Just Style considers the impact expiration, renewal and creation of key trade agreements in 2025 will have on the global fashion sector.

For the global fashion sector, trade agreements are essential to maintaining stable supply chains with predictable costs. Disruptions to that – the sudden imposing of tariffs as one example – can throw the whole process into turmoil.

Recently, the global trade environment looks increasingly volatile, in part due to changes in political relationships between major nations, but also the looming expiration of trade deals, which is forcing many US and EU fashion retailers to consider contingency plans.

Speaking of the situation in the US, Robert P. Antoshak, VP of Strategic Global Sourcing and Development at Grey Matter Concepts, tells Just Style: “The central takeaway from the early months of the Trump administration is that trade relations have been marred by uncertainty and swiftly changing policies. The uncertain environment surrounding these free trade/preferential trade agreements will make business planning problematic for fashion companies. Ironically, such uncertainty could undermine Trump administration policies to encourage more domestic manufacturing, particularly if trade relations continue to be strained.”

While Matthijs Crietee, secretary general of the International Apparel Federation, warns that a global tariff war looming over the market “is a huge source of uncertainty.”

He says: “For business, and especially a huge, complex and global business as the apparel and textile industry, uncertainty is bad news. It drives up costs because the industry has to take precautions and take into account multiple (sourcing) scenarios. We also see overstocking in anticipation of possible higher tariffs. And uncertainty prevents companies from making much-needed investments.”

For the EU, the fashion sector stands at a crossroads, where strategic trade policies can propel it towards greater competitiveness and sustainability. Euratex is pushing for the finalising of the EU-Mercosur Free Trade Agreement (FTA), revising the EU-Türkiye customs union, negotiating a balanced EU-India trade agreement, enhancing trade facilitation with the US and ensuring a closer coordination among trade, industrial and energy policy – all of which are key priorities that can collectively bolster the sector.

“By adopting these strategic priorities, the EU can ensure that its textile sector remains strong, competitive, and resilient in the face of global challenges,” explains Euratex.

“The next five years will be critical to determine whether manufacturing textiles in Europe will be economically viable or not.”

Euratex adds that the EU and the textile sector need to engage in “a delicate balancing act” to enhance access to markets outside the EU and to keep the door open to global supply chains while at the same time implementing an “assertive trade policy that promotes the EU industry on the global stage and applies trade defence measures where needed and justified.”

Just Style considers the trade agreements most impacting the global fashion sector today and consults industry and trade experts on how amendments or changes to these will affect trade for them going forward.

United States-Mexico-Canada Agreement (USMCA)

In his sweeping tariff strategy, US President Donald Trump targeted two of the US’ key trading partners – Canada and Mexico – much to the concern of the US fashion and retail sectors which have been making a concerted push to source more heavily from these locations, particularly after the US Mexico Canada (USMCA) Trade Agreement came into force in 2020.

According to the United States Trade Representative (USTR), US goods exports to USMCA in 2022 were $680.8bn, up 16.0% ($94.1bn) from 2021 and up 34% from 2012. US goods imports from USMCA totalled $891.3bn in 2022, up 20.5% ($151.5bn) from 2021, and up 48% from 2012. US exports to USMCA account for 33.0% of overall US exports in 2022.

So it’s safe to say panic spread across the apparel and textile supply chains of USMCA countries when Trump made his announcement. Shortly after however, the Administration clarified goods under the USMCA would not be subject to tariffs, much to the relief of the fashion sector.

Antoshak said: “At this early stage in the Trump administration, a consistent policy regarding the USMCA has yet to emerge. In the interim, trade relations among the USMCA signatories remain rocky. USMCA may change,” he warns.

Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)

Dr Sheng Lu, professor of apparel studies at the University of Delaware, notes that in 2024 utilisation of the CAFTA-DR trade agreement improved, despite the volume of US fashion imports being stagnant overall.

“Specifically, in 2024, about 73.0% of US apparel imports came from CAFTA-DR members claimed the duty-free benefit, up from 70.5% in 2023. Particularly, 68.2% of US apparel imports under CAFTA-DR complied with the yarn-forward rules of origin in 2024, a notable increase from 61.3% in 2022 and 65.4% in 2023. Another 2.7% of imports utilised the agreement’s short supply mechanism, also went up from 2.3% in 2022 and 2.5% in 2023, thanks to additional products approved for the list last year.

“Overall, the improved utilisation of CAFTA-DR reflects an ever more integrated regional textile and apparel supply chain among its members. However, additional efforts could be made to further diversify the region’s product offers and strengthen its local textile manufacturing capability.”

African Growth and Opportunities Act (AGOA)

The African Growth and Opportunities Act (AGOA) remains up in the air, much to the ire of the US apparel and textile firms that are looking for greater opportunities to diversify sourcing outside of Asia.

