Join Sarah Kent, the Chief Sustainability Correspondent, and Simone Stern Carbone, Luxury Correspondent, as they dive into the seismic impact of Trump's tariffs on the fashion industry. They discuss how luxury brands, previously insulated by European production, will now face challenges from import duties. Kent explains the unrealistic expectation of reviving US-based manufacturing, while Stern Carbone highlights the delicate balance luxury brands must maintain amid rising costs and price sensitivity. A thought-provoking look at the future of fashion in turbulent economic times!
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insights INSIGHT
Unprecedented Tariff Impact
Trump's latest tariffs are far-reaching and impact various industries, including fashion and even food.
This differs significantly from 2016, targeting more countries and goods with higher percentages.
insights INSIGHT
Expanded Tariff Scope
The 2016 tariffs primarily focused on China and specific goods like sneakers.
The new tariffs encompass luxury goods and European production, impacting a wider range of brands.
insights INSIGHT
Understanding Tariff Application
Tariffs apply to the manufacturing cost of goods, not the retail price, influencing where brands manufacture.
This incentivizes strategic manufacturing optimization to minimize costs at the point of U.S. entry.
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President Donald Trump announced an unprecedented wave of tariffs on April 2, imposing duties as high as 54 percent on fashion imports from key manufacturing countries, including China and Vietnam, and 20 percent on goods from the EU. These measures immediately sparked panic across global markets, ratcheting up the odds of a US recession and causing sharp stock price declines for major fashion brands such as Nike, Victoria's Secret and VF Corp.
Sustainability correspondent Sarah Kent and luxury correspondent Simone Stern Carbone join executive editor Brian Baskin and senior correspondent Sheena Butler-Young to break down the tariffs’ effects on manufacturing, luxury brands, consumer behaviour and potential future shifts within the industry.
Key Insights:
The belief that these tariffs could quickly restore US-based fashion manufacturing is unrealistic. "It would take years of investment to build up the infrastructure and skill base within the US to replace manufacturing capacity that has been moving abroad for decades. For the apparel industry, it just does not exist on the scale that would be needed," explains Kent.
Luxury brands, traditionally insulated by European-based production, will also face pressure. "Even for luxury brands that pride themselves for their production in countries like mostly France and Italy, they are going to be hit with some tariffs too," Stern Carbone points out.
The tariffs introduce a complex challenge for luxury brands, requiring careful balancing of price adjustments, consumer sentiment and creativity amid ongoing economic uncertainty. "It's this mix between pricing, demand, maybe a lack of creativity, and also incentivising customers to actually purchase luxury goods," says Stern Carbone. "You don't know what [Trump] is going to do next, you don't know if this is going to stick, so are you going to spend $10,000 on a handbag - even if you can technically afford it - when you don't know what tomorrow brings?" emphasises Kent.
The industry isn’t entirely powerless. "Brands have a voice. Brands are part of the global economy. Brands can lobby," says Kent. "They can make it known that they don't like this. If you're not raising your voice and saying, 'hey, this is really hurting big business and it's not making America great again,' then you're not even trying."
The Business of Fashion Podcast