China Is Losing America’s Garment Market. Pakistan Has the Cotton and the Factories. So Why Is Cambodia Beating It?

 

Pakistan has cotton and a deep textile base, yet Cambodia exported more than twice as much apparel to the United States during January-July 2026.

China's retreat from the U.S. apparel market should have opened space for Pakistan. Instead, Cambodia is expanding while Pakistan remains far behind. The comparison exposes an uncomfortable weakness inside Pakistan's export model.

The Country Missing From the Graphic

A graphic caught my attention on my phone in Karachi. It ranked the leading Asian suppliers of apparel to the United States during the first seven months of 2026. Vietnam stood far ahead at about $9.37 billion, while Bangladesh followed at $4.66 billion. China had slipped just behind it.

I kept moving down the chart. Indonesia appeared. Cambodia came next at roughly $2.62 billion. India occupied sixth place, but the country I expected to see was absent.

Pakistan.

The omission looked strange because Pakistan has spent decades building an enormous textile industry. Cotton still feeds part of that industrial system, and Pakistani mills manufacture products for some of the world's most demanding markets. The U.S. International Trade Commission has identified vertical integration as one of Pakistan's competitive advantages and highlighted the country's strength in high-quality denim.

Pakistan had not disappeared from American clothing stores. It simply fell below the six countries shown in the graphic.

U.S. import data for January through July 2026 put Pakistan's apparel shipments at roughly $1.26 billion. Cambodia supplied about $2.62 billion. A Southeast Asian economy without Pakistan's domestic cotton-textile base therefore sold the United States more than twice as much apparel.

I stopped looking at the chart as a ranking after that. It looked more like a question about Pakistan's industrial model.

China Is Leaving Space, but Not an Empty Market

China's position in American apparel sourcing has changed sharply.

During January through July 2026, Chinese apparel shipments to the United States fell about 34 percent from the same period a year earlier. Their value dropped to roughly $4.55 billion.

It would be tempting to convert China's decline into a simple Pakistan story: China lost orders, therefore Pakistan should have gained them. The numbers do not support such an easy conclusion because the entire American apparel import market weakened during the period. Total imports fell about 8.65 percent, reaching $41.83 billion.

Yet suppliers performed very differently inside that shrinking market.

Vietnam's exports declined only slightly. Indonesia recorded growth. Cambodia did considerably better, with shipments rising about 10.5 percent to $2.62 billion. Pakistan moved in the opposite direction, falling roughly 5.6 percent to around $1.26 billion.

Cambodia therefore presents the useful comparison. It did not need the American market to expand before taking a larger piece of it.

Pakistan did.

Pakistan's Textile Strength Can Hide Its Apparel Weakness

Pakistan's absence from an apparel ranking should not be confused with the collapse of its textile industry.

Textiles remain central to Pakistan's export economy. Official figures put textile and apparel exports at about $17.9 billion in FY2024-25, accounting for more than half of merchandise exports. The government has also been working on a new textile and apparel policy after examining the barriers facing exporters.

More recent numbers show substantial industrial activity. Pakistan earned roughly $17.9 billion from textile exports in FY2025-26. Readymade-garment exports also recorded strong year-on-year growth in July 2026.

The distinction between textiles and apparel changes how I read the original graphic.

Pakistan remains particularly important in cotton-based manufacturing and denim. Home textiles constitute another major business, but an apparel-only ranking does not capture those exports. OTEXA separates different textile and apparel categories in its trade statistics, so Pakistan's $1.26 billion apparel figure should never be presented as its total textile trade with America.

Still, the qualification does not erase the comparison with Cambodia. It makes it more interesting.

Pakistan built much of its industrial strength around the earlier stages of the textile chain. Global garment sourcing rewards something slightly different: the ability to convert materials into the particular finished clothing that retailers want, under commercial conditions they can trust.

That distinction is where Cambodia enters the story.

Cambodia Imported What It Lacked

Cambodia's garment industry developed under conditions that should have placed it at a disadvantage against Pakistan.

It lacks Pakistan's extensive domestic cotton-textile chain. Cambodian factories depend heavily on imported inputs, while foreign investment has played a major role in building the country's export-oriented garment sector. The USITC has described Cambodia as an increasingly attractive sourcing alternative to China.

Instead of waiting to develop every upstream industry at home, Cambodia built factories around international production networks.

Fabric can come from abroad. The garment can still leave a Cambodian factory carrying value added inside Cambodia.

That model says something important about modern manufacturing because the nationality of every input matters less to an international buyer than the performance of the production system. A sourcing executive needs a factory capable of producing the required garment at an acceptable commercial cost. Delivery reliability then determines whether the relationship survives the next buying season.

Pakistan possesses deeper upstream capacity. Yet Cambodia's January-July performance suggests that upstream depth does not automatically translate into dominance at the garment end of the chain.

A bale of cotton is an advantage. It is not a purchase order.

Even Pakistan's Cotton Advantage Has Become Complicated

The phrase "Pakistan has cotton" also deserves scrutiny.

Pakistan certainly has a large cotton economy. Domestic production, however, has struggled to meet the requirements of its textile mills. A USDA assessment estimated Pakistan's 2025-26 cotton production at about 4.8 million 480-pound bales, against domestic consumption estimated at 10.6 million bales.

Imports fill much of that gap.

That does not invalidate Pakistan's textile advantage, but it changes its character. An industry once imagined as running from Pakistani cotton fields into Pakistani mills now depends substantially on international supply for an essential raw material.

The composition of global clothing demand creates another difficulty. Pakistan developed formidable expertise in cotton-based textiles, with denim providing one important success story. Yet the international apparel business extends far beyond the products that fit most naturally into Pakistan's traditional cotton ecosystem.

A World Bank examination of Pakistan's textile value chain had already identified difficulty obtaining synthetic fibres as a constraint. It also found excessive concentration in relatively low-value cotton products outside stronger niches such as denim.

That diagnosis predates the current movement away from China.

Years passed. The sourcing map moved.

Pakistani Exporters Have Already Told Islamabad Where the Friction Lies

In February 2026, Pakistan's Commerce Ministry held consultations with textile and apparel industry representatives. Their complaints were concrete rather than theoretical.

Industry representatives raised high energy costs alongside infrastructure constraints. They also pointed to liquidity pressure caused by delayed refunds.

Financing created another layer of concern. Exporters wanted changes to credit arrangements and temporary import facilities, while repeated shifts in government policy complicated longer-term investment decisions.

Consider those problems from the desk of an American sourcing executive rather than from a ministry in Islamabad.

A Pakistani factory may quote an attractive price and possess decades of manufacturing experience. If operating costs move unpredictably, however, the buyer must incorporate that uncertainty into the relationship. Delays involving imported inputs create a separate calculation because fashion retail operates against seasonal inventory schedules.

No dramatic announcement follows.

A Cambodian supplier may simply receive another production run while the Pakistani factory receives fewer pieces than expected. Somewhere inside the statistics several months later, Cambodia's line rises and Pakistan's line falls.

The exporter experiences the consequence long before it becomes a national debate.

Pakistan's Trade Model Creates Another Contradiction

Modern export manufacturing depends heavily on imports.

Factories need machinery and specialised inputs from abroad. Garment producers may also require fibres unavailable locally in sufficient quantity or quality. An export strategy therefore cannot treat every import primarily as a drain on foreign exchange.

Pakistan has struggled with precisely that tension.

A July 2026 World Bank assessment argued that Pakistan's tariff structure has historically protected domestic industries while increasing the cost of imported inputs. The Bank linked that structure to an inward-looking economic model that weakens export competitiveness.

Cambodia offers an almost awkward counterexample.

