An article by Lara Walsh
Trump’s recent tariff plans have shaken the global community, sparking international panic and fear. At the beginning of April, he announced a 10% baseline tax on imported goods from most external countries, raising these subsequently in around 60 countries labelled the ‘worst offenders’. But what will these changes really mean for the fashion community, both producers and consumers?
Fashion is a highly globalised industry, with the US importing over 98% of clothing and 99% of shoes. A recent ThredUP report found that 80% of fashion retailers expect tariffs to disrupt their global supply chain, leading to businesses pulling out of America due to its economic volatility. A tariff is a percentage of a product’s value, like a tax, that is paid on imports. The idea behind tariff increases is that they will boost home production and protect jobs, improving the domestic economy. The additional cost on the product must be paid, either by the company or the consumer. It is up to the company as to where they hedge this cost.
luxury brands
Luxury stocks have plummeted since the announcement, with the US being a key component in the sector. Following the pandemic, luxury brands invested heavily in America with the country becoming central to their recovery. Sales in other locations continued to lag whilst the American consumer base, being wealthy and consumption-forward with a high share of billionaires, returned to high economic activity.
The impact on luxury brands may be delayed; compared to high street and mainstream brands, luxury operates at a higher gross margin so can more easily pass on costs to consumers. Additionally, their wealthier consumer base are more resistant to economic pressures and could even plan trips to do their luxury shopping abroad. Brands that are preferred amongst higher-income consumers will likely find it easier, whilst lower-end luxury with more aspirational shoppers will see decreased sales. Recent ‘greed-flation’ in pricing has already discouraged spending amongst shoppers; any further price increases could dissuade large swathes of consumers.
The differing production methods of luxury brands will lead to varying impacts. The majority of US luxury brands manufacture overseas, whilst manufacturing within the US, both from American and external brands, is sparse. During Trump’s first term, LVMH built three Louis Vuitton facilities in California and Texas, a bid to invest in American manufacturing. In relation to the 20% tariff on European Union goods, Bernard Arnault pushed the EU to create a solution, stating that if it did not come to a deal under the 90-day suspension period, LVMH will have no choice but to move production to the US, risking thousands of jobs. On the other hand, many luxury brands are opposed to moving production methods. Brands like Kering and Valentino believe they are selling a piece of their culture, hence production must remain in Europe. Not only does moving production to the US take away the cultural authenticity of the brand, the US also lacks the infrastructure and skilled workers to uphold quality.
big brands
Tariffs will hit large, multinational companies hard. Vietnam, with a proposed 46% tariff, is the second biggest apparel exporter to the US, and the site of 50% of Nike’s footwear production in 2024. China and Cambodia likewise have proposed tariffs of 54% and 49% respectively, both of which are also major sites of apparel production. Following Trump’s announcement, fashion stocks plummeted, with Lululemon shares dropping over 10%, and Nike and Ralph Lauren falling 7%. Companies will be forced to seek out cheaper production costs with factories, sparking a reaction up the production chain. Farmers and textile makers are already facing slim profit margins, with the tariffs exacerbating this issue. Brands may cut corners to produce garments cheaply, compromising on ethical conditions for garment workers and product quality.
Outside of the US, it could become more difficult for brands to expand internationally. UK brands in particular, who have depended on the US market following the high shipping costs to the EU following Brexit, could face major losses. Shein has considered an entire restructuring of their US operations following the announcement, putting its London Initial Public Offering plans on hold for fear that tariffs on China could disrupt this. The US generates ⅓ of Shein’s annual revenue and, with the recent ending of their de minimis tax exemption, the American market is looking increasingly volatile. Whilst Shein may consider shifting production for the US market outside of China, some brands within the US may consider shifting to local production to avoid import costs.
resale
An unintended by-product of the tariffs could be an expansion of the resale market. In 2024, the US secondhand apparel market grew 14 times, outperforming primary retail, and this pattern is predicted to continue with a 12% projected increase in 2025. Due to supply chain disruptions and import fees, there could be an increase of peer-to-peer selling through platforms like Vinted and Vestiaire Collective. We could then see an increase in prices for secondhand goods due to the rise in demand. ThredUP reported that 59% of consumers would seek out secondhand should government policy make primary apparel more expensive, with Gen Z and Millennials being most likely, planning to spend almost half of their apparel budget in the resale market.
Increasing demand for resale will not only affect consumer behaviour, but may also lead to producers increasing focus on sustainability. 54% of retail executives believe second-hand clothing is more stable and predictable compared to new production in the face of tariff fluctuations. We have already seen brands turning to upcycling and circular production models to lower carbon emissions. Coach’s ‘(Re)Loved’ programme allows you to trade in products for credit, whilst Mansur Gavriel has an in-house resale site called ‘MG Forever’ which allows peer-to-peer selling.
Overall, Trump’s tariffs, should they go ahead as planned, would lead to a major restructuring of the global fashion market. Companies will see differing impacts, with smaller brands, favouring local production, or those with wealthier clientele performing better. The luxury sector could see major losses in the future, unless production is moved to the US, whilst big brands may have to consider moving production out of certain countries or cutting corners and compromising on ethics. A silver lining could be a surging of the second-hand market and hence an ideological shift in brands, with increased focus on resale and reuse.
The Violet Post 
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