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With some duty rates surging between 40 and 50 per cent, brands are seeing margin compression like never before, says Ali Furman, PwC’s consumer markets industry leader. “In some cases, this could drive up costs by 15 per cent or more — just for footwear,” she says. On top of that, companies attempting to front-load shipments to avoid tariffs are racking up extra warehousing and logistics expenses, further eroding profitability. Brands, feeling the effects of trade uncertainties, may feel pressure to scale back sustainability commitments. However, experts urge them to stay the course. Footwear brands in particular are facing a tariff snowball effect, with base duties ranging from 10 per cent to 37.5 per cent, depending on materials and construction. But it’s the compounded tariffs that are driving costs even higher. A 34 per cent tariff on Chinese imports, for example, doesn’t just stack onto the base duty — it applies to the post-duty price, inflating the effective rate to between 40 per cent and 50 per cent. For brands, the result is a 15 per cent or more increase in total costs, forcing difficult decisions on pricing, sourcing and profitability. Indeed, McGrath sees pricing strategy becoming an art form, as brands grapple with shifting consumer spending habits and their own financial balancing act. “Consumers are being hit by increased costs across many categories, which could affect the share of wallet dedicated to apparel,” she says.Official I Act Like Im Ok But Deep Down I Need The Baseball Season Back Shirt
The unpredictability surrounding tariffs is stalling fashion’s efforts to reduce its dependence on China, Herman warns. Brands, uncertain about where trade policies will land, are hesitating on supply chain investments and hiring decisions. “There is a real concern that forthcoming announcements may generate more questions than answers,” he adds. This uncertainty is particularly acute given Trump’s history of renegotiating and then disregarding trade agreements. “As recent developments have demonstrated, it is unclear that the US can be relied on to honour agreements that it enters into going forward,” says Stephen Sidkin, partner and head of ESG at Fox Williams law firm. The ripple effects of tariffs extend far beyond the balance sheets of brands and retailers — they strain international relationships, disrupt contractual obligations and push businesses into murky legal territory. Apparel companies could find themselves facing unintended breaches of contract, exposing them to costly and complex disputes. Tariffs are already complicating nearshoring efforts. While many US fashion companies are eager to expand sourcing within the Western Hemisphere, new tariffs on textile and apparel imports from Mexico and Canada — both USMCA members — are sending mixed signals. Rather than incentivising close-to-market production, the policy is dampening enthusiasm for reshoring, says Dr Sheng Lu, director of the department of fashion and apparel studies at the University of Delaware.
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