From Runway to Retail: How Tariffs Affect the Fashion Industry

Image via The Ticker

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At the beginning of April, the United States government implemented a series of tariffs on imported goods, establishing a significant shift in trade policy. These measures, labeled “Liberation Day” tariffs by President Donald Trump, have introduced a universal baseline tariff of 10% on imports, with higher rates for specific countries: new 34% tariff on top of the previously announced duties for China, 46% for Vietnam, 37% for Bangladesh, 49% duty for Cambodia, and 20% duty for the European Union. Furthermore, Trump is targeting the de minimis exception, which allows all goods worth less than $800 to enter the U.S. tariff-free as long as they are directly shipped to the consumer. Trump is abolishing this exception for Chinese goods, subjecting them to tariffs up to 90%. 

These new policy changes have sent shockwaves throughout the fashion industry, which heavily relies on global supply chains and imports. From luxury brands to fast-fashion retailers, companies are grappling with increased costs, supply chain disruptions, and shifting consumer behaviors. The United States Fashion Industry Association (USFIA) states, “We are deeply disappointed by the Trump Administration’s decision to impose new tariffs on all imports,” claiming it will target and affect American fashion brands and retailers. There has already been an immediate plunge in fashion stocks, showing that Lululemon shares have dropped over 10%, Nike and Ralph Lauren down 7%, Tapestry, Capri, and PVH Corp. are all down around 5%. 

Trump then announced a 90-day pause on ‘reciprocal’ tariffs, allowing all countries subjected to the increase of tariffs to see the rate go back down to the universal 10% rate for a mere three months—but China is not included in this. China refrained from retaliation initially, but with Trump consistently increasing his tariffs, they were forced to respond with equivalent levies. Trump’s raised tariffs on China reached an increase of 145% on April 9, with China responding with a 125% increase on April 11. On social media, Trump stated, “At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.” These increases will remain until an agreement is reached between the two countries. 

The fashion industry’s supply chains are intricately woven across multiple countries, with many brands depending on manufacturing hubs in Asia. This includes sports brands, which are also starting to shift their manufacturing from China to places such as Cambodia and Vietnam. Nike made 50% of its footwear in Vietnam in 2024, alongside the Swiss brand On, which made 90% of their shoes in Vietnam. With the uncertainty of the initial implementation of tariffs and Trump’s resort to the baseline universal 10% tariff, companies are reassessing their sourcing strategies. They must wait until the 90-day freeze is up to know what will come next. 

As tariffs increase, many countries express concern about their relationship moving forward with the United States. Trump wrote on social media that more than 75 trading partners reached out without retaliation to discuss some issues, leading him to implement the 90-day pause. He claims that since China retaliated with tariff increases, he did not include them in this pause, due to a “lack of respect.” 

The hit in China targets fast-fashion brands such as Shein and Temu, which are popular online retail stores for American consumers. Known for their cheap prices, Shein and Temu are facing a complex problem with the cut of the de minimis exemption. These affordable alternatives are likely to face a steep rise in prices, thus forcing consumers to look for other options. According to a congressional report, bipartisan legislators have been pushing for this cut of the de minimis exemption due to the value of goods entering the U.S. having soared from about $5.5 billion to $66 billion in the past five years. 

Jason Wong, working in product legislation for Temu, stated that one plan is to push into Europe and Australia, which have their own de minimis rule of imported goods under $1000 to enter the country tariff-free. Though there might be a shift to Europe and Australia, the hit from the U.S. will take a lasting toll on the company. It is predicted that American consumers will turn toward second-hand clothing, since inflation has brought consumers to look closely at prices. “All of a sudden, if ultra-fast fashion is now 30% or so more expensive, it really does make the value proposition that much more compelling for resale,” stated Alon Rotem, the executive of an online second-hand fashion retailer called ThreadUp. 

The shift for consumers to buy second-hand is prominent in predictions, whether in person at thrift stores, consignment shops, or online retailers such as Poshmark and Etsy. This is seen as a positive outlet for American consumers struggling with already high prices in the U.S.

“A 2025 report by Capital One Shopping Research found that approximately one-third of all clothing and apparel purchased in the U.S. over the past year was secondhand,” stated an NPR article showing previous support for the shift to second-hand clothing. 

An issue that could arise from second-hand clothing is turning a profit for the market. To keep second-hand clothing prominent, there needs to be an abundance of clothing items that will sell and make a profit. “According to a 2023 study, one large Swedish charity has to pay to have 70% of donated clothing incinerated because it is too low quality to sell in-store or export,” stated a BBC article. With many second-hand retailers facing the issue of turning a profit, this can affect the thrifting culture that has gained popularity. This could limit the options for this outlet, involving people seeking good quality clothes at a reasonable price, to battle against the tariffs. 

Though these tariffs aim to promote domestic manufacturing, the U.S. fashion industry is not equipped for these significant hurdles. Only 3% of apparel is made in the U.S., and the infrastructure to support large-scale domestic manufacturing is lacking. Skilled labor shortages, higher wages, and environmental regulations contribute to the difficulty of moving production stateside. 

The fashion industry has changed dramatically, affecting supply chains, production costs, and consumer behavior. Some companies adapt by diversifying suppliers or investing in technology, while others struggle to maintain profitability. Consumers, too, are adjusting their habits, turning to secondhand markets and value retailers.

As the industry navigates this complex landscape, flexibility and innovation will be key. The long-term effects of these tariffs are still unfolding, but one thing is clear: the fashion world, like its ever-changing styles, must continually evolve to survive.

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This article was edited by Kailee Pierce.