The market in 2026 continues to be fraught with volatility regarding tariffs, geopolitics, and logistics costs. Furthermore, ongoing conflicts in some regions of the world not only increase risks but also directly impact the textile and garment supply chain. In light of these factors, businesses within the Vietnam Textile and Garment Group have made early assessments of the market's impact to develop appropriate response scenarios.
Mr. Than Duc Viet – General Director of May 10 Corporation – JSC
Following the US Supreme Court's ruling on February 20, 2026, to terminate global reciprocal tariffs, some customers have retained their basic shirt orders in India, instead of transferring them to May 10 for production as discussed last year. Other product categories such as jackets, trousers, and suits are still securing orders until May, with jackets specifically scheduled for June.
It is expected that Indonesia and Europe will sign the C3 agreement by the end of 2026, effective from 2027. This could reduce tariffs on Indonesian textiles exported to Europe from 10% to 0%. This may lead some customers to switch to ordering shirts from Indonesia.
From June and July 2025, some US customers have requested May 10 to expand production outside of Vietnam, to countries like Egypt and Indonesia; however, this is a long-term plan requiring careful consideration.
Ms. Nguyen Hong Lien – Member of the Board of Directors, General Director of Hue Textile and Garment Joint Stock Company
As predicted by Hue Textile and Garment in 2025, the first quarter of 2026 will see significant fluctuations in the garment industry, product lines, and customer base, but will be more stable for the yarn industry.
For the garment industry, product lines are more complex, order quantities are large, but delivery times are short, requiring mass production across multiple production lines. Customer transactions are also relatively numerous, eliminating concerns about garment orders. The company needs to plan for production operations throughout the second quarter. However, given the changing product lines and short production times, careful consideration is needed to optimize product allocation and increase productivity, especially given the continuously shrinking profit margins in the garment industry. For the yarn industry, current order volumes have reached 75% of the target for April.
Since the outbreak of hostilities between the US and Iran, Hue Textile and Garment has seen positive signs of activity in both the yarn and garment sectors. Customers are proactively placing orders early. For the yarn industry, the focus is on the Chinese market, with increased transactions after the holiday period. Garment customers are tending to increase production capacity further into August and September; however, caution is needed regarding order certainty, as orders are constantly changing in terms of design, delivery time, and quantity. Some orders with designs already in production are still subject to changes, and this is becoming more frequent. All customers and suppliers hope for an optimistic scenario regarding the short-term nature of the conflict.
With that assessment in mind, unlike the first quarter which focused on stabilizing production, Hue Textile and Garment Company will concentrate on finding suitable solutions to negotiate and increase the efficiency of orders. Currently, the most common solution for garment industry personnel is to closely monitor and update information from multiple sources, including their own customers, diversifying markets and customers to minimize risks.
Ms. Hoang Thuy Oanh – Deputy General Director of Hoa Tho Textile and Garment Corporation
At Hoa Tho, customers have not yet clearly assessed the latest market fluctuations. However, based on the company's operational experience, we would like to share four observations about the current market situation.
Firstly, there continues to be changes in the order cycle. Production orders from mid-to-late June onwards are showing signs of being slower than usual. This is a defensive stance by customers to monitor purchasing power and tariff fluctuations. In the third and fourth quarters, production time will continue to be shortened so that customers can optimize inventory. Hoa Tho has prepared its management and production processes to be flexible with small, fast, but urgent orders.
Secondly, similar to the situation at May 10, Hoa Tho's customers are also restructuring their supplier networks and shifting to countries with lower costs and taxes. Basic goods have shifted rapidly to Bangladesh, India, and some African countries with low tariffs to offset increased costs and taxes. At Hoa Tho, some basic, high-volume orders have been shipped, while the majority remain small-quantity orders with complex structures and new materials. For large-scale factories producing basic goods, this will present many challenges. If we only compete on price, our advantage in 2026 will be affected.
