The current focus regarding the economy is the impact of Trump’s tariffs on industries ranging from fashion to electronics. On April 9, President Trump announced a 90-day pause on reciprocal tariffs exceeding 10 percent for all countries except China, which briefly sent fashion stocks soaring. The stock market is still on track to experience its worst April in nearly a century since the Great Depression began in 1932.
The proposed Trump tariffs are the highest in nearly a century, with some of the largest tariffs being imposed on major apparel manufacturing hubs worldwide. Trump’s tariffs include a baseline rate of 10 percent on all imported goods, with higher tariffs imposed on nearly two dozen countries. Vietnam will eventually face a 46 percent tariff, Cambodia will incur a 49 percent duty, and Bangladesh will see a 37 percent tariff. China will be subject to a new 34 percent tariff, in addition to previously announced duties, bringing their total tariffs to 54 percent, while the entire European Union (EU) will face a 20 percent duty. It is worth noting that Cambodia is the second largest apparel exporter to the U.S. after China.
Fast fashion companies represent one of the largest sectors in the fashion industry, currently clutching their pearls over Trump’s tariffs due to their significant production in countries like China, Vietnam, Cambodia, and Bangladesh. Tariffs on Chinese imports are likely to increase the costs of fast fashion for Americans, which is expected to result in decreased purchases from these brands.
Trump’s tariffs seek to reshore American industry and drive sales of U.S.-made goods by raising the price of imports. While this idea sounds great in theory, America lacks the manufacturing infrastructure to do so and hasn’t had the needed infrastructure for decades.
Rather than lead to the reshoring of manufacturing in the U.S., it’s likely that these tariffs will lead to product shortages domestically. The price of leather goods, clothing, furniture, and consumer electronics is expected to increase. Even fast fashion companies, like Shein and Temu, notorious for their exceptionally low prices, are expected to raise their prices.
Trump also signed an executive order in April, eliminating the “de minimis” rule for Chinese imports, which previously allowed goods under $800 to be imported duty-free. Beginning in June, these items will now see a duty rate of 30 percent of their value of $25 an item, increasing to $50 per item.
What some consumers might find shocking is that clothing prices are one of the few things that have seen deflation in recent decades thanks to the use of lower-priced fabrics, like polyester, and a shift to manufacturing in countries that employ low wages. The fast fashion model also led to lower prices accelerating new product cycles, creating more demand for clothes.
Image courtesy of fastcompany.com
Despite the concern over the increase in prices for fast fashion, sustainability advocates are also saying this could be beneficial in the long term for the environment. Getting consumers to purchase less will reduce the amount of clothing in production, thereby reducing the amount of clothing going into landfills.
Sustainable shopping advocates are hoping for a boost in thrifting because the U.S. trade war is putting fast fashion in a chokehold. More than 11 million tons of textiles were sent to landfills in 2018 alone, according to the U.S. Environmental Protection Agency. Fabric in landfills doesn’t decompose and releases greenhouse gases that warm the climate. Much of the U.S. waste is exported to Chile and Nigeria, where toxic chemicals and dyes from textiles can affect the soil and groundwater.
In the wake of Trump’s tariffs, an unlikely firestorm has been set off on TikTok by none other than luxury fashion consumers. Hermès, the brand famous for their five-figure handbags, including the iconic Birkin and Kelly bags, already announced in the wake of Trump’s tariffs on the EU, that they will raise their prices by 10 percent.
This caused Chinese manufacturers to create viral videos urging people to buy their versions of luxury products to circumvent higher prices. One viral TikTok video from the account Sen Bags, which has since been removed from the platform, featured someone saying “Just buy from us. We use the same material, same leather, same hardware, same edge oil. The [difference] is that we don’t have the logo.”
Although an immediate surge in counterfeit luxury goods hasn’t happened yet, with more consumers now priced out of buying designer handbags with planned price increases, it isn’t unlikely. Advances in Chinese manufacturing have allowed high-quality replicas of luxury goods to grow exponentially. Some luxury consumers see buying directly from these Chinese manufacturers as a way to “give the middle finger” to Trump.
Apparel isn’t the only arena feeling the effects of Trump’s tariffs. Beauty is also taking a hit as well. Double-digit fees were slapped on beauty manufacturing hubs, including South Korea and France. South Korea, which surpassed France as the largest source of beauty imports to the U.S. in 2024, will see a 25 percent increase. This is expected to deal a blow to the booming K-beauty market. For smaller beauty brands, the tariffs will be especially crushing. This is expected to lead to some beauty brands going out of business.
Even if Trump found a way to reshore jobs, the process would be long-term. In the interim, brands are negotiating with factories to figure out ways to offset costs to stay in production and ameliorate their losses. These tariffs are unlike anything anyone in business has lived through today, so, it will be a learning experience navigating them. For now, we can only hope for the best for the economy.
Kristopher Fraser
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