WASHINGTON, D.C. — The fashion industry may have dodged another bullet when President Donald Trump again delayed tariffs on many imports from Canada and Mexico, but for industry leaders gathered in the nation’s capital for a conference this week, it didn’t feel that way.
On Thursday, just two days after the US levied a new 25 percent tariff on imports from Mexico and Canada, Trump announced that goods from both countries covered under the existing US-Mexico-Canada Agreement, including textiles and apparel, would receive a one-month reprieve. The decision came after Trump had already delayed the tariffs by a month, and a day after Trump opened a 30-day loophole for automakers.
Now, the tariffs are scheduled to take effect on April 2. Imports from China, which Trump hit with an additional 10 percent tariff this week — on top of the 10 percent duty implemented in February — get no such break for the moment.
Of course, the whole situation could change again in a month, or a day, or by the time you finish reading this sentence. The uncertainty alone comes with a cost.
“If you have a good data point from January, who cares? It does not matter at all,” Curtis Dubay, chief economist at the US Chamber of Commerce, said on stage Wednesday at the American Apparel & Footwear’s Association’s annual executive summit in Washington DC, where members of the fashion industry gathered for insights from analysts and policy experts.
The first weeks of Trump’s second term have been a flurry of activity as he’s upended long-standing trade relationships and used the largest cudgel at his disposal, the economic might of the US, to pressure other nations to bend to his will. But the new tariffs and constant reversals have knocked global businesses off balance and left them straining to adjust to a mercurial new reality.
Others at the AAFA event were trying to take the reversals and re-reversals in stride. Joe Mellaci, an attendee who manages business development for the Americas at Impactiva, a quality-assurance firm serving fashion and footwear clients, recalled recently telling a client in Hong Kong not to panic about the latest duties, because in a week everything will change.
Though not all are feeling so calm. “Their hair is on fire,” said Mellaci of the general sentiment among brands.
Some retailers are certainly treating the tariffs as if they’re here to stay. Pacsun had initially told the Associated Press after the first China tariffs, which were lower than it expected, that the company would not raise prices for customers or move any existing knitwear and denim production out of China. That was until Trump revealed his newest China tariffs. In a statement to The Business of Fashion, chief executive Brieane Olson said given the additional 10 percent duty, Pacsun plans to shift more manufacturing out of China. It’s still evaluating its pricing strategy as it tries to assess the tariffs’ impacts.
Moving production is the most obvious strategy to avoid tariffs, but knowing where to relocate could prove difficult, because no sourcing location is immune to the upheaval. Even countries seen as allies and bedrock trade partners like South Korea are vulnerable, with Trump threatening the country with higher tariffs than he put on China. Many brands have spent recent years shifting production from China to Vietnam, but the latter could become another target.
“I do think Vietnam is on the chopping block,” said Nasim Fussell, senior vice president at lobbying and communications firm Lot Sixteen, during a Thursday panel on US trade policy. She pointed out that, in Trump’s first term, his administration began an investigation into Vietnam and highlighted the US trade deficit with the country, adding “I think had they won reelection at that time, they would have acted on Vietnam and we likely would have seen tariffs along the lines of what we saw imposed on China.”
Earlier in the day, the president of the Dominican Republic, Luis Abinader, made a pitch to the AAFA audience about the benefits of manufacturing in his country, underscoring its proximity to the US and friendly trade relations. Later, however, Fussell noted that CAFTA, a free-trade agreement of which the Dominican Republic and the US are a part, is likely to be reviewed by the Trump administration as well.
She also pointed out that Congress has been thinking about how it could legally apply tariffs to Chinese-owned factories in other countries, meaning even a manufacturer’s subsidiaries in neighbouring nations could be up for scrutiny.
The EU, meanwhile, is already in Trump’s crosshairs. The president has said tariffs on European imports are coming, threatening a painful blow to luxury firms for whom the US is their most resilient market in a global luxury slowdown. Given fashion’s importance as an export, it’s a good source of leverage and would likely be caught up in any trade war.
Countries are fighting back. China, for instance, announced its own tariffs on US goods including cotton, which it’s the largest buyer of globally. The news sent cotton prices to a four-year low.
For now, fashion businesses are trying to work out the likely scope and duration of all the tariffs. Just because the US puts a 25 percent duty on goods today doesn’t mean it won’t come down or be narrowed to select goods in the future, or disappear altogether if Trump gets the concessions he’s after. Everything is transactional and up for negotiation.
What’s clear, however, is that the constant threat of tariffs is here to stay, and more are still to come. Trump has already said the US will impose what he’s called reciprocal tariffs on April 2, targeting countries such as India that he believes apply greater tariff and non-tariff barriers to US products than the US applies to theirs. Those tariffs would take months to go into full effect though. Anything could happen in that time.
THE NEWS IN BRIEF
FASHION, BUSINESS AND THE ECONOMY
Prada Group defies slowdown as young shoppers flock to Miu Miu. Revenue at the Italian group rose 17 percent at constant currencies in 2024. Growth remained strong in the fourth quarter, with retail sales climbing 84 percent at Miu Miu, the company said.
Versace owner Capri jumps on Prada moving closer to purchase. Capri Holdings Ltd. saw its shares rise as much as 9.6 percent following reports that it is close to selling its Italian luxury brand Versace to Prada for up to €1.5 billion ($1.62 billion). The deal could help Prada compete with luxury giants like LVMH and Kering SA.
