President Trump's tariffs have plunged US fashion brands that manufacture their brand overseas into a crisis, with several iconic companies reporting immediate financial strain and describing the policy change as an "existential threat." While the tariffs aim to bolster American-made products, the fashion industry has historically been reliant on global manufacturing.
Companies such as Nike, Gap, American Eagle, Ralph Lauren, Nordstrom, Levi's, and Under Armour have all taken hits since Trump enacted tariffs on April 2, which the president dubbed "Liberation Day," Vogue Business reported.
The tariffs on $2.5 trillion in imports have spurred executives from US fashion companies to call suppliers in countries such as Vietnam, Cambodia, and Bangladesh, who were hit with 46, 49, and 37 percent levies, respectively, to try to devise a strategy.
"These [tariffs] are significantly more than people expected. The administration needs to understand that this will be significant for retailers both large and small, especially small, because they can't shift as quickly. They're talking to officials and expressing concerns," said Jonathan Gold, National Retail Federation's VP of supply chain and customs policy. "Will they be able to stay in business with these cost increases? In understanding the real downstream impact that this has, from job losses, all the way to going out of business, consumer confidence is already down, and this will make it go lower."
Markets have been volatile in response to the tariffs; however, Trump has said that if countries make good trade deals with the US, that he may lower the barriers.
Sources told Vogue that the majority of brands will likely have to increase prices by an average of 15 percent due to tariffs as high as 54 percent, specifically on China, which is the highest rate after the new policy. The focus of discussions with vendors has been on the extent to which they can absorb the cost without being driven to the brink.
"This is an existential threat. Everybody is holding their breath," Sanjeev Bahl, CEO of denim manufacturer Saitex, told the magazine. "Sourcing teams are looking at other options; people are crunching numbers. Nobody has yet approached a formula of 'what if.' That will start once we know the final numbers and if there are negotiations."