Antoshak says with no word from the US administration on whether it will be reauthorising or modifying AGOA, participants are left “uncertain about its prospects for renewal or extension after the current agreement expires in 2025.”

But Lu questions whether the trade benefit was being effectively utilised at all during its tenure.

“Trade data shows that US apparel imports from Sub-Saharan Africa (SSA) members have stagnated over the past decades without evident growth. Notably, with little change from 2010, SSA countries collectively accounted for only 1.7% of US apparel imports in 2024, down further from 1.8% in 2023. No single SSA member achieving a market share of more than 1% in 2024. In contrast, over the same period, despite China’s declining market shares, the following five largest Asian suppliers —Vietnam, Bangladesh, India, Indonesia, and Cambodia — jointly accounted for 44.2% of US apparel imports in 2024, a notable increase from 27.4% in 2010.

“With the fast-approaching expiration of AGOA in September 2025, the outlook for the SSA region as an apparel sourcing base for US fashion companies is becoming increasingly uncertain. Without an immediate and long-term renewal of the agreement, US fashion companies would be even more hesitant to commit to sourcing from the region or making new investments to expand the textile and apparel production capacity there.”

Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) and Haiti Economic Lift Program (HELP) 

According to the Wilson Centre, since the HOPE I/HOPE II/HELP programmes came into effect, Haiti’s apparel exports to the US have quadrupled from $231m in 2001 to $994m in 2021. 

But the benefit is set to expire in 2025.

Antoshak notes: “HOPE/HELP remains uncertain, and efforts to renew the programme are pending. New Trump administration procedures that no longer shield illegal Haitian immigrants from deportation further complicate a renewal.”

Last month, the American Apparel and Footwear Association called on US Congress to pass new bipartisan legislation for a decade-long HOPE/HELP Haiti trade programme to reduce supply chain uncertainty. 

“Delays in renewing the programme, coupled with acute security concerns, have already contributed to the loss of nearly 2/3 of the 60,000 Haitian textile and apparel jobs that existed just two years ago. More of those jobs will be lost in the coming months if Congress fails to act soon,” said AAFA’s vice president of trade and customs policy Beth Hughes.

While Canadian clothing manufacturer Gildan’s vice president of commodities, Marc Doyan, argued, HOPE/HELP renewal legislation also plays a vital role in supporting US textile jobs and strengthening regional supply chains.

US-EU Covered Agreement 

According to Euratex, the US remains one of the EU’s most significant trading partners, and enhancing trade facilitation measures can substantially benefit the textile sector.

But the economic relationship between the EU and the US is on an unstable trajectory, with its dynamics largely shaped by the elected presidents.

The EU’s ties with the US in the textile sector could therefore have a significant impact on the future of the EU textile industry. In light of this, Euratex recommends prioritising the development of policies aimed at de-escalating potential trade conflicts, ensuring that the EU textile industry can thrive independently. Amid its priorities it says it is looking at agreements that reduce trade barriers which includes streamlining customs procedures and enhancing regulatory cooperation to avoid duplication and unnecessary delays; greater regulatory cooperation that helps in aligning standards and testing requirements, making it easier for EU textiles to enter the US market; and enhancing collaboration on sustainability.

Speaking to Just Style, Kathrin Jaenecke, Euratex senior policy officer – Trade, Industrial Policy and Energy, says the recent tariff announcements on EU goods creates “a complicated situation for us” given the US is a significant partner.

While reciprocal tariffs loom, she says Euratex members are keen not to open a trade war.

She says moves like this create “great uncertainty and instability in the market”.

“It is a worry… and we are monitoring the situation carefully.”

“We hope that we can find a compromise there and that it does not come to this great trade war, because the US is a key partner for us.

She is hopeful, given the US consumer’s appetite for luxury goods coming from the EU, Trump will rethink the decision.

“Let’s hope there is a realisation that the US is more dependent on the EU than it thinks”.

But she also notes that it should be a lesson in resilience for EU producers and exporters and a lesson in self-reliance for the governments themselves.

“We talk about wanting to level the playing field and increase our competitiveness. We have so many skilled makers here yet we’re not utilising them to their full potential,” she asserts.

She points to the defence sector.

“We have defence textiles. We have European suppliers. But then we’ve had member states that are purchasing defence uniforms from China. They could’ve bought the same uniforms here, perhaps even at better quality. But again, it’s about ensuring sustainability over the sector rather than prioritising price. We have a lot to do. We need to assess our own behaviour.”

But to the same degree she warns it’s important not to become protectionist which she says is “not the spirit of the European Union and not the spirit of the trade policy that the European Union follows.”

EU-Mercosur Free Trade Agreement 

The EU-Mercosur Free Trade Agreement is poised to create one of the world’s largest free trade areas, encompassing over 770m people.

It would allow access to Argentina, Brazil, Paraguay, and Uruguay, which Euratex says represents a significant market for EU textiles.

“With the elimination of tariffs and non-tariff barriers, EU textile exports could see substantial growth. This enhanced market access is vital for EU companies looking to diversify their markets and reduce dependency on traditional trading partners.”

The FTA would provide EU textile manufacturers with a competitive advantage over non-EU competitors who do not benefit from similar trade agreements with Mercosur. This can help in increasing the market share of EU textiles in these countries. And by aligning Mercosur countries with EU environmental and labour standards, this FTA can ensure that market expansion does not come at the expense of ethical considerations.

Euratex is urging policy makers and legislators to do everything they can to swiftly finalise and ratify this agreement.

Jaenecke says the agreement would provide access to Brazil which has been on the wishlist of fashion and textile exporters for a long time.

“Brazil is a market that is autonomous and self-reliant, and for us, it would be a huge opportunity to access this market. The current terms make it difficult for our members to export to Brazil. But with Mercosur in place, there is a greater advantage. Mercosur would also create a level playing field regarding sustainability as it respects the Paris agreement.

Crietee agrees Mercosur is a key trading agreement the EU fashion and textile industry is holding out for.

However, it still has to be ratified by the Mercosur national parliaments and by the European Council.

“Here, a minimum of four states representing at least 35% of the EU population could block the agreement. France, Austria, and Poland have stated that they oppose the agreement, but they would need another large country to reject the agreement at the European Council. Then, if the agreement is not blocked, it must be ratified by the European Parliament. This approval only applies to the ratification of those provisions that fall within the exclusive competence of the European Parliament, mainly those related to trade liberalisation, and do not require ratification by national parliaments.”

However, he points out: “Interestingly, the threat of tariffs from the US has stimulated both EU and Mercosur to come to an agreement. Countries are increasingly thinking of ways to replace export to the US. The EU-Canada CETA agreement is already in place, but it has taken on additional importance for Canada.”

EU-India Agreement 

Euratex says increasing prosperity in Indonesia, Thailand and the Philippines, along with India, with its vast market and growing economy, present significant opportunities for the EU textile sector. But a balanced approach is crucial to ensure that the agreement is both free and fair.

While the EU looks to negotiate for tangible market access opportunities, such as reducing high tariffs it also needs to ensure that EU textile exports can enter the Indian market on equal terms with Indian exports entering the EU market. This includes requiring India to abolish all textile-related mandatory Quality Control Orders and BIS standards, such as those for polyester and cellulosic fibres.

“This must be a precondition for concluding the FTA negotiations,” says Euratex, stressing that the principle of reciprocity must remain central to trade liberalisation.

Euratex is calling on any trade agreement to ensure robust intellectual property rights protection to safeguard the innovations and designs of EU textile companies and that the agreement should include provisions that promote high labour and environmental standards, a critical point for the textile sector which will align with the EU’s commitment to sustainable and ethical trade practices.

Jaenecke says: “India presents a huge opportunity for the EU textile sector but equally carries some concerns. It has its own huge textile market and a political priority for them would be to extend that market.

“While we support the agreement, of course, it can’t be at any price. As part of the negotiations, we need to ensure there isn’t any creative idea to block the exchange. What we want to avoid is a flooding into the EU market of goods… they have the production and export capacity, and already, as we have seen with the Chinese platforms, there are millions of products coming in daily that can’t be quality and safety checked. That creates an uneven playing field for EU players.

“So yes, there’s great potential; yes we are in favour of it; but equally we need to be aware of any consequences to our market.”

EU-Türkiye

Since 1995, the EU and Türkiye have operated a customs union agreement that has been instrumental in boosting trade between the two regions.

Euratex is looking for an expansion and transformation of the agreement to a revised Customs Union which it says will yield more satisfactory results for both parties.

In the revision, it hopes for enhanced regulatory alignment on emerging issues like sustainability and environmental regulations for facilitating smoother trade.

And it wants the removal of transport quotas, simplified visa processes for the business sector, Türkiye’s inclusion in expert working groups, and the establishment of effective consultation and dispute resolution mechanisms.

It also seeks mechanisms for the swift and effective resolution of trade disputes to be strengthened.

“This will ensure that trade flows remain uninterrupted and that businesses can operate with greater certainty and stability.”

Jaenecke says: “We’re looking at modernising the existing agreement, adapting it to new standards and to foster also the relations between the two countries.

“It’s not always easy to maintain a great trading relationship when there’s political turbulence in the background. But Türkiye is a critical partner for the textile supply chain.”