US' garment CPI down in May, spending rises despite tariff uncertainty
Apparel imports dropped sharply in May, falling -22 per cent by weight after a brief rebound in April (+3.3 per cent). This follows a sustained seven-month surge from September 2024 to March 2025, when volumes were up +15.2 per cent year-over-year. The pullback in May reflects the first clear reaction to tariff hikes that took effect in April.
Consumer spending on clothing rose +1.1 per cent in May, up +4.9 per cent year-on-year—more than double the 12-month average of +2.3 per cent—indicating relative resilience despite broader economic concerns. Overall consumer spending, however, declined -0.3 per cent month-over-month, and annual growth slowed to +2.2 per cent, the weakest pace since February 2024, Cotton Incorporated said in its Executive Cotton Update - US Macroeconomic Indicators & the Cotton Supply Chain, July 2025.
US apparel CPI fell -0.4 per cent MoM and -0.7 per cent YOY in May, but prices remain historically high. Imports plunged -22 per cent after early tariff hikes, while spending on clothing rose +4.9 per cent YoY. Consumer confidence dipped and overall spending slowed. Tariff frameworks for August 1 propose higher rates, including 40 per cent on transhipped goods via Vietnam.
Consumer sentiment showed signs of strain, with the Conference Board's Index of Consumer Confidence dipping 5.4 points to 93 in June, following a May recovery from April's pandemic-era low.
Trade tensions continue to weigh on market sentiment. As of early July, tariff frameworks were released with implementation delayed to August 1. These maintain the 10-percentage point tariff hike introduced in April while proposing steeper duties, including a 40 per cent tariff on transhipped goods via Vietnam. Final agreements remain under negotiation, and clarity is lacking on how transshipment and component transformation rules will be enforced.
Adding to the complexity, a major US legislative package passed in early July phases out duty-free de minimis shipments (under $800) by July 2027—a move that could reshape e-commerce trade flows.
Meanwhile, the Federal Reserve maintained interest rates in June and trimmed its US GDP forecast for 2025 to +1.4 per cent (down from +1.7 per cent in March), signalling a more cautious economic outlook. The US added 139,000 jobs in May, though previous months saw downward revisions. The unemployment rate held steady at 4.2 per cent, still low by historical standards, while wage growth slowed to +3.9 per cent year-over-year.
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