President Donald Trump may have instituted a 90-day-pause on tariffs, but retailers are nevertheless spiraling. However, few industries have felt the tremor as acutely as fashion retail, as the exorbitant tariffs (up to 60%)—levied on major production hubs such as China, Vietnam, and Bangladesh—practically spelled the end of low-cost manufacturing, forcing brands to either eat into their margins or raise retail prices.
But does it have to be the end? Experts advise not to wave the white flag just yet.
“Brands and retailers are navigating a complex and fluid situation, which will require a thoughtful game plan and nimble approach,” Brittany Steiger, principal analyst of retail and e-commerce at Mintel, told Retail Brew via email. “Companies should be focusing on operational flexibility—from adjusting sourcing strategies and aligning new manufacturing partners to optimizing inventory management.”
Speaking of new manufacturing partners, a key justification for the tariffs is the goal of bringing manufacturing back to the US and, by extension, creating jobs.
Oh, shore: But Steiger, among other analysts, believes it’s unlikely to have that domino effect simply because it won’t be feasible for most retailers to reshore to the US.
“While reshoring manufacturing to the US or relocating to Europe sounds appealing, the feasibility is limited for most brands and retailers due to the high costs associated with labor and infrastructure,” she said, adding that US-based production would “drastically increase operational expenses, cutting into already tight margins.”
Joanna Rangarajan, partner and managing director in the consumer and retail group of Alvarez & Marsal, highlighted key challenges that would make it unreasonable for most companies to completely shift manufacturing to the US.
“Chief among them are the lack of scaled finished goods manufacturing tailored to domestic markets, and the absence of a robust, end-to-end supply chain for raw materials and components,” Rangarajan said via email. “Without both, reshoring entire assortments is not yet a viable solution at scale.”
It should be noted, however, that these challenges are primarily an issue for fast fashion or retailers with a relatively affordable range of products as opposed to luxury or high-end brands, Steiger said.
Still, recent reports about Louis Vuitton’s 6-year-old facility in Texas coming up as the worst performing after failing to be able to train local workers don’t exactly instill confidence.
Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.
Given these reports and the broader infrastructural limitations, diversifying and possibly nearshoring production to other parts of Asia to reduce lead times and reliance on Asia may be a viable option.
“Shifting countries of origin doesn’t have to be a binary move from one nation to another,” Rangarajan said. “In many cases, more nuanced strategies are possible—such as relocating specific components or final assembly to a lower-impact location or determining whether a portion of final assembly can be conducted in the US.”
Steiger agreed, adding that while moving entirely away from major manufacturing hubs would be unlikely.
“The most logical starting point for brands and retailers is to reassess supply chain strategy,” she said. “In most cases, this would involve forging relationships with new manufacturers in regions that may be less affected by tariffs than the ones they work with currently.”
Costs in translation: But even if retailers can successfully diversify, setting up new sourcing and manufacturing is likely to inflate costs to some degree.
“Pricing strategy will also be a key consideration,” Steiger said. “Fashion brands and retailers will want to carefully consider their margins and how price-sensitive their core customer is to determine how much additional cost the company is prepared to absorb or pass along to the consumer.”
Rangarajan suggests brands conduct “price elasticity and promotion studies” to help understand the impact of passing on costs to shoppers.
“In the near term, brands are likely to test targeted price increases in lower-sensitivity products or categories to gauge consumer response—even as the broader tariff environment remains in flux,” she said.
Investing in value messaging to justify price hikes, along with increased transparency around it to maintain long-term brand loyalty, will be central to strategizing costs.
In fact, to put greater emphasis on transparency, Steiger cites a recent Mintel study that found that 71% consumers want companies to keep them informed of any price hikes due to tariffs.
“Clear, honest communication paired with thoughtful messaging will be vital for navigating this economic shift and maintaining customer relationships,” she said.
In an industry where speed and cost are king, surviving this economic shift won’t just require strategy; it’ll demand reinvention.