The Impact of U.S. Tariffs on Global Fashion Pricing

Recent changes to U.S. trade policy have significantly affected global apparel production, transportation, and supplier relations. Many consumers have noticed rising clothing prices, and this report outlines the economic, social, and industry-wide impacts of these new tariffs.

Rising Clothing Prices

Clothing prices have increased noticeably due to new U.S. tariffs introduced under the International Emergency Economic Powers Act. These tariffs, described as “reciprocal,” target major production hubs including Vietnam, Cambodia, Bangladesh, and China. Because these countries are central to global apparel manufacturing, the tariffs have caused widespread cost increases throughout the fashion industry.

Impact on Major Retailers

Large U.S. apparel brands are facing substantial cost increases as a direct result of the new tariff structure. Companies such as Victoria’s Secret, American Eagle, and G-III Apparel anticipate between 100 million and 160 million dollars in additional tariff expenses. These increases directly influence retail prices and operational decisions, making it more challenging for brands to maintain competitive pricing.

Pressure on Smaller, Ethical Brands

Smaller retailers, particularly those committed to ethical production, face even greater challenges. These businesses already incur higher operational costs due to fair wages, sustainable materials, and environmentally responsible practices. The additional tariff burden threatens their ability to remain competitive. For example, one small ethical knitwear company reported that the cost of a 65-dollar stitch sample rose to 179.44 dollars after tariff implementation. Such increases cannot be absorbed easily, meaning the financial impact ultimately falls on consumers.

Social and Labour Implications

These tariffs also have serious social implications. As manufacturers compete to offer lower prices to retain U.S. clients, they may reduce spending in critical areas such as wages, worker safety, personal protective equipment, break times, and waste management. This creates heightened risks for factory workers in countries already known for vulnerable labour conditions.

Considering Nearshoring as a Solution

Nearshoring has been proposed as a strategy to reduce dependence on distant manufacturing hubs. Potential alternatives include production in Mexico, the United States, Turkey, and North Africa. While this may reduce exposure to tariffs, it does not eliminate cost pressures, as labour costs in these regions remain high. As a result, retail prices are still likely to reflect the increased operational costs (Kohler, 2025; McKinsey and Company, 2024).

Political and Economic Background

The tariff strategy reflects former President Trump’s broader economic agenda, which aims to increase the sale and production of American-made goods. By raising import taxes, the government reduces foreign competition and encourages domestic manufacturing. Countries such as Mexico, Canada, and China are now required to pay between 10 percent and 145 percent in tariffs on goods imported into the United States. These tariffs are billed directly to retailers, which further intensifies the financial pressure on fashion brands.

Rationale Behind the Tariff Policy

It has been rumoured that the tariffs have been justified as part of efforts to ‘combat the illicit flow of synthetic opioids into the United States’. Regardless of this reasoning, retailers have responded by increasing product prices to maintain revenue and profitability under the new cost structures.

Brand-Specific Impact

Super Fast-Fashion Brands: Companies such as Temu, Shein, and AliExpress rely heavily on U.S. consumers and have strong manufacturing links to China. This makes them particularly vulnerable to the tariff increases, which undermine their ultra-low-price business models.

ZARA will also be affected, but the impact is expected to be moderate because the United States represents a smaller percentage of its global sales portfolio.

H&M faces a more significant challenge. The United States is its second-largest market, and much of its production occurs in China. CEO Daniel Ervér has confirmed that the increased costs will “come at the cost of the consumer” (Editors, 2025). This raises important questions about the brand’s value proposition and how price-sensitive its customer base may be. The uncertainty surrounding whether H&M can remain within a narrow price elasticity band is a key issue for analysts and researchers (Kindness, 2025).

The introduction of new U.S. tariffs has reshaped the global fashion landscape, increasing production costs, pressuring profit margins, and driving up retail prices. Large brands face hundreds of millions in additional expenses, while smaller ethical companies risk losing market presence due to unsustainable cost increases. Social consequences for factory workers are also emerging as manufacturers cut costs to remain competitive. Although nearshoring offers potential relief, it comes with its own financial challenges. As the industry adapts, consumers should expect continued price increases and shifts in sourcing strategies across major and emerging brands.

References

Editors, M.C. (2025). How Trump’s Trade War Is Affecting 6 High-Street Fashion Brands. [online] Marie Claire. Available at: https://www.marieclaire.com/fashion/trump-trade-war-effects-on-high-street-brands/.

Kindness, D. (2025). Price elasticity of demand. [online] Investopedia. Available at: https://www.investopedia.com/terms/p/priceelasticity.asp.

Kohler, S. (2025). SMART FASHION. [online] SMART FASHION. Available at: https://www.smartfashion.news/blog/how-us-tariffs-are-transforming-fashions-futureand-its-sustainability [Accessed 21 Nov. 2025].

McKinsey & Company (2024). The State of Fashion 2025: Challenges at every turn. [online] McKinsey. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion.