The Forces That Will Shape Fashion’s Supply Chains in 2026

By Megan Doyle | January 5, 2026 | Vogue Business 

Unpredictability was the theme for fashion’s supply chains in 2025, and the coming year looks to deliver much of the same turbulence. The key drivers of last year’s supply chain shocks for apparel sourcing teams — climate crisis events like floods and droughts, President Trump’s unpredictable tariffs, and a suite of looming laws — are likely to continue reshaping the industry’s sourcing map down to the raw material level.

Apparel experts are approaching the new year with cautious optimism, encouraging fashion businesses to focus on building resilience by shifting from short-term reactions to long-term preparation and relationship-building. This will require companies to look at sustainability as a core business strategy rather than a fair-weather focus.

“With the current state of the world, a prudent approach is to expect the unexpectable,” says Ranjan Mahtani, founder and chairman of Epic Group, a Hong Kong-based manufacturer with facilities in Bangladesh, India, Ethiopia, Jordan and Sri Lanka.

Full tariff impacts are only just emerging

Sweeping tariffs imposed by the Trump administration were the big story of the last year, impacting dozens of countries, including key apparel sourcing regions like India, China, Pakistan and Vietnam. Some 95% of executives surveyed by supply chain management platform Inspectorio for its State of Supply Chain 2025 report said tariffs were the biggest disruptor of 2025, leading to increased supply chain diversification, production relocation to lower-risk regions, and renegotiation of agreements with existing suppliers.

“In 2025, tariffs functioned less like a static tax and more like a strategic variable that reshaped ordering patterns, inventory decisions, supplier allocation, and nearshoring conversations because the risk of change became as important as the rate itself,” says Mark Burstein, senior vice president for the Americas at Inspectorio, who also sits on the board of directors for the American Apparel and Footwear Association. “In 2026, even if specific rates shift, tariff-driven sourcing strategy will likely remain a core agenda item.”

Historically, sourcing decisions have been financially driven as brands sought the most cost-effective producers to maintain margins on apparel production. Now, reliability is the key priority. “Countries such as Indonesia and Vietnam, where tariffs have remained relatively stable since April 2025, are seen as safer sourcing options,” says Bernhard Riegler, vice president of marketing for Sappi, a leading wood pulp producer in the man-made cellulosic fiber supply chain. “Stability, more than cost, is becoming the decisive factor.”

Reigler believes the industry is only just beginning to feel the effects of 2025’s “seesaw of tariff changes”, with increasing geopolitical tensions likely to exacerbate this instability in 2026. “Markets adjust to certainty, but they struggle when ultimate landed costs change from month to month,” he says. “This uncertainty impacts the entire value chain, from retailers who are unwilling to provide early commitments for garment purchases, to garment makers, fabric producers, spinners, and fiber suppliers who are unsure what to make, when to make it, or how much seasonal stock to carry to ensure security of supply.”

Climate chaos and the decline of worker rights

The World Meteorological Organization’s State of Climate Update, published ahead of COP30, named 2025 one of the hottest years on record. Extreme weather events hit fashion’s producing regions hard, from the worst flooding in 30 years that decimated cotton crops in India and Pakistan to air pollution and extreme heat making garment factories increasingly dangerous for workers.

According to a series of reports from Climate Rights International, workers in Karachi, Pakistan and Dhaka, Bangladesh lack fundamental needs such as clean and fresh water, appropriate ventilation, and adequate breaks to withstand extreme, yet increasingly commonplace, temperatures. “Extreme heat events are putting stress on workers, which will require the factories to upgrade temperature management technologies,” says Epic Group’s Mahtani. “This pressure is expected to come from some brands as early as 2026 and continue to escalate as the planet heats up.”

While some brands are putting pressure on suppliers to implement heat-adaptation solutions, many are seeking to avoid high-risk regions. “More companies are treating climate as a sourcing and logistics risk input, not just a sustainability topic,” says Inspectorio’s Burstein. “The practical shifts we hear most often are more geographic spreading of key programs to avoid single-region weather concentration, more seasonal timing flexibility and contingency capacity, and more risk-based supplier segmentation where ‘resilient operations’ becomes part of supplier scorecards.”

