2025 brought a revival of interest in domestic production, but these tariff-fueled discussions overlook the broader value proposition of U.S. manufacturing. Even as garment factories struggle and close, there are long-term advantages to investing in this ecosystem. Rebuilding domestic capacity could be an effective strategy to address a market that looks very different from the one that pushed brands offshore decades ago.
In the late ‘80s and early ‘90s, apparel companies began rapidly shifting production to low-cost, low-regulation countries. The relentless downward pressure on price led to growing minimums and longer lead times. John Thorbeck in “Under the Banyan Tree” illustrates the outcomes of this approach. Say a brand today buys 10 t-shirts. It sells three at full price—where the bulk of the profit comes from—and four at a discount, and then struggles to sell the last three, which are liquidated, shredded or burned.
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Entrenched in this first-cost mindset, sourcing executives today still dismiss U.S. production as “too expensive.” Sure, it’s not competitive in a vacuum—but in a volatile retail landscape, a small share of responsive domestic production can help unlock a transformative model. Modernized and integrated into a hybrid global supply chain, U.S. manufacturing allows brands to respond to demand in real time, mitigate risk, reduce waste, and release capital otherwise tied up in unsold inventory.
Whether you call it postponement, replenishment or supply flexibility, the concepts are not new but three dynamics make this moment different. First, economic uncertainty, faster trend cycles, and shifting consumer behavior online make it increasingly difficult to forecast demand, and more costly to get it wrong. Second, geopolitical and climate disruptions to shipping, material production and working conditions are upending sourcing. Third, the tools required to manage smarter, more agile supply chains are finally reaching maturity.
The narrow focus on first cost is increasingly out of touch with what it takes to run a successful brand; it is just one variable impacting profitability, alongside inventory turns, markdowns, working-capital exposure, and more. Small variations in first cost are less important than how long an item is held and whether it is sold at full price.
Profitability improves with a hybrid approach to sourcing, where predictable SKUs are produced in lower-cost environments while less predictable SKUs are produced with shorter lead times at a higher cost. This holds true even when short-run local production costs up to two-and-a-half times more, because it meets full-price demand and the costs can be averaged over the entire program.
Current supply chains are not well-designed to handle this onshore-offshore hybrid. While only a small share of production needs to be reshored, the infrastructure to support it does not yet exist. U.S. factories are under-resourced, outdated, and disconnected from the global supply chain, but their role in this opportunity makes them worth investing in, with cascading benefits beyond profitability.
U.S. manufacturing strengthens industry-wide resilience, protecting brands from overextension during geopolitical and climate disruptions—both of which are intensifying—while preserving the capacity to respond to upswings in demand.
It reduces overproduction, wasting fewer inputs while freeing up resources to invest in more sustainable materials, fair wages, and better end-of-life solutions. Long-haul air freight declines as last-minute production happens closer to home, while stable programs are more carefully planned for ocean freight. Brands also gain greater control over inputs like energy and materials.
Domestic production has a direct national security impact, ensuring the country retains some capacity in a critical industry and reducing exposure to global shocks. And innovation rises with necessity and proximity; when there is a financial incentive to produce locally, the incentives to invest in R&D shift accordingly.
Finally, in an industry that depends on it, creativity flourishes when designers work more closely with factories. It becomes easier to take creative risks when they don’t need to commit to large minimums and can scale quickly to capture demand.
This is not about re-creating the industry of the past, but about developing the flexibility to navigate ongoing uncertainty. Done right, U.S. manufacturing can help drive the largest transformation in apparel supply chains since the rise of free trade and the emergence of China as a dominant source of supply.
— with contributions from Rachel Cantu, Jen Guarino and Kathryn Birky
Christian Birky, is the founder of Because Capital and Co-founder of the Industrial Sewing and Innovation Center (ISAIC); Rachel Cantu, Partner at Because Capital and former Vice President of Global Supply Chain at Patagonia; Jen Guarino, Founding Advisor of Because Capital and CEO and Co-founder of ISAIC; and Kathryn Birky, Co-founder of Because Capital. Because Capital is an investment and strategic advisory firm focused on data-driven, globally integrated and digitally connected supply chains.
