Slower market growth, fierceer competition
In 2026, export market outlook for textiles and garments is predicted to be less bright than in 2025. According to major businesses and corporations in the industry, global demand for textiles and garments is still increasing, but the pace has slowed down significantly.
Mr. Hoang Manh Cam, Chief of Board of Directors' Office of Vietnam Textile and Garment Group (Vinatex), stated that the biggest pressure in 2026 will no longer be immediate tariff shock, but rather the fact that tariffs have already "permeated" into consumption. "The room for retailers and suppliers to absorb the tariff costs, meaning they haven't yet passed them all into the final selling price, has almost run out. In 2026, the likelihood of price increases is very clear, which will directly impact consumer demand, especially for textiles and garments with medium to high price elasticity," Mr. Cam analyzed.
According to Vinatex's forecast, total global textile and garment demand in 2025 may increase by about 6% compared to 2024, but in 2026 the increase will only be about 3%, a 50% reduction in growth rate.
Regarding tariffs, the US remains the largest export market for Vietnamese textiles and garments. However, currently, Vietnam is at a "neutral" tariff rate of around 20%, equivalent to Bangladesh and only slightly higher than Indonesia and Cambodia (around 19%), but much lower than India, Brazil, or China. "This is a factor that helps prevent tariffs from creating a major shock for Vietnam's textile and garment industry in 2026," Mr. Cam said. He also stated that speculations about transit tariffs currently lack concrete evidence.
Notably, despite increasingly stringent US tariff policies, by the end of 2025, Vietnam will still be the second largest exporter of textiles and garments to this market, with strong growth. "This shows that Vietnam's textile and garment industry's position in the global supply chain remains very solid. This gives us a certain degree of confidence in the results for 2026," Mr. Cam emphasized.
However, as US tariffs begin to significantly impact consumption, a wave of goods from major exporting countries will shift to other traditional markets such as EU, Japan, and South Korea. It is here that competition is predicted to become even more intense.
In EU, Vietnam is facing significant pressure from Bangladesh, which still enjoys a 0% tariff rate under the least developed country mechanism, and from China, which, having been constrained in the US, has turned to boosting exports to Europe. “From July 2025 to the present, China’s market share in the EU has increased dramatically; they compete by offering very deep discounts. This is a segment where Vietnam has little advantage, or even a significant disadvantage,” a Vinatex representative observed.
Japan continues to be a stable market, but breakthrough growth is unlikely, with textile and garment imports estimated at around $17-20 billion annually. Meanwhile, South Korea, a rapidly developing fashion market, is being affected by political and geopolitical instability, weakening domestic consumption and production. Without a significant recovery in 2026, this will remain a challenging market for Vietnamese textiles and garments.
Businesses must adapt to move forward.
In this context, pressure is directly mounting on export businesses. Mr. Than Duc Viet, General Director of May 10 Corporation, said that 2026 is predicted to be a "tough year" regarding pricing. “Although reciprocal taxes have been adjusted, they still create significant pressure on global fashion retailers, especially in the US. Currently, Vietnam's exports to the US account for over 37%, and May 10 alone accounts for over 50%. Customers are clearly demanding that businesses share the tax costs or reduce prices,” Mr. Viet said.
Meanwhile, input costs, including labor and raw materials, are rising, making price reductions likely to erode profits, or even result in negative business performance. “If we can’t offer the most competitive prices, the risk of orders shifting to countries with lower costs is very real,” Mr. Viet warned.
From an order perspective, picture has also changed significantly. May 10 currently has orders booked until the end of February 2026 and is actively seeking orders for March and the second quarter. Notably, from 2026 onwards, time it takes to confirm customer orders is shortening. “Previously, orders were usually finalized 3-6 months in advance, but now sometimes only 1-2 months in advance. This forces businesses to speed up processing, otherwise they will miss opportunities,” Mr. Viet shared.
Accepting orders quickly is only the first step. More challenging aspect lies in organizing production and developing plans to ensure progress and quality under highly volatile conditions. According to Mr. Viet, the trend in 2026 revolves around two main points: pressure to reduce prices and sharing costs with customers. This is compounded by shorter order lead times, requiring businesses to be more flexible and adaptable than ever before.
In short, 2026 will not be an "easy" year for Vietnam's textile and garment industry. Advantage of cheap labor is gone, tax incentives are no longer outstanding, while competition is increasingly fierce. However, with its established position in the global supply chain, along with efforts to innovate management, digital transformation, and improve productivity, Vietnam's textile and garment industry still has room to move forward, perhaps more slowly and with greater difficulty, but more sustainably.

Source: Vitic/ congthuong.vn