President Trump’s proposed tariffs have sparked a lot of conversation and a lot of retaliation from countries such as Canada, Mexico, and China.
Although it is likely to shake up a lot of businesses, its impact on industries such as fashion comes with its own unique challenges, especially as countries like China continue to be a major source for textiles, fabrics, and clothing. And while both Mexico and Canada may not be as dominant in fashion manufacturing, tariffs on raw materials like cotton and leather could also hike production costs for brands that source from these countries.
While companies will likely take a direct hit on profits, consumers may be in for a loss too as costs could be passed down.
“If tariffs are imposed, fashion brands will likely face a 10% or more rise in input costs, which will ultimately be passed down the supply chain,” Madhav Durbha, Group VP of CPG and Manufacturing at retail planning platform Relex, told Retail Brew via email. “Brands that are unable to absorb these additional costs could see margin compression, potentially by 8%–10%, unless they optimize their supply chains and adjust their sourcing strategies.”
He added that aside from an increase in prices, brands might have to resort to switching to lower production quality or using inexpensive materials to offset the tariffs while maintaining an affordable pricepoint for the consumer.
“This would be similar to the ‘shrinkflation’ trend seen in consumer goods, but in fashion,” Durbha said. “It may result in thinner fabrics, less intricate detailing, or reduced durability in clothing.”
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