While short-term orders remain stable, textile and garment businesses are acutely aware of the challenges posed by the "double risk" of geopolitical tensions and order shifts due to tariff competition.
(Photo: Duc Duy/Vietnam+)
With export turnover of US$46.2 billion and a trade surplus of US$20.7 billion in 2025, the textile and garment industry continues to be a pillar of Vietnam's exports. However, 2026 presents a difficult challenge as businesses face the "double risk" of tariff fluctuations and geopolitical tensions, forcing them to restructure their strategies to not only retain orders but also increase added value in the context of increasingly fierce global competition.
The pressure is already present.
In reality, textiles and garments remain one of the solid export pillars of the Vietnamese economy. In 2025, the industry recorded an impressive trade surplus of approximately US$20.7 billion, with products reaching over 130 countries and territories. However, entering 2026, the market landscape continues to be volatile, requiring businesses to develop contingency plans well in advance.
The short-term picture shows that orders remain relatively stable until the end of Q2 2026 for many businesses, but most businesses are clearly feeling the pressure from the rapid and continuous changes in markets.
The first challenge comes from the shift in orders due to tariff barriers. Mr. Than Duc Viet, General Director of May 10 Corporation, pointed out this change: "Following the US Supreme Court's ruling on February 20, 2026, to end global reciprocal tariffs, some customers have kept their basic shirt orders in India, not shifting to May 10 for production. In addition, Indonesia's expected signing of the C3 agreement with Europe, reducing tariffs from 10% to 0% in 2027, is also causing customers to shift towards this market."
Agreeing with this assessment, Ms. Hoang Thuy Oanh, Deputy General Director of Hoa Tho Textile and Garment Corporation, stated that basic goods are rapidly shifting to Bangladesh, India, and Africa to offset costs. Ms. Oanh warned: "If we only compete on price, our advantage in 2026 will be severely affected."
Beyond tariffs, the textile and garment industry is also facing risks from geopolitics and logistics. According to Ms. Oanh, escalating tensions between the US, Israel, and Iran risk further disruptions in the Middle East, prolonging transit times to Europe and the US, leading to container shortages and increased freight costs.
The consequences of the conflict also weigh heavily on input costs. Ms. Le Thi Que Huong, Deputy General Director of Phu Bai Yarn Joint Stock Company, analyzed: "The war has caused oil prices, fiber raw materials, and cotton to rise, and this is expected to have a significant impact in May and June 2026."
Assessing the severity of this cost pressure, Mr. Nguyen Hung Quy, CEO and General Director of Vinatex (VSC), emphasized: "When raw material prices increase, production costs will rise, while customers will certainly not accept price increases. The fourth quarter of 2026 will be a crucial period for us to closely monitor and plan production accordingly."
Flexible Production, Upgrading the Value Chain
Despite facing numerous challenges, the short-term outlook for the industry remains bright. A representative from VSC stated that garment manufacturers have almost sufficient orders to cover the remainder of Q2 and are likely to cover Q3/2026 as well. Similarly, Phu Bai Yarn has secured enough orders to cover orders until April 2026.
However, the nature of orders and production methods have necessitated changes. Ms. Nguyen Hong Lien, General Director of Hue Textile and Garment, shared her insights on the practical operational challenges: "For the garment industry, the products are more complex, the order volume is large, but the delivery time is short, forcing us to organize mass production on multiple lines. We need to carefully plan for optimal product allocation and increase productivity in the context of continuously shrinking profit margins."
Besides flexibility in processing capacity, new market standards are also reshaping how businesses source their materials. Ms. Nguyen Thi To Trang, General Director of Vinatex Phu Hung Joint Stock Company, revealed a very clear emerging trend: "Customers' traceability needs are very strong. Numerous brands are requiring 100% American cotton for large orders of up to several hundred tons. Because the price of American cotton is only recovering slightly, companies need to take advantage of this opportunity to purchase it to meet deadlines."
Producing yarn for the domestic and export markets. (Photo: Tran Viet/VNA)
Looking at the long-term strategy, Mr. Truong Van Cam, Vice President of VITAS, noted that global textile and garment demand only increases by about 2-3% annually, making competition among exporting countries increasingly fierce. The Vietnamese textile and garment industry cannot continue the strategy of prioritizing quantity over quality.
“The important thing is to focus on quality growth. First and foremost, we must concentrate on developing domestic raw material and accessory production, followed by upgrading products and increasing their value,” Mr. Cam emphasized.
2026 marks a pivotal period for Vietnam's textile and garment industry. While short-term orders remain stable, businesses are acutely aware of the challenges posed by the "double risk" of geopolitical tensions and the shift in orders due to tariff competition.
Instead of focusing solely on maintaining orders, textile and garment businesses are shifting their strategies towards increasing added value, investing in technology, and developing domestic raw materials and components. This is the inevitable path for the industry to not only maintain its leading export position but also achieve sustainable growth in the context of increasingly fierce global competition.
