The Trump administration unveiled its full tariff plan this week, and the fashion industry was immediately sent into turmoil. The tariffs include a minimum flat 10% tariff on goods from all countries except Russia and North Korea, with many other countries’ goods slapped with much higher tariffs. That includes 34% for China, 46% for Vietnam and 20% across the board for the European Union.
Virtually no hubs for apparel manufacturing, like China and much of Southeast Asia, were spared. And neither was Europe, where many luxury goods are imported from. In response, by Thursday afternoon, the U.S. had seen the largest wipeout of stock market value in years. The S&P 500 fell by a full 5%, the largest single-day drop since the pandemic, sparking fears that a full economic recession is likely.
Glossy spoke with a number of fashion and shipping executives about what they’re doing to mitigate the effects of the tariffs on their business and how they expect things to go from here. One prevailing feeling: Diversification of goods manufacturing is still important, even if it feels like playing whack-a-mole.
“We are still in shock over the information shared from President Trump last night,” said Kim Vaccarella, founder and CEO of the handbag brand Bogg. Bogg manufactures mainly in China and is on track to do $100 million in sales this year. “Following the original 10% and additional 10% tariff on China, we took steps to diversify to Vietnam and Sri Lanka, and we spent a significant amount of money traveling there. We found viable sources and were feeling good – not great – about the state of our business. But following the most recent announcement, at a quick glance, China is now our best option.”
Vaccarella said Bogg will likely continue to manufacture in China, eating the cost of the additional tariffs, but is continuing to investigate other options. Vietnam and Sri Lanka, both growing manufacturing hubs outside of China, were newly hit with harsh tariffs, as well, putting brands that were looking to move there on the wrong foot.
It is near-guaranteed that, in the short term, consumers will face higher prices and limited availability for products they’re used to having.
“With the U.S. having the largest apparel market globally, these tariffs will hugely impact global players like Abercrombie & Fitch and Nike, which have very diverse supply chains and import huge quantities into the country, while value players like Shein will see their low-cost propositions rocked,” said Alice Price, an apparel analyst at GlobalData. “Players importing into the U.S. will therefore have to find ways to offset these higher costs, and consumers may expect availability issues while they try to navigate these new challenges.”
And while moving production to the U.S. is the preferred solution the Trump administration has stated, it’s not so easy. For one, not only are there fewer manufacturers to work with in the U.S., for some products, there are no viable domestic options.
“In the medium to long term, we will look for domestic solutions,” said Sabeen Mian, president of the Lash Division of Performance Beauty Group. “While this would be a great option if it existed, this is challenging, given that the U.S. lacks domestic production facilities for false eyelashes and related beauty product packaging. Establishing the infrastructure and labor to support [this move] would require significant time and investment. This is not a short-term solution.”
Instead, Performance Beauty Group is one of many brands considering raising prices soon. Mian said increased prices are something “we don’t want to have to do,” but they may be necessary.
Karen Danudjaja, founder of the wellness and supplement brand Blume, echoed the sentiment that moving production to the U.S. is not something that can be done overnight, if ever.
“In the face of this confusion, we have tried to adapt our supply chain as best as possible, looking for backup or alternative suppliers, but realistically, we can’t source certain things domestically,” she said. “Local manufacturing is not a light we can turn on, and it will take time.”
Yossi Nasser, the president and CEO of intimates manufacturer Gelmart International, told Glossy his company is lucky that it had begun to diversify from China years ago. Over the last decade, Gelmart has invested millions into building up its manufacturing capabilities in the Philippines. Compared to the rest of Southeast Asia, which was hit particularly hard by the tariffs, the Philippines has much lower tariffs, at only around 17%.
“The good news — if there is any good news — is that everyone is in the same boat,” Nasser said. “Everyone is dealing with this at the same time. I think forming a long-term strategy and investing in that, if you can even think about investing right now, will be the best move. But it’s going to be very difficult. And in my view, you will see a lot of companies soon fold entirely.”
