Push to bring clothes manufacturing back to Australia ramps up due to trade war

Australia Broadcast Center

17-05-2025

During Australian Fashion Week last week, models walked the runway clothed by home-grown designers, but while the designs were local, the outfits themselves were made overseas.
As the industry's luminaries gathered to celebrate, the escalating trade war between the United States and China cast a long shadow.
Determined to future-proof the industry from rising costs and tariff uncertainty, the Australian Fashion Council is embarking on a bold plan to bring the textile industry home.
While welcomed by wool and cotton farmers, there are concerns the economic reality of the supply chain may scupper any home-made dreams.
In the 1950s, Australia's 'rag trade' was booming.
Surry Hills in Sydney and Flinders Lane in Melbourne were bursting with garment manufacturing factories and workshops.
But as worker shortages and rising electricity costs combined with cheaper labour overseas, much of it moved offshore.
The fashion council, which represents the industry, now estimates 97 per cent of Australia's $28 billion of fashion is produced overseas.
"Our sector is at a critical tipping point," chief executive Jaana Quaintance-James said.
"We've identified an urgent need for a national manufacturing strategy — one that safeguards jobs, restores technical capability, and strengthens our global competitiveness."
Partnering with RM Williams, which has been manufacturing clothing and shoes in Adelaide since 1932, the council will hold six industry consultation sessions, with the full detail of the strategy to be delivered in late 2025.
Ms Quaintance-James said the plan would also help job creation.
"You're supporting the payment of local taxes, and a broader kind of economic and social development in Australia," she said.
Rising trade tension over tariffs between the United States and China has contributed to the sense of urgency.
Ms Quaintance-James said while China was the engine room of global textile production, the US was a growing market for Australian fashion houses.
With most of the cotton and wool produced in Australia being processed in China, Australia's fashion industry has become collateral as a key customer goes to war with the industry's main supplier.
Ms Quaintance-James said news of a 90-day pause of the escalation between the two nations had come as a relief, but it highlighted the vulnerability at the core of the supply chain.
Along with less exposure to global volatility, she said a return to domestic manufacturing offered other practical advantages, such as supply chain transparency and shorter lead times in textile production.
To make clothes you need fabric, which can either be synthetic or natural.
Most synthetic fibres such as polyester or nylon are made from petrochemicals, and it is estimated 70 per cent of the global supply is manufactured in China.
Natural fibres can be sourced from plants, such as cotton, or animals, such as sheep.
The raw product needs to be processed, which includes cleaning, spinning and weaving, and like garment manufacturing, it is almost all done offshore.
Australia is a leading producer of cotton and wool, though both industries have struggled in recent years; the cotton industry faced a trade ban from China in 2020 while Australian wool production this year fell to a 100-year low.
Adam Kay, chief executive of grower group Cotton Australia, said the last local cotton spinning mills moved offshore 20 years ago, under pressure from rising labour costs.
He said that issue had largely been overcome through automation, but now the high cost of electricity would be a barrier to re-establishing the industry.
Mr Kay said the cotton industry already worked with more than 50 fashion brands across the country to supply Australian-grown cotton.
"Having a spinning mill locally and doing that next stage of processing, and maybe going all the way through to garment manufacturer, it really is a more circular economy," he said.
"It could really reduce the carbon miles that the products have."
As Australian wool producers stare down historically low production, seeing wool take centre stage at the Met gala in New York earlier this month was heartening.
Considered fashion's biggest night of the year, the annual fundraising gala for the Metropolitan Museum of Art's Costume Institute in New York City invites A-List celebrities to dress in a theme — this year it was "tailored to you".
Australian Wool Innovation's global marketing projects manager Catherine Veltman said several major brands chose to showcase wool outfits this year, which would lift the fibre's profile.
Attracting 15 million views to its live-stream and countless commentaries, Ms Veltman hoped the exposure would encourage mainstream brands and ultimately consumers to consider wool.
If Australia is to turn back the clock textile manufacturing, Ms Quaintance-James said the national strategy would require a co-ordinated effort from government and the private sector.
"Tariffs are just the latest example. In COVID, we were unable to produce our own healthcare uniforms," she said.
"And we're in exactly the same situation. We have not evolved from that.
"So when are we going to learn this lesson?"