Thirdly, regarding concerns about tariff risk management and technical barriers. Following the US Supreme Court ruling on Trump's retaliatory tariffs from April 2025 and the global 10% (expected 15%) tariff, customers are now reviewing their entire supply chains. The US government is tightening traceability requirements to prevent illegal transshipment violations with a global tariff of 10%, expected to reach 15%, lower than the previous 20% reciprocal tariff. However, Hoa Tho believes that the likelihood of existing partners increasing purchase prices or reducing their share is very low. While the reciprocal tariff reached 20%, the company did share with customers, but only at a very low level. This requires collaboration and cooperation, as it wasn't enough to fully cover the costs incurred during that period. Therefore, even with 10% or 15%, there is no significant support or price increase from customers. In this situation, the company continues to work with customers and suppliers to review the origin of goods and access suitable domestic sources, while continuing negotiations on share levels under the new global conditions.
Fourthly, the company recognizes a double risk related to geopolitics and logistics. Currently, escalating tensions between the US and Iran threaten to disrupt the Red Sea region again. Shipments to Europe, especially to the US East Coast, are likely to experience longer transit times. The company also anticipates container shortages and increased freight costs during this period. Therefore, Hoa Tho is working with its customers to revise production plans and delivery schedules to avoid supply chain disruptions.
Mr. Nguyen Hung Quy – CEO of the Group, Member of the Board of Directors, General Director of Southern Textile and Garment Corporation – Vinatex (VSC)
With the current information regarding US tax policy, many customers are tending to shift some orders to Vietnam. For example, as of now, almost all units in the Garment Production and Business Department have sufficient inventory to last until the end of Q2 2026. It is expected that all units currently working with customers in the Garment Production and Business Department will also have sufficient inventory for Q3.
However, Q4 is a period that requires close monitoring, especially given the ongoing conflict in Iran. While it may not have an impact yet, it is predicted to certainly affect the price of raw materials and components. When the price of raw materials and components increases, production costs will increase, and customers will certainly not raise prices. Therefore, this is also a challenge for all units. With such constantly changing market forecasts, Q4 2026... 2026 will be a quarter we need to monitor closely in order to have flexible plans and adjust production accordingly.
Ms. Le Thi Que Huong – Member of the Board of Directors, Deputy General Director of Phu Bai Yarn Joint Stock Company
Generally, in terms of the market, before the war, yarn prices and orders were favorable. Based on existing raw material prices, the market was favorable and more efficient in March and April. However, the war affected oil and fiber prices, and cotton prices also increased, expected to impact May, June, and the coming months. Currently, Phu Bai has orders until April; we need to update the market for the following months.
Ms. Nguyen Thi To Trang – General Director of Vinatex Phu Hung Joint Stock Company
In February, the yarn industry saw positive developments, especially the price of cotton yarn, which increased sharply. CVC and TC yarns also improved. The main reason for the increase in yarn prices stems from China. The rapid rise in Chinese cotton prices has made domestic yarn uncompetitive compared to imported yarn, leading China to import more yarn. Recently, although the US has removed reciprocal tariffs, the trend towards traceability in consumer sentiment and across industries is very strong, with almost all orders requiring 100% US cotton. This trend is very evident. Some brands even explicitly state that 100% US cotton is mandatory for very large orders, up to several hundred tons per order. This trend continues to be a subject of much discussion recently.
The first quarter is essentially complete. Although prices were good, most orders were already finalized beforehand. The price increase will mainly affect orders in April and May, particularly TC and CVC yarn orders. I expect the second quarter's performance to improve compared to the same period last year. However, continued monitoring is necessary as many factors are changing the market, both in terms of demand and customer sentiment.
Regarding the impact of the US-Iran war, there is currently no clear and direct impact on the yarn industry. Demand for yarn continues to increase. However, due to the shock of the war and OPEC's commitment, polyester fiber prices may increase compared to before, although not significantly. During this time, companies can take advantage of the higher prices compared to polyester fiber to improve their selling prices. They can also purchase more when fiber prices adjust or cool down to meet their production requirements.
As for US cotton, although the trend of purchasing US cotton has increased recently, the price of US cotton (according to quoted prices) is only recovering and showing a slight stabilization trend, not a significant increase. Therefore, orders with large quantities of US cotton can take advantage of this to meet production deadlines. Brazilian cotton prices have recently become less competitive compared to US cotton, due to China's previous focus on purchasing large quantities of Brazilian cotton, which narrowed the price gap with US cotton. Purchasing US cotton meets origin requirements and offers a price advantage; companies fulfilling orders requiring traceability of US cotton are taking advantage of this to meet production deadlines.
