Key takeaways
- Global textile industry confidence hit -25 percentage points in March 2026, the worst reading since November 2022, as geopolitical crisis overtook weak demand as the sector’s primary concern for the first time.
- The war in Iran has triggered a petrochemical supply crisis pushing production costs up across the board.
- US tariffs have reshuffled the geography of global apparel trade but not revived domestic manufacturing. US apparel output fell 17% while Asian suppliers collectively gained market share.
The global textile industry was already navigating a difficult year when the Strait of Hormuz effectively closed to commercial traffic in late February 2026. What followed made a complex picture significantly worse.
The International Textile Manufacturers Federation published the results of its 37th Global Textile Industry Survey in April 2026, conducted across the sector in March. Industry confidence had collapsed to -25 percentage points, the worst reading since November 2022. Business expectations fell from +23 points to just +5. For the first time in the survey’s history, geopolitical crisis had overtaken weak consumer demand as manufacturers’ primary concern, cited by 50% of respondents. Africa was the only region still in positive territory. North and Central America recorded the steepest decline of all.
The demand problem nobody is talking about
Years of elevated inflation, rising interest rates, and persistent geopolitical uncertainty had already taken a measurable toll on consumer confidence across Western markets well before 2026. Households had been quietly recalibrating, cutting discretionary spending, trading down, and deferring purchases that weren’t strictly necessary.
Fashion bore the brunt of it. In Europe, it became the single category where household net spending fell furthest — down 22 points in six months, according to Boston Consulting Group data drawn from a survey of 16,000 consumers. Euro Area consumer confidence hit -16.3 in March 2026, its lowest since October 2023. Europeans now allocate just 4.3% of total expenditure to clothing and footwear, down from 4.7% in 2018, according to Eurostat data via CBI.
The energy crisis behind the fabric
The war in Iran has disrupted global energy markets in ways that are now working their way directly into the cost of production across the global textile industry. The connection is polyester, the dominant fiber in global textile production, accounting for 59% of output.
Monoethylene glycol (MEG), a key input for polyester fibers, is one of the Gulf’s most significant chemical exports, with around 6.5 million tons shipped in 2025 alone. That supply is now largely trapped. Filatex, one of India’s biggest polyester yarn producers, is paying nearly 30% more for the petroleum-derived feedstocks it needs to make yarn. The CEO of Bindal Silk Mills, which supplies dyed and printed polyester fabrics to H&M, Inditex, Target, Walmart and IKEA, told Reuters the energy crisis had “drastically” pushed up the cost of chemicals and dyes.
The pressure is moving through the entire value chain. In Bangladesh, even factories making mostly cotton-based clothing face higher prices for the polyester sewing thread that feeds their sewing machines. Thread producer Coats Bangladesh announced a 15.5% price increase effective April 15, citing the “rapid escalation in oil-derived feedstock costs.”
The exposure extends well beyond apparel. Petrochemical-derived materials are embedded across virtually every textile-dependent sector, from footwear and home furnishings to automotive interiors and medical textiles. For now, some retailers are cushioned by forward buying, but that buffer has a shelf life. The cost shock is already embedded in the supply chain. How far it travels, and how fast, depends on how long the conflict persists.
What the US tariffs actually did and didn’t do
US textiles and clothing imports fell 12% in Q1 2026, to $23.7 billion. China’s exports to the US collapsed 45.9% year on year. The numbers are stark. But the story they tell is one of geographic redistribution, not demand recovery or domestic revival.
Vietnam absorbed much of what China lost. It is now the leading supplier to the US market, with $4.4 billion in Q1 exports — up 4.7% year on year. Vietnam, Bangladesh, Indonesia, India and Cambodia together now account for 50.6% of US apparel imports, compared to 37.1% pre-COVID, according to research by Dr. Sheng Lu of the University of Delaware. The ASEAN bloc overall posted a 5.8% increase to $7.8 billion even as total US imports contracted.
The reshoring argument has not held. Kearney’s 2026 Reshoring Index found that US apparel manufacturing output fell 17% last year. Combined imports from 14 Asian low-cost countries grew 6%. The tariffs redirected trade flows. They did not reverse them.
Industry mood in the US market is now defined less by the tariff rates themselves than by the uncertainty around them. The additional duties imposed under Section 122 are due to expire on 24 July 2026. The Trump administration has signaled it will pursue further measures under Section 301. Full supply chain realignment takes 12 to 18 months at minimum, and companies are being asked to make those decisions in a policy environment that can shift within weeks.
What comes next
The three forces hitting the global textile industry in 2026 do not have a single resolution date. The Iran conflict has no clear end in sight, and even a full reopening of the Strait of Hormuz would leave months of mine-clearing, elevated insurance premiums, and petrochemical price volatility in its wake. US trade policy enters a critical window in late July, but the administration has signaled further measures are coming, and the sourcing decisions that companies make now will take 12 to 18 months to fully execute. Consumer demand in Western markets, meanwhile, is a structural issue that no policy change resolves quickly.
What the textile sector is left with is a recalibration question: not whether to diversify supply chains, but how far, how fast and at what cost. In an industry built on long lead times and fragile margins, the luxury of waiting for clarity is one most players simply cannot afford.