Luxury slump hits shop openings across Europe’s toniest streets. Three of the world’s largest luxury conglomerates opened just 29 stores in Europe last year, down 20 percent in 2023. The slowdown reflects the luxury industry’s choppy recovery from an extraordinary surge in demand after the pandemic.
Macy’s joins retailers with good results and a dour outlook. The largest US department-store operator forecast net sales in the current fiscal year between $21 billion to $21.4 billion. That guidance includes the decrease in revenue from the closing of more than 60 Macy’s stores last year.
Adidas sets cautious tone for 2025 outlook. Adidas said it should reach between 1.7 billion euros and 1.8 billion euros ($1.8 billion and $1.9 billion) operating profit in 2025. Adidas expects annual revenues to increase at a “high single-digit” rate in currency-neutral terms, lower than the 12 percent growth it delivered last year.
Abercrombie & Fitch deepens retail gloom with a tepid forecast. The company expects annual net sales growth of 3 percent to 5 percent, below expectations for a 6.77 percent rise. Abercrombie expects a fiscal 2025 operating margin of 14 percent to 15 percent, including the impact from tariffs on China, Canada and Mexico.
Foot Locker outlook weighed down by discounts and weak demand. Comparable store sales, a key retail metric, rose 2.6 percent in the fourth quarter, better than analysts expected. CEO Mary Dillon said in a statement that the company will continue to face uncertainty due to promotional pressures, especially in the first half of the year.
JD.com sales rise most in years after China consumers awaken. The company reported a much better-than-projected 13 percent rise in sales to 347 billion yuan ($47.9 billion) for the December quarter. Net income also more than doubled to 9.9 billion yuan.
Walmart asks Chinese suppliers for major price cuts on Trump tariffs. Some suppliers, including clothing producers, have been asked to lower prices by as much as 10 percent per round of tariffs. Suppliers will essentially shoulder the full cost of duties.
Zalando sees growth helped by its loyalty programme and fewer discounts. Revenue will likely grow between 4 percent to 9 percent, the company said Thursday as it reported full-year results. Earnings before interest and taxes may rise to as much as €590 million ($637 million).
The Independents launches incubator. The fashion communications giant is launching an incubator conceived to “identify, support and accelerate the next wave of talent, entrepreneurs and creative agencies.” Paris-based spatial and lighting design firm Matière Noire is the first to join the programme, dubbed L’Incubateur.
Victoria’s Secret abandons DEI goal for focus on “belonging.” The retailer has halted its promotion goal for Black workers and altered its language on diversity, equity and inclusion. The lingerie retailer replaced references to DEI efforts with text on “inclusion and belonging,” archived and live versions of its website show.
Tecovas to open New York store. The western wear brand, known for its swanky cowboy boots, is opening a 4,500-square-foot outpost in SoHo amid a broader retail expansion. The brand has ambitions to reach $1 billion in sales by 2030.
THE BUSINESS OF BEAUTY
Louis Vuitton to launch a makeup line. The luxury fashion house will release a line, La Beauté Louis Vuitton, of colour cosmetics this autumn, its first foray into cosmetics since the 1920s. It has also named Pat McGrath as its creative director.
L’Oréal divests hair care line Carol’s Daughter. L’Oréal did not name the entrepreneur the label was sold to, but said the individual has a “proven track record” of acquiring and growing beauty brands. In 2014, when L’Oréal acquired the brand, it recorded net sales of $27 million.
Kenvue settles proxy fight with activist Starboard. The company appointed three new directors to its board, including Starboard Value CEO Jeffrey Smith. The move is part of an agreement to resolve a months-long dispute over the company’s performance in the skincare and beauty segment.
Olaplex sales slide 9.8 percent. The biotechnology hair care company said sales declined to $100.7 million in its fourth-quarter earnings on Tuesday. Direct-to-consumer sales declined 2.5 percent to $40.9 million, and net income decreased 162.4 percent.
Inde Wild secures $5 million. The Indian skin and hair care brand has closed a seed extension round led by Unilever Ventures. The funds will help the brand expand its partnership with the LVMH-owned retailer, with a launch into Sephora US planned for early 2026. (The brand launched into Sephora UK in late 2024.)
PEOPLE
Shana Randhava is the latest executive to depart Estée Lauder Companies. Randhava spearheaded the creation of Estée Lauder Companies’ investment arm New Incubation Ventures. Prior to creating NIV, she led the team managing ELC’s M&A strategy, overseeing the acquisitions of Deciem, Too Faced, Dr. Jart, as well as the Balmain Beauty license.
MEDIA AND TECHNOLOGY
Reddit co-founder Alexis Ohanian joins Frank McCourt’s bid for TikTok. Ohanian is joining as a strategic adviser specialising in social media. He is expected to help promote the Project Liberty bid to buy the US assets of TikTok, which would let users control how their data will be used and shared.
Carine Roitfeld to launch new magazine ‘Players.’ The new sports-centric bi-annual fashion magazine, teased late last year, is officially launching in May. The veteran editor will serve as head of fashion, while her son Vladimir Roitfeld, also chief executive of CR Fashion Book, will lead the title as editor-in-chief.
Compiled by Yola Mzizi.
Content shared from www.businessoffashion.com.