It did not insist that every stage of garment production had to originate domestically before its factories could compete abroad. Imported material entered the country, workers and factories added value, and finished garments left for markets such as the United States.

Pakistan possesses far more domestic textile capacity, but parts of its policy system have repeatedly made access to foreign inputs expensive or cumbersome.

From my experience around cross-border payments in Karachi, I find the contradiction familiar. Goods may cross several borders before becoming a finished export. Money follows another network through banks and correspondent relationships, while commercial deadlines continue running regardless of the administrative difficulties encountered along the way.

A modern export economy cannot function as an island simply because the finished product carries a Pakistani label.

Tariffs Cannot Fully Explain the Gap

The changing U.S. tariff regime complicates any comparison in 2026, so the legal position needs careful treatment.

The White House's country schedule established a 19 percent reciprocal tariff rate for Pakistan. Cambodia also appeared at 19 percent under the revised U.S. framework.

Washington later reached a reciprocal trade agreement with Cambodia under which that headline rate remained 19 percent, subject to specified exceptions.

A further trade action arrived in July 2026 when USTR announced Section 301 measures connected with forced-labour practices. Both Pakistan and Cambodia were among the economies affected by the action, although the precise duty applicable to an individual shipment depends on the measure's legal scope and the product's classification.

For an importer, the actual landed duty must therefore be calculated against the relevant HTS classification. A headline national tariff cannot substitute for a product-level customs assessment.

Even with that qualification, tariffs do not provide an easy explanation for Cambodia's lead over Pakistan. Both faced the same 19 percent headline reciprocal rate in the White House schedule, yet their apparel exports moved in opposite directions during the first seven months of 2026.

The divergence began inside factories and sourcing networks before it appeared on a customs spreadsheet.

What a Buyer Actually Purchases

Working around cross-border payments has made me wary of the way Pakistan sometimes discusses exports.

We often begin with what the country possesses. Cotton becomes an advantage. Low-cost labour becomes another.

The buyer begins somewhere else.

An American retailer places an order under a commercial timetable. The supplier has to manufacture the specified product at the agreed quality. Once production begins, reliability becomes visible through mundane things: whether imported material arrives when expected, whether financing remains available, whether the exporter can absorb a sudden operational problem without missing the shipping window.

None of those factors appears prominently on a shirt label.

They appear indirectly in sourcing decisions.

The World Bank's earlier comparison of South Asian and Southeast Asian apparel industries found that competitors such as Cambodia performed strongly on non-cost factors valued by international buyers. For Pakistan, the Bank emphasised the need to improve reliability while expanding product diversity.

That finding changes the meaning of Pakistan's raw-material advantage.

Cotton helps a factory compete in products suited to cotton. An established textile base lowers some industrial barriers. Neither advantage guarantees that a global retailer will allocate its next million-piece order to Pakistan when competing factories elsewhere offer a better fit for the product or a more predictable production environment.

The buyer does not need to diagnose Pakistan's political economy.

The buyer only has to choose a supplier.

I Keep Coming Back to Cambodia

I returned to the original graphic after checking the numbers.

Vietnam sat at roughly $9.37 billion. Bangladesh had reached about $4.66 billion. Cambodia stood at $2.62 billion, more than twice Pakistan's approximately $1.26 billion in U.S. apparel shipments during January through July.

Pakistan still has capabilities Cambodia would need years to reproduce domestically. Its textile base is large, and its denim industry has earned international recognition. Recent garment-export growth also shows that Pakistani factories remain capable of competing rather than merely surviving.

Yet China is surrendering part of a market it once dominated. Supply chains are moving, and buyers are reconsidering where clothes should be made.

Cambodia entered that movement without waiting to acquire cotton fields.

Pakistan entered it carrying decades of textile experience, but the January-July figures still left the country outside the six names on the graphic I saw in Karachi.

I can explain why Pakistan was missing now.

What remains harder to explain is why a country with so much of the industrial machinery already in place still watches Cambodia take the larger order.