Why Brands Are Moving Apparel Production From China to Vietnam in 2026
Published by Agile Apparel Source | July 2026
Vietnam overtook China as the largest apparel supplier to the United States in 2025. Vietnam surpassed China to become the largest apparel supplier to the United States, with a 17.71% market share, while China followed at 16.96%. That shift — years in the making — reflects a structural change in how global brands think about production geography. ShiJinFshion
In 2026, the picture has gotten more complicated. New tariff developments have introduced variables that weren't in the equation a year ago. This post gives an honest overview of what's driving the China-to-Vietnam shift, what's changed in 2026, and what it actually means for emerging brands making sourcing decisions now.
Why the Shift Happened: The Structural Case for Vietnam
The movement of apparel production from China to Vietnam didn't happen overnight. The rapid relocation of apparel manufacturing orders from China to other countries like Vietnam is not a coincidence — it's the result of a complex mix of policy shifts, cost pressures, supply chain risks, and strategic business decisions. Dar Lon Garment
The primary drivers:
Section 301 tariffs on Chinese goods. Starting in 2018 and escalating significantly in 2025, Section 301 tariffs on Chinese-origin apparel created a material cost disadvantage for brands manufacturing in China. At rates ranging from 25% to 145% depending on category, the tariff exposure on Chinese-origin goods made Vietnam's standard MFN duty rates — typically 12–32% — significantly more attractive by comparison.
Manufacturing capability maturity. Vietnam transformed from a basic assembly hub in 2010 into a high-tech manufacturing powerhouse. The capability gap between Vietnam and China for most standard apparel categories has narrowed to the point where it's no longer a meaningful differentiating factor for most emerging brand product types. home
Supply chain risk diversification. Geopolitical pressure, tariff volatility, and rising labor costs in China have pushed brands of all sizes to reconsider their manufacturing footprint. The "China Plus One" strategy has moved from trend to operational standard. Brands that were 100% China-dependent recognized the concentration risk and began building Vietnam relationships as a hedge — which accelerated as tariff pressure increased. Deepwear
Trade agreement access. Vietnam offers brands a compelling balance of competitive pricing, strong compliance, growing technical capability, and advantageous trade access — particularly to Europe through the EU-Vietnam Free Trade Agreement (EVFTA).
What Changed in 2026: The Honest Picture
The tariff story in 2026 has been anything but straightforward — and brands making sourcing decisions deserve an accurate picture rather than a simplified one.
In April 2025, the US proposed a 46% reciprocal tariff on Vietnamese goods under IEEPA authority. This was subsequently reduced to 20% under a July 2025 trade deal framework. Then the situation shifted again.
On February 20, 2026, the US Supreme Court ruled 6-3 that IEEPA does not grant the President the authority to impose sweeping across-the-board tariffs — invalidating the reciprocal tariff regime entirely. Within days, the administration replaced the struck-down tariffs with a temporary 10% Section 122 surcharge, effective February 24, 2026 for a 150-day window.
The steep country rates from the IEEPA period — Vietnam 46%, Bangladesh 37%, Cambodia 49% — ended in February 2026 and are now refundable for importers who paid them.
As of August 2026, the Section 122 surcharge has expired (July 24 expiration), and US trade policy is in another transition period. A new Section 301 tariff of 12.5% on 46 countries has been proposed as a replacement mechanism, though the final framework is not yet settled.
The net picture for Vietnam-origin apparel entering the US today: standard MFN base rates of 12–32% depending on product category, plus whatever surcharge mechanism is in place under the current framework. Vietnam remains significantly more competitive than China for most apparel categories because Section 301 tariffs of 7.5–25% continue to apply to Chinese-origin goods — a surcharge that does not apply to Vietnamese goods.
The honest summary: the tariff environment is more favorable for Vietnam than it appeared in mid-2025, but it remains in flux. Brands should run current landed cost calculations with their customs broker rather than relying on any single source — including this one.
What Still Makes Vietnam a Strong Sourcing Choice in 2026
Despite the tariff volatility, the structural case for Vietnam remains solid across several dimensions:
The China tariff gap persists. Vietnamese imports do not face Section 301 tariffs of 7.5–25% that apply only to Chinese goods — meaning the total tariff burden on Vietnamese products remains generally lower than on equivalent Chinese products. This advantage survived the IEEPA period and the Supreme Court ruling.
Manufacturing capability is real and established. Vietnam transformed from a basic assembly hub into a high-tech manufacturing powerhouse. The capability gap between Vietnam and China for most standard apparel categories has narrowed significantly. That capability doesn't shift with tariff policy.
EVFTA access for EU-bound goods. For brands shipping to European markets, the EU-Vietnam Free Trade Agreement provides 0% import duty for qualifying goods meeting EVFTA's double-transformation origin rules — an advantage completely separate from the US tariff situation.
Refunds are in process. Importers who paid the struck-down IEEPA duties may be eligible for refunds, which US Customs and Border Protection has begun processing. Brands that continued sourcing from Vietnam through the IEEPA period may have money coming back.
Supply chain infrastructure is built. The China Plus One strategy has moved from trend to operational standard. Brands that built Vietnam relationships are likely to maintain them even as tariff math shifts — because the cost of rebuilding a supply chain relationship is real.
What This Means for Emerging Brands
For a brand at 150–500 units per style, the sourcing decision in 2026 requires more nuance than it did two years ago:
Run the landed cost math for your specific product. The tariff situation is complex enough that general statements about Vietnam vs. China cost comparison are less reliable than they were. The calculation depends on your product category, HS code, order volume, and shipping method.
EU vs. US market matters. If your primary market is the EU, Vietnam's EVFTA advantage remains meaningful and the reciprocal tariff doesn't apply. If your primary market is the US, the new tariff environment changes the calculation.
Quality and capability still matter independently of tariffs. A manufacturer that can produce your garment to spec, communicate reliably, and deliver on timeline has value that isn't fully captured in a per-unit cost comparison.
The relationship infrastructure matters. Finding a reliable manufacturing partner takes time. Brands that have built Vietnam relationships are likely to maintain them even as tariff math shifts — because the cost of rebuilding a supply chain relationship is real.
A Note on Transparency
At Agile Apparel Source, we think it's important to give brands an accurate picture of the sourcing environment rather than a marketing-optimized one. The 2026 tariff developments are real and affect the landed cost calculation for US-bound goods from Vietnam.
What we can offer: transparent cost breakdowns including applicable duties, production that meets international quality standards, and documentation that supports accurate customs classification. If you're evaluating Vietnam sourcing and want a realistic assessment of what makes sense for your specific product and market, contact us to discuss.
Agile Apparel Source produces apparel for emerging brands with MOQs starting at 150 units per style, with US and EU export documentation handled as standard.
