 "Dressed for disaster? How Trump’s tariffs will hurt the fashion industry")
Style is under siege!
On April 2, as US President Donald Trump announced his ‘Liberation Day’ tariff plan in which the US will impose a 10 per cent reciprocal duty on all imports, with steeper duties for “worst offender” nations, the fashion industry was left stunned with the most severe levies reserved for some of the biggest apparel manufacturing hubs.
Immediately in the aftermath of Trump’s announcement, fashion stocks plummeted with Nike and Lululemon shares dipping seven and 10 per cent respectively.
But why is it so? How do Trump’s tariffs affect the fashion industry? We examine.
US apparel market and tariffs
The US imports nearly all of its clothing and shoes, with more than half coming from China, Vietnam and Bangladesh. A 2024 report from the American Apparel & Footwear Association showed that the US gets a whopping 97 per cent of its apparel and shoes from other countries.
In 2024, 28.7 per cent of all clothes and shoes sold in the US came from China. Vietnam was a close second with 25.4. Bangladesh, according to data, was third with 7.8 per cent, followed up by Indonesia (7.3 per cent) and India (5.6 per cent). The US itself only provided three per cent of all apparel and shoes sold there.
However, now, Trump has levied significant tariffs on countries that export the most clothes and shoes to the US. For instance, China, which was already hit with a 20 per cent tariff, will be slapped with an additional 34 per cent — bringing its total tariff rate to 54 per cent.
Also read | Will India’s textile sector get a ‘Trump bump’ from tariffs?
Vietnam, the second-largest apparel exporter to the US, will face a steep 46 per cent tariff. Additionally, Cambodia will have a 49 per cent duty and Bangladesh 37 per cent. Denim powerhouse Pakistan has been slapped with a 29 per cent tariff while textile titan Taiwan sees a 32 per cent tariff. Also, the European Union has been punched with a 20 per cent duty.
As trade group United States Fashion Industry Association said in a statement, “We are deeply disappointed by the Trump Administration’s decision to impose new tariffs on all imports. This action will particularly affect American fashion brands and retailers.”
Fashion stocks plummet
Trump’s tariff announcement was immediately felt by fashion brands. Sporting giant Nike saw a drop of seven per cent in after-hours trading, while Lululemon saw a dip of 10 per cent. In Frankfurt, Adidas dropped as much as 12 per cent and Puma SE declined as much as 14 per cent.
Shares in fast-fashion retailer H&M, which sources mainly from China and Bangladesh, fell five five per cent, while stocks of US retail giant Amazon and Target were down eight and 10 per cent, respectively.
Impact on fashion industry
But beyond the immediate impact of stocks falling, what Trump has done is effectively made clothes in America more expensive, as he has disrupted the supply chain. Mary Ross Gilbert, an analyst at Bloomberg Intelligence, explained, “Apparel brands will most certainly be forced to raise prices.”
Noted American handbag and accessories designer Rebecca Minkoff also concurred with this assessment. Speaking to Yahoo’s Finance Executive Editor Brian Sozzi, she said, “Everything is going to be more expensive.”
And customers already grappling with inflation will not be happy about this. Rita McGrath, professor of management at Columbia Business School, told Vogue Business, “Consumers are being hit by increased costs across many categories, which could affect the share of wallet dedicated to apparel.”
UBS analysts, led by Jay Sole, also noted that every company in the apparel industry will be impacted. “Our view is that, given how extensive the list of tariffs is, the industry will realise there are few ways to mitigate the impact in the medium term other than by raising prices,” they wrote in a note.
And for those who argue that retail and clothing brands should relocate to the US to escape these tariffs, this is easier said than done. Firstly, shifting manufacturing is not an overnight solution — months of planning is required, and capacity constraints present a significant challenge. Also, labour costs in the US are much, much higher than in countries such as Vietnam.
Moreover, for some brands manufacturing in the US doesn’t align with their values. For instance, Kering, says manufacturing stateside “makes no sense”. Speaking to Business of Fashion, Kering CEO Francois-Henri Pinault said, “We’re producing in Italy and in France… we’re selling a part of our culture."
Ultimately, the entire fashion industry will feel the impact of Trump’s tariffs. It is left to be seen if the apparel industry can turn it into a fashion high or a fashion faux pas.
With inputs from agencies
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