Brand-name clothes is not really a commodity, and there is nothing efficient about destroying inventory (at scale, destroying small returns might be efficient). The brand name is a psychological trick that transforms commodity items into premium products, and supply control (destruction) seeks to gatekeep the brand and maintain that image. It works because the cost of the textiles is a small fraction of their retail price. It wouldn't work for example for things that cost more to produce, like electronics, which is why those are usually sold refurbished.

Supply control usually benefits the producers, despite what it may seem (destroying items). Increasing the supply lowers the relative pricing power of the vendors, and reduces the price an average consumer pays for the same item, even if the retail price for the item technically increases.

I'd say it is good in the long run. If people spent less on clothes, they'd have more to spend on other goods and services or invest in productive endeavors.

The main risk I see is things getting shipped overseas to where it isn't properly handled and this policy not having any effect at all.

If that can be avoided somehow (I haven't looked in detail at the legal text) I think the outcome you mention would be good. Slower fashion cycles, higher quality and higher cost per item would all potentially synergise. Another thing that could happen is less overproduction, which would also be good.

Thinking about what else could be done: I would like to see some mandatory marking indicating fiber / weaving quality. I have had T-shirts that lasted a decade, and those that lasted a couple of years. And it is very hard to tell up front which is which. As a consumer I would like to be able to tell.