Data shows the importance of a healthy export/import balance.
The textile trade in industrialized economies is unequal and deficit-driven. While this is the general trend, trade in creative technology is more positive than trade in produced commodities. The United States boasts a trade surplus in aerospace and military systems. The advanced textiles industry should follow suit and participate in trade that benefits advanced economies. According to the US Department of Commerce, the aviation industry has exported around $20.157 billion in goods year-to-date (till February 2024), while imports were $8.57 billion, resulting in a $11.59 billion surplus.
The global economy and politics
Global commodity trade, particularly textiles, is inextricably linked to the global economy, consumer psychology, and geopolitical environment. According to the most recent International Monetary Fund (IMF) predictions, global GDP will expand by approximately 3.2% in 2024-25.Global headline inflation is expected to decline, with a soft landing. The rate will decrease from 6.8% in 2023 to 4.5% in 2025.
This economic forecast is optimistic for non-essential commerce and industry, but global economic growth over the next five years will need to be closely monitored. Advanced economies will grow at a slower rate than the world average of 1.7% in 2024 and 1.8% in 2025. China and India’s growth rates, albeit slightly lower than in 2023, remain robust, with India surpassing China. China’s GDP is forecast to increase by 4.1 percent in 2025, while India’s is expected to grow at 6.5 percent. Important data to keep an eye on include the total growth in global commerce in both advanced and emerging markets. Exports and imports are predicted to expand, with growth exceeding 2.8% in 2025. The price of oil is a major determinant for the advanced textiles sector, which is primarily reliant on synthetics. Overall, oil prices are likely to fall, which will control the prices of fossil fuel-based raw commodities.
As the textile trade is dependent on smooth global transportation, ongoing conflicts and unrest impacting key regions such as Russia, the Middle East and areas of the European Union will affect supply, and therefore trade. U.S. leadership will play a major role in creating political stability, which will support more stable trade. Given the current scenario, it may be difficult to reach normalcy by the end of 2024, so that growth and trade in 2025 may be relatively better than 2023-24.
2024 is and will be significant in terms of the geopolitical situation with national elections in two major countries, the U.S. and India.
Trade, tariff regimes, investments in defense and infrastructure, support for manufacturing and advanced technologies will depend on the election outcomes in these two democracies. In the case of textiles and advanced textiles, India and the U.S. are key players. respectively. Importantly, India is a player to watch in its textile exports, and in strengthening its domestic technical textiles industry.
Trade imbalance
Given the global insecurity in some regions of the world and inflation still above benchmark, textile trade has slowed down post COVID-19 as indicated by the U.S.’s global trade data. According to the U.S. Dept. of Commerce, global imports of textiles and apparel to the U.S. were about $132 billion in 2022, but fell to $104.95 billion in 2023. During this timeframe, exports of textiles and apparel from the U.S. have been about $24.87 billion and $23.62 billion, respectively.
The trade imbalance shows developed economies such as the U.S. are heavily dependent on emerging economies and lower-wage countries, due to a priority shift in manufacturing. China, India and Southeast Asian Nations (ASEAN) are leading trade partners with a major influx of imported textiles coming from these countries.
Here again, compared to 2022, imports have decreased from these countries showing an overall slowing of trade.
The ASEAN region collectively exported $34.2 billion in textiles in 2022, while this value reduced to $23.617 in 2023. Imports from China and India in 2022 were $32.66 billion and $11.06 billion, while in 2023, the import values reduced to $25.20 billion and $8.99 billion, respectively.
Trade statistics are precisely available for commodity textiles, while in the case of technical textiles, such data are hard to assemble and analyze from government agencies. It is interesting to report that in the case of felts and nonwovens, given the scope of the sector, trade in value terms is relatively small compared to textiles and apparels.
Even in such non-commodity sectors, such as felts and PPE, developed economies, including the U.S., import. 2022, the U.S. imported 2.46 billion Kgs of felt while exports were about 0.3 billion Kgs. In the felts sector, trade slightly reduced from the previous year with imports at 2.334 billion Kgs and exports at 0.29 billion Kgs.
In developed economies, domestic demand for advanced textiles is higher, and production goes for captive consumption, which is a positive trend. This is the reason developed economies still import these products. Product-wise trade details in the advanced textiles industry are needed, which will help the sector to plan and expand.
In the case of the technical textiles sector, competition from low-wage countries may not be high as countries like Vietnam, Bangladesh and Thailand, which are yet to keep the advanced textiles sector as a priority. India is investing heavily in its technical textiles sector and is still dependent on imports for functional fibers and finishes.
Manufacturing comparisons
While technical textiles fall within the manufacturing sector, given the applications of technical textiles in areas such as national defense, health, transportation, infrastructure and environmental protection, threats from other competing countries are reduced. More importantly, the advanced textiles industry, which is research and development (R&D) intense, depends on a skilled workforce, and therefore strategic development of the sector in developed economies will enable growth.
This illustrates the contrast between the general manufactured goods sector and technical textiles. The U.S. Dept. of Commerce trade data year-to-date (February 2024) gives the general pattern of increased imports vis-à-vis exports. Overall, imports of manufactured goods, such as textiles, leather, paper, rubber, iron and steel, were estimated at a value of $49.70 billion, while exports were at $19.59 billion. In the case of advanced technologies such as biotechnology, electronics and defense, this trend is not applicable. The advanced textiles sector needs to model after these sectors to gain optimism and expand.
Policies and a way forward
In general, the manufacturing and commodity products industry, and the influx of imports is forcing governments to embark on protection measures such as trade restrictions, enforcing labor standards and enforcing tariffs. Additionally, intellectual property issues have rightly surfaced and developed economies have increased custom duties on certain products.
During the Trump presidency, tariffs were raised for certain Chinese products. To counter retaliatory measures in certain sectors, like cotton exports, the government created Market Facilitating Assistance providing support to producers that could compensate for the increased tariffs imposed by China on U.S. cotton.
Currently, President Biden is proposing tripling tariffs on steel imports from China. Depending exclusively on tariffs and counter support mechanisms may not be feasible in the long run and may lead to political and trade repercussions. The way forward is to increase productivity, and to look for opportunities to reduce input resources and cost of production. Exploring untapped markets will also help.
Governments must revise trade agreements depending on the need and look for alternate partners and markets. Timing is ideal for the U.S., as the Congress has a bill to revise the Generalized System of Preference. The bill once debated and approved by the Congress will allow preferential and/or duty-free imports from countries such as Bangladesh to counter Chinese imports. Also, within the framework of the Trade and Investment Cooperation and Agreement with countries like Bangladesh, Sri Lanka, Pakistan and Uzbekistan, the U.S. can insist on better labor standards and wages, which can offset the undue advantages some countries enjoy.
In addition to these trade negotiations, governments can invest in more R&D to strengthen manufacturing, which is happening in the U.S., the U.K. and India, for example. The Chips Act in the U.S. and the Technical Mission on Technical Textiles in India are examples of initiatives to revitalize advanced manufacturing.
Given the nature of the advanced textiles sector, support for R&D, the need for domestic consumption and manufacturing, trade negotiations with other nations will help to grow the advanced products sector. Furthermore, due to the nature of applications, such as health care and defense, negative economic aspects may not impact these sectors as is the case with commodity products manufacturing.