Earlier this year, tariffs were implemented by the U.S, hitting key sourcing countries such as India (25%), China (57.6%), Bangladesh (20%), Vietnam (20%), and Sri Lanka (29.9%), among others. This pushed the tariff rate to a level not seen since the 1930s. As a result, prices for apparel and footwear spiked, increasing by 38% for clothing and 40% for footwear. It is estimated that in 2025, tariffs could cost an average U.S. household as much as $2,400.
Many fashion brands are developing strategies to adapt to the high tariffs in multiple ways. European brands like ZARA and Mango raised U.S. prices. ZARA by 14% across 13% of its collection, and Mango applied similar increases up to 43% while keeping European prices steady. Industry surveys reveal that 85% of fashion brands plan to raise prices due to tariff costs, with 96% of U.S.-based retailers on board.
When talks about tariffs began, many retailers rushed to import goods early in the year to beat tariff deadlines. This was a smart move for large corporations, but smaller businesses did not have the capital to make such large purchases. Additionally, about 70% of companies have delayed or canceled sourcing orders due to the high costs of materials. Tariffs are forcing many businesses to cut back on investments due to financial strain. In countries like Bangladesh and India, brands are increasingly turning to solar and wind power to cut costs and improve competitiveness.
Urban Outfitters warned that tariffs from India, Vietnam, Turkey, and China will result in price increases. Meanwhile, Macy’s expects consumers to become more selective and possibly wait on some purchases in response to rising prices.
Luxury British labels Asceno and Lucy Delius, are bypassing tariff-related hurdles by organizing pop-up events and trunk shows across underserved U.S. locations, maintaining sales despite higher costs.
With U.S. tariffs so high, India extended its cotton import exemption until December 31, 2025, mitigating raw material cost pressures for its garment sector. Even so, export hubs, especially around Delhi, face strain from clients wanting the company to absorb tariff hikes.
Elevated prices have boosted interest in secondhand markets. Surveys show 59% of consumers, especially Gen Z and Millennials, are willing to shop resale if tariffs do not drop.
One positive aspect of this tariff situation is that “Made in USA” branding saw a significant uptick on platforms like Amazon, fueling $5.1 billion in related sales. However, consumer loyalty remains uncertain, about half of Americans say they’d likely revert to purchasing domestic products.