GAO Maps Policy Options for US Textile Circular Economy

The US Government Accountability Office has laid out a menu of policy options for building a textile circular economy, with extended producer responsibility and circularity-linked tax credits at the top of the list. For apparel brands and their suppliers, the report signals where compliance obligations may land next — and at which level of government.

The October 2026 report, published after Congress asked the GAO to examine how a circular textile economy could develop in the US, follows the agency's December 2024 work on federal efforts to address textile waste. It defines textiles broadly: apparel, carpets, footwear and towels all fall within scope, and the discussion is anchored to rising global textile consumption and waste.

The evidence base is concrete. GAO reviewed legislation, regulations, federal agency documents and academic research, and interviewed 49 stakeholders drawn from government, industry, academia and non-profit organisations. It also left the desk: site visits took place in Washington and Oregon, and agency staff travelled to France and the Netherlands to meet private-sector organisations working across textile circularity.

What does the report actually propose?

Two options receive the clearest framing. The first is extended producer responsibility for textiles, which would make companies accountable for what happens to products after use. The second is tax credits tied to circularity, designed to "reduce or offset the amount of taxes paid by businesses" when they take steps such as reusing textiles or cutting textile waste.

GAO notes that "some US states and other countries are proposing, enacting, or implementing most of the identified policy options" — a reminder that this is a tracking exercise, not a blank slate. It points to activity in individual US states and in the European Union, where legislation establishing textile EPR programmes has been proposed or enacted.

The federal-versus-state question

Stakeholders split on who should lead. Several, including industry groups, said they would prefer a federal approach, arguing it could support coordination, compliance and consistent implementation across states — and help businesses navigate other countries' legal requirements.

The appeal is obvious. A single national framework is cheaper to comply with than fifty divergent ones. But GAO tempers the enthusiasm: a nationally led model would still require additional coordination and resources, and would depend on the federal government's legal authority to put such an approach in place. That authority is not established; it is a condition.

Costs, benefits and caveats

On the upside, GAO said a shift towards circularity could support new jobs and markets linked to repair and recycling, help reduce environmental harm, and influence consumer practices. On the downside, stakeholders flagged practical hurdles — notably the absence of nationwide systems and facilities to collect and process textiles, alongside funding limitations.

That infrastructure gap deserves attention from sourcing teams. An EPR obligation without collection and processing capacity does not eliminate waste; it relocates the cost of it, most likely onto producers.

What does this change for sourcing decisions?

In the near term, nothing is mandated. The report offers options, not rules. In the medium term, it maps the likely shape of US regulation: EPR schemes on the EU model, tax incentives for reuse and waste reduction, and a running debate over federal pre-emption. Brands selling into the EU already face the direction of travel; the GAO report suggests the US will follow a similar path, on its own timetable.

For now, the practical reading is preparatory: watch state legislatures, model EU compliance costs, and treat fibre-to-fibre recycling capacity as a sourcing question rather than a sustainability slide. The report offers a map, not a deadline — but the terrain it charts is one the industry will be walking regardless.