US President Donald Trump’s recent announcement of new tariffs has shaken the global fashion industry, particularly for manufacturers in major apparel-producing countries. The tariff rate will be set at 10% for all imported goods, with much higher rates for countries the US has a trade deficit with. Vietnam, the second-largest apparel exporter to the US after China, will face a 46% tariff, while Cambodia will have a 49% duty and Bangladesh a 37% tariff. China will experience a new 34% tariff in addition to the previous ones, bringing the total to 54%, and the EU will face a 20% levy.
The United States Fashion Industry Association expressed disappointment, highlighting the negative impact the tariffs will have on American fashion brands and retailers. Fashion stocks plunged immediately after the announcement, with Lululemon’s shares dropping more than 10%, Nike and Ralph Lauren falling by 7%, and Tapestry, Capri, and PVH Corp. losing around 5%. The fashion supply chain is likely to be hit hard by the new measures. Companies that had already adjusted their strategies after previous tariff announcements, such as Walmart negotiating lower supplier costs, will now face even greater pressures. Factories with thin margins will likely struggle further, and these effects will cascade throughout the entire supply chain, impacting textile makers and even farmers.
Brands and retailers are now forced to decide whether to absorb the increased costs or pass them on to consumers through higher prices, potentially leading to reduced sales. With many consumers already managing inflation-related concerns, these new tariffs may exacerbate the situation. The National Retail Federation noted that the uncertainty surrounding these tariffs has created additional anxiety, particularly for luxury goods, where the US market has remained strong despite a global slowdown. However, many luxury companies manufacture outside the US, meaning they will face new costs. LVMH, which operates several US-based factories, will likely be impacted, with estimates suggesting the new tariffs could hurt their profitability.
Sports brands also find themselves in a difficult position as they diversified their sourcing away from China, moving to countries like Vietnam and Cambodia. Nike, for instance, produced half of its footwear in Vietnam in 2024, and Swiss brand On made 90% of its shoes there. As a result, these companies will now see significant increases in their costs.
The broader fashion industry will undoubtedly feel the repercussions of these new tariffs, as even US-based manufacturers rely on overseas raw materials. As the sector navigates these changes, the coming months will present significant challenges.
READ MORE: