave more like competitors or whether their trade tends to fit together in a complementary way. One of the evidences comes from the TCI results: China’s export profile in textiles and clothing lines up quite closely with import of the U.S., suggesting a relationship in which the U.S. mostly plays the role of import country and China the supplier. The ESI results, on the other hand, show that the two countries’ export structures are not very similar, especially in third markets, which implies that head-to-head competition between them is not particularly strong outside their bilateral trade.The policy implications that follow from these findings point in different directions for each country. On China’s side, the evidence shows that it holds a strong position in this sector and continues to meet much of the demand coming from the United States. At the same time, heavy depency on the U.S. market also appears to carry certain risks. Diversifying its export destinations, rather than becoming overly dependent on a single large buyer, would help China protect itself against potential changes in U.S. demand or shifts in American trade policy.For the United States, the analyses revealed that the situation was almost the exact opposite. The persistent comparative disadvantage in textiles and apparel, combined with its low export similarity with China, suggests that competing directly with Chinese producers on cost or product range is unlikely to yield strong results. A more practical path for the U.S. would be to redirect its resources toward industries where it already holds stronger advantages, instead of trying to match China within a sector that has long been structurally unfavorable for American producers.