This may create more flexibility for brands, but where does it leave approximately 70 million workers, who are the most vital yet vulnerable actors in these increasingly unstable supply chains? Climate events force brands to make urgent changes to orders, including switching suppliers, which can have a knock-on impact for workers whose incomes are threatened by fluctuating workloads. This may be one reason informality is on the rise. Garment production and agriculture have some of the highest rates of informality of any sector due to the prevalence of subcontracting and home-based workers, but according to Pakistani trade unionist Zehra Khan, this is increasingly common in factories too.

“Previously, factories were considered as the formal sector because they had laws and the workers could also [access] through grievance mechanisms,” says Khan. “But now the majority of the factories [in Pakistan] are hiring workers in a third-party contractual system. So it means that the workers don’t have a direct relationship with the employer.” Khan says as many as 95% of garment workers in Pakistan lack appointment letters. Without these, workers are unable to unionize and have few protections or access to social security schemes.

As legislations loom, technology adoption is vital

Could incoming due diligence laws, such as the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), move the needle to drive stronger protections for these workers? “European legislation and regulations will require the brands to understand and support minimizing extreme climate events impacting apparel supply chains, with ripple effects to sourcing strategies,” says Mahtani. “Not addressing the impact on workers’ health and well-being will expose them to legal jeopardy. Similar approaches have not yet percolated to most US brands, but they are unlikely to be more than a few years behind.”

2025’s Omnibus Package, released by the European Commission, attempted to simplify a host of complex legislative requirements that address everything from forced labor to greenwashing. The result was what many in the industry perceived as a watering-down of once-ambitious laws. Others saw the package as a necessary adaptation to support businesses through the transition phase. Either way, experts say fashion brands shouldn’t take their foot off the gas when it comes to getting their house in order for compliance in 2026. “EU sustainability reporting and due diligence timelines are shifting, not disappearing,” says Burstein. “The EU has moved to delay parts of the Corporate Sustainability Reporting Directive and CSDDD timing, but the direction remains toward deeper supply chain disclosures and controls.”

In the last year, AI-driven traceability technology has proved a vital tool in helping fashion businesses navigate this process. “From the beginning of 2025 to now, we’ve seen significant developments in how retailers are looking at incorporating AI and how they’ve been piloting different [initiatives] within the retail supply chain,” says Jess Dankert, vice president of supply chain at the Retail Industry Leaders Association, which counts brands like H&M, Chanel, Lululemon, and Nike among its members. “It really comes back to technology being an enabler for more responsive and smarter supply chains. There are a lot of opportunities for AI to help ingest large mountains of data that can help make smarter, faster, and better decisions.”

This trend is expected to continue, as businesses refine their use of AI and traceability solutions to address ongoing supply chain challenges, gather compliance data, and improve supply chain visibility. “Traceability [will] move from compliance reporting to operational control,” says Burstein. “The companies investing in traceability platforms are doing it to quickly answer critical questions, such as: What’s the exposure? Which purchase orders are impacted? Can we prove the origin? Can we switch materials or suppliers without breaking compliance?”

Approaching 2026 with cautious optimism

All experts interviewed for this article have varying degrees of optimism about the state of fashion supply chains in 2026. Adaptability, collaboration, and investment in those supply chains will separate businesses that merely survive the new norm of unpredictability from those that succeed. “The uncertainty that defined 2025 will continue into 2026, but the value chain is resilient and is already adapting,” says Sappi’s Riegler. “That adaptation is, in fact, an opportunity.”

To build more agile, dynamic supply chains that can weather any storm, whether literal or metaphorical, fashion brands should invest in stronger relationships with their suppliers, benefiting workers in the process. “The brands and suppliers that invest together, move together, and share their data will outperform in 2026,” says Mahtani. “For suppliers who are thinking forward and far ahead, there is tremendous opportunity to create an agile and nimble supply chain with global alternatives. While nothing is going to be easy, companies that continue to challenge themselves and evolve should remain optimistic.”