Executives in the US fashion industry are grappling with the reality of President Trump’s latest round of tariffs, which was far worse than expected. Announced on April 2, the tariffs affect $2.5 trillion worth of imports and have had a profound impact on US-based companies with overseas production. The new tariffs have created chaos across the industry, with brands scrambling to assess the impact and formulate a response.
The tariffs, which range from 46 percent to 49 percent on goods from countries like Vietnam, Cambodia, and Bangladesh, have left US fashion companies in turmoil. For example, one major brand formed a “tariff task force” to handle the fallout, with teams from various departments mobilizing to address the sudden rise in costs. Stock prices for companies like Nike, American Eagle, Gap, Ralph Lauren, and Tapestry plummeted, with the S&P 500 losing $2.4 trillion in value on one day.
Executives described the mood as one of chaos, uncertainty, and anxiety, with many reluctant to speak publicly for fear of retaliation from the Trump administration. Brands such as American Eagle, Ralph Lauren, and Levi’s declined to comment, referring inquiries to trade organizations like the National Retail Federation (NRF) and the American Apparel and Footwear Association (AAFA). Major companies like Gap, Nike, and New Balance also did not respond to requests for comment.
According to Jonathan Gold, NRF’s VP of supply chain and customs policy, the impact of these tariffs is far worse than anticipated. He emphasized that the new tariffs would be particularly damaging to small businesses that cannot shift operations as easily as large corporations. Gold also warned that the tariffs could lead to job losses and further undermine consumer confidence, which is already fragile. A March 31 survey by the NRF found that 76 percent of US consumers were concerned about the impact of tariffs on prices, and 81 percent were worried about small businesses closing due to the economic downturn.
For many fashion brands, the tariffs – particularly the 54 percent rate on imports from China – will likely force them to raise prices. Discussions are underway with vendors about how much of the increased cost can be absorbed before businesses are pushed to the brink. While some have explored ways to soften the blow by being transparent about the reason behind price hikes, there is a strong reluctance to anger the administration by highlighting the tariffs publicly.
“This is an existential threat,” said Sanjeev Bahl, CEO of Saitex, a denim manufacturer with operations in both Vietnam and Los Angeles. “Everybody is holding their breath. Nobody knows what the next step will be.”
While some companies are hopeful that tariff rates might be negotiable, others are more cautious. There are reports that some companies have already delayed shipments to the US to avoid the new tariffs. President Trump has suggested that negotiations might be possible, though conflicting statements from his administration have left companies uncertain about whether tariff rates will be adjusted.
The rapid implementation of the new tariffs has left little time for brands to adjust. Even those that had shifted production away from China to other countries now face the challenge of dealing with high tariffs on those same alternative markets. As companies plan for the upcoming holiday season, there is little clarity on which countries can offer a viable escape from these new tariffs.
While some in the industry have speculated that Trump’s goal is to bring manufacturing back to the US, many executives say that this is unlikely. The US simply doesn’t have the necessary facilities, materials, or workforce to absorb the volume of production that is currently sourced overseas. As Gold explains, the scale and capacity needed for such a shift aren’t available, and it won’t happen overnight.
Bahl, whose company offers denim manufacturing in Los Angeles, admits that it would be impossible to move all of Saitex’s operations to the US. He believes that companies already operating in the US should be rewarded for their efforts but acknowledges that preferential treatment for domestic manufacturers is a long shot.
The increase in tariffs has already made manufacturing in the US more expensive, as the cost of materials rises. The AAFA has expressed concern that the tariffs will have a devastating impact on US manufacturers in the fashion industry, as they depend on foreign inputs that are not easily replaced by domestic alternatives. The AAFA also warned that retaliatory tariffs from other countries, including China and the EU, could further undermine US export opportunities.
Already, some countries have retaliated or threatened to retaliate against the US. China has imposed a 34 percent tariff on US imports, while the European Union has considered imposing tariffs on US products and services. With prices expected to rise across the board, companies are bracing for the long-term consequences of these tariffs on their entire supply chain, from raw materials to finished products.
Katherine Tash, the owner of Katherine Tash Bridal in Santa Monica, is already feeling the pressure. She sources materials such as silk from Korea, which is now subject to a 25 percent tariff, and lace from Italy, France, and the UK, which face tariffs ranging from 10 percent to 20 percent. Tash is considering changing her sourcing strategy to mitigate the impact but is determined not to raise her prices. However, she acknowledges that her margins will take a significant hit. “It’s a survival test,” she says, comparing the current situation to the challenges faced during the COVID-19 pandemic.
Many executives in the fashion industry are drawing comparisons between the current situation and the impact of COVID-19, though one brand executive noted that while the pandemic was a natural event, the tariffs felt “self-inflicted.” With no easy solutions and little time to adapt, the US fashion industry now faces a full-blown trade war with no clear end in sight.
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