REPORTS & RESEARCH — GLOBAL SOURCING
Updated: September 2026
Report: 2026 USFIA Fashion Industry Benchmarking Study
Focus: Sourcing Strategy / Tariffs / Cost / Supply Chain Risk
The 2026 Fashion Industry Benchmarking Study from the United States Fashion Industry Association (USFIA), conducted in collaboration with researchers at the University of Delaware, provides a useful view of how leading U.S. fashion companies are adjusting their sourcing strategies in an increasingly complex trade environment.
The study shows that sourcing decisions are being shaped not only by factory cost, but also by tariffs, policy uncertainty, compliance requirements, supply chain resilience, and the ability of suppliers to respond to changing business conditions.
For apparel sourcing and production professionals, one of the most important messages is clear: sourcing diversification is becoming more strategic rather than simply expanding into more countries.
What the Report Shows
U.S. fashion companies continue to identify protectionist U.S. trade policies and tariff-related uncertainty as their most significant business challenge.
According to the study, 92% of respondents ranked U.S. protectionist trade policies and related policy uncertainty among their top two business challenges in 2026.
Increasing production and sourcing costs have also become a more significant concern.
At the same time, companies are moving beyond short-term reactions and placing greater emphasis on supply chain optimization, compliance capabilities, and operational resilience.
Sourcing Diversification Is Changing
The report shows that U.S. fashion companies continue to maintain highly diversified sourcing networks.
Respondents sourced apparel from 49 countries in 2026, compared with 46 in 2025. Among large companies, approximately 65% sourced from ten or more countries.
However, an important change is taking place.
Companies appear to be moving away from simply adding more countries and vendors. Instead, many are focusing on optimizing existing supplier networks, consolidating vendors, developing stronger strategic supplier relationships, improving traceability, and increasing operational resilience.
For sourcing teams, this suggests that diversification should not be measured only by the number of countries or factories in the sourcing base.
The more important question is whether each supplier adds meaningful capacity, flexibility, cost competitiveness, product capability, and risk protection to the overall sourcing strategy.
China’s Role Continues to Change
China remains an important apparel sourcing country, but its role in U.S. fashion companies’ sourcing portfolios continues to decline.
Only 12% of respondents sourced more than 30% of their apparel products from China, while most respondents sourced less than 10%.
At the same time, the study does not suggest that companies are simply abandoning China.
Respondents continue to recognize China’s competitiveness in areas such as sourcing cost, flexibility, minimum order quantities, and vertical manufacturing capability.
This means the sourcing discussion is becoming less about completely replacing one country and more about determining the appropriate level of exposure within a diversified sourcing portfolio.
Nearshoring Is Growing — But Capacity Still Matters
The study also shows increased interest in sourcing from the Western Hemisphere.
In 2026, 76% of respondents sourced apparel from CAFTA-DR member countries, compared with 64% in 2025.
However, sourcing from the region remains concentrated in a relatively limited range of products, particularly T-shirts, activewear/athleisure, and bottoms.
More than 65% of respondents also identified access to duty-free benefits as one of the most important incentives for sourcing from CAFTA-DR members and Mexico.
This highlights an important practical limitation of nearshoring.
Geographic proximity alone does not create a competitive sourcing base. The region must also have the required material availability, manufacturing capability, capacity, cost structure, and product specialization.
Tariffs Are Changing the Cost Equation
Tariffs remain one of the strongest forces affecting sourcing decisions.
Companies reported using a range of strategies to manage tariff exposure, including supplier contract renegotiation, sourcing diversification, tariff refunds, and first-sale valuation.
The practical implication is that comparing factories based only on FOB price is becoming increasingly inadequate.
The sourcing calculation increasingly needs to consider:
Factory FOB Cost
Duty and Additional Tariffs
Freight and Logistics Cost
Lead Time
Compliance Cost and Risk
Inventory Exposure
Supplier Reliability
The lowest factory quotation may therefore not produce the lowest total sourcing cost.
Compliance Is Becoming a Sourcing Requirement
Another significant finding is the growing importance of forced-labor risk, traceability, sustainability regulation, and supplier documentation.
Managing forced-labor risk rose from the tenth-ranked business concern in 2025 to sixth in 2026.
Companies are also strengthening supply chain mapping, collecting additional supplier compliance information, and preparing for increasing traceability and regulatory requirements.
For factories and suppliers, this means competitiveness increasingly involves more than price, quality, and delivery.
The ability to provide reliable documentation, material traceability, compliance information, and supply chain visibility is becoming part of the supplier evaluation process.
AI Is Entering Apparel Sourcing
The report also provides an interesting indication of how quickly AI is entering fashion sourcing operations.
Among surveyed companies, 56% reported using AI for demand forecasting and inventory planning, while 50% reported applications including sourcing strategy and cost optimization and risk-related functions.
AI is also being used for customs, trade compliance, and tariff optimization.
This does not mean that sourcing judgment can simply be automated.
Instead, AI is increasingly becoming another tool for analyzing larger amounts of sourcing, inventory, cost, compliance, and supply chain information.
Kevin’s Sourcing Perspective
The findings reinforce something that experienced sourcing professionals have learned repeatedly:
A sourcing strategy cannot be built around factory price alone.
A competitive sourcing decision requires the right combination of price, product capability, capacity, quality, lead time, compliance, logistics, and reliability.
Diversification is valuable, but adding more factories or countries does not automatically reduce risk.
Sometimes a smaller group of capable and reliable suppliers can create a stronger sourcing structure than a much larger supplier base that is difficult to manage.
The objective should therefore not simply be to find more suppliers.
It should be to build the right supplier portfolio for the product, customer, cost structure, and delivery requirements.
What Apparel Companies Should Take Away
The 2026 USFIA study suggests that apparel sourcing is moving toward a more mature form of diversification.
Companies are still reducing concentration risk and evaluating new sourcing regions, but they are also paying greater attention to supplier capability, tariff exposure, compliance, traceability, operational flexibility, and long-term supplier relationships.
For apparel companies, the sourcing question is increasingly changing from:
“Where can we produce this product at the lowest FOB price?”
to:
“Which sourcing structure gives us the best combination of cost, capability, flexibility, compliance, and delivery reliability?”
That is a much more useful question for building a resilient apparel supply chain.
Source & Report
This article is based on the 2026 USFIA Fashion Industry Benchmarking Study, authored by Dr. Sheng Lu and Emilie Delaye in collaboration with the United States Fashion Industry Association.
The study surveyed sourcing executives from 30 leading U.S. fashion companies between April and June 2026.