Trump's proposed tariffs could change American retail

Stories of retailers bulk buying and allocating greater resources to acquire immediate stock, are just some of the conversations the fashion industry is having in the wake of Donald Trump’s re-election as president and expectations of increased tariffs.

With Mr Trump having previously warned he may levy a 60 percent tariff on imported goods from China, and 10-20 percent across the board on other fashion related imports, any brands or companies importing or exporting to the US will be affected. Christopher Hufnagel, CEO at Saucony and Chaco shoe-maker Wolverine Worldwide summed up the feeling to WWD: "I think us, along with just about everyone, is sort of digesting the news and the new reality and to contemplate what's going to be on the horizon."

A strain on brands, retailers, and consumers

With more than one-third of all apparel imported into the United States originating from China, the prospect of increased tariffs stands to ripple through the entire supply chain—from manufacturers and brands to retailers and, ultimately, the consumer. Though recent tariff hikes have largely targeted categories such as electronics and machinery, apparel remains a critical and vulnerable segment due to its heavy reliance on China. As tariffs on this category increase, the effects will be swift and pronounced, marking a notable shift in global sourcing dynamics and price pressures across the fashion landscape.

Firstly, brands will bear the initial brunt. For years, China has served as the go-to for textile and apparel production, offering unmatched scalability and cost efficiency. Even with brands’ growing interest in diversifying their sourcing footprint to Vietnam, Bangladesh, or Central America, China’s sophisticated infrastructure, specialized factories, and supply chain integration have kept it the hub for high-volume production. As tariffs rise, brands will need to either absorb the additional cost—pressuring already tight margins—or pass it along the chain. Few brands, especially in the competitive mid-market, can afford to fully internalize such increases, making price adjustments all but inevitable.

For retailers, the timing could hardly be worse. Rising tariffs on Chinese apparel arrive as many retailers grapple with higher labour costs, increased demand for online services, and pandemic-induced supply chain disruptions. Additionally, post-pandemic shifts in consumer behaviour toward more casual, affordable apparel make pricing sensitive to fluctuations. Higher prices in apparel could erode loyalty among price-conscious consumers, who may turn to discount platforms or lower-cost alternatives if the usual brands can no longer offer value.

The consumer pays the price

Ultimately, it is the consumer who will feel the pinch, both in terms of price and choice. If brands do diversify their sourcing to regions with less established infrastructure, quality and availability may suffer. Furthermore, even a modest increase in apparel prices has a disproportionately strong effect on lower-income consumers, for whom clothing is an essential but often discretionary expense. This erosion of purchasing power comes at a time when inflationary pressures on other essentials, from fuel to food, are already impacting household budgets.

The potential consequences extend beyond the immediate price implications. Rising tariffs threaten to accelerate the restructuring of global supply chains and reshape the economics of apparel retailing. For US-based apparel brands and retailers, preparing for a future in which China is less central to their strategy is no longer a matter of preference—it is becoming a competitive necessity.

Footwear companies are also facing a tough road, reported Yahoo Finance. Brooks Running CEO Dan Sheridan called it a "huge headwind" for the entire industry, as it already faces a 20 percent tariff on imports from China and a roughly 27 percent tariff on Vietnam imports. "An additional 20-25 (percent tariff), it's huge. The conversation is massive," he said on a Yahoo Finance podcast. "To absorb that as a business begins to take investment out of R&D. We have to pass those on to the consumer and you can't pass a 25 percent lift in cost completely."