Joan Kennedy, a correspondent focusing on tariffs and consumer behavior, and Marc Bain, who covers trade and supply chains, dive into the resurgence of tariff threats from Trump. They discuss the rising apparel prices reflecting these tariffs and how brands are grappling with