For the past 18 months the fashion industry has been in a funk. Overall luxury sales fell by 2 percent in 2024 while the sneaker market declined by 5.8 percent. You get the sense that the average fashion consumer is exhausted. Enter President Donald Trump, whose tariff policies are about to make matters that much worse.
On April 2, Trump imposed heavy “reciprocal” tariffs on a score of countries before suspending most of them for ninety days. Many of the hardest hit, including China (145 percent), Vietnam (46 percent), Bangladesh (37 percent), and Indonesia (32 percent), are the heaviest apparel exporters to the United States. Japan, the supplier of much American menswear nerdery, was hit with a 24 percent tariff, and the European Union, where the majority of luxury fashion is made, is facing a 20 percent hike. Tariffs are set on wholesale prices, so retail prices won’t immediately go up by 145 percent, but price increases are inevitable.
Brands and stores, which judging by the chatter in my orbit seem to be in low-key panic mode, are faced with a tough choice: They either have to eat some of the additional costs and take a lower margin or pass the burden of these tariffs onto the customer. Neither is an appealing option. From my conversations with insiders across the fashion industry, the impact will be felt at all levels, from fast fashion to luxury.
While the luxury industry is best known for its high profit margins and wealthy customers, who tend to be less price-sensitive, today it caters to a high number of aspirational consumers from the middle class. According to The Economist, shoppers who spend less than $2,000 a year make up two-thirds of the luxury industry’s sales. “If the tariffs go through, we expect a 12 percent to 13 percent price hike at retail,” says Christophe Desmaison of CD Network, the showroom that distributes the likes of Lemaire, C.P. Company, and Golden Goose in North America. That may not mean much to the rich, but many luxury consumers, who already feel taken for a ride due to the egregious post-pandemic price hikes, will likely pull back. According to a study by the consultancy McKinsey, 80 percent of the luxury market’s wild post-pandemic growth came through price increases, and only 20 percent through an increase in the volume of goods sold. This means that further price hikes will meet even more resistance. If you’re already dropping most of your discretionary spending on one or two luxury purchases, increases might price you out of the market altogether.
This does not mean that the rich will stop shopping; according to another report in the Wall Street Journal, the 10 percent of the richest Americans are now responsible for a whopping 50 percent of all American consumption. But plenty of it comes from their Paris and Milan shopping jaunts, where already-cheaper European-made goods are made even more so through tax refunds. Desmaison envisions a scenario where even more shopping will be done by Americans who can afford European vacations. But even those purchases will not be entirely unaffected, as Trump’s policies have torpedoed the US dollar, which enjoyed unparalleled strength in 2024 (one reason why suddenly everyone on your social media feeds was in Europe or Japan last year). The weakened dollar also means that American stores will have to pay more for imports that they buy in local currencies.
As usual, smaller businesses will likely be hit first. “We are already at the ceiling with our prices,” says Kiya Babzani, the owner of Self-Edge, a boutique that specializes in Japanese denim with a handful of locations across the US. “We’ve been lucky that the strong dollar has offset the rapidly increasing manufacturing costs in Japan, but with added tariffs we’d have to raise prices.” Babzani thinks that in his market segment, price hikes due to tariffs will have to be absorbed by all three parties of the consumption cycle: The brands, the stores, and the consumers. For stores that revolve around seasonal deliveries, the impact of the tariffs feels somewhat distant as most spring deliveries are already in stores.
But that’s not the case for the mass market, which relies on constant merchandise churn. Most of the goods sold in that category, including a great deal of streetwear, are made in Asia where the tariff situation looks worse. The National Federation of Retailers estimates that imports into the US will drop by 20 percent by the end of 2025, and another study estimates that some prices will rise by as much as 40 percent. While Trump has exempted computers and some consumer electronics, the apparel industry did not get so lucky.
Trump’s stated goal for egregious tariffs is reshoring American manufacturing. That’s a tall order for fashion, considering that America has killed off its manufacturing base and deskilled its labor force through decades of offshoring, so much so that over 97 percent of apparel is now imported into the US. The menswear commentator Derek Guy, who has been busy on X skewering right wing influencers for selling MAGA merch made in Asia and Latin America, thinks that reshoring is a pipe dream. “I don't think that people recognize that in order to build that garment manufacturing base, you need to spend a ton of money,” he says. “In order for people to build garment factories, the government would have to cover some of that cost and figure out how they're going to train people to do basic sewing techniques.” Guy also predicts that smaller businesses will be affected by the tariffs first, as larger brands will have more ability to redirect their production and supply chains.
Even if Trump walks back on the tariffs, or the price hikes end up being less egregious than currently predicted, what also matters is consumer sentiment — which has sunk to an all time low. Wary of a looming recession, Americans are prioritizing saving and buying necessities, and the last thing on their minds is adding another garment or another pair of sneakers to their already overloaded wardrobes. Whatever the outcome of Trump’s policies, which seem to change every day, one thing is clear; Americans will be buying less. Which makes Trump an unwitting sustainability warrior. One major move was Trump closing the de minimis loophole, which exempted Chinese packages valued under $800 and shipped direct from duties, thus saving fast-fashion giants like Shein and Temu millions of dollars and contributed to their ultra low prices. The added tariffs on apparel will make fast fashion, whose consumer is the most price-sensitive, even pricier.
“Our retailers expect their clients to buy less but pay more per garment,” says Desmaison of CD Network. For fashion, this sentiment will be felt across the board. Which ultimately may not be a bad thing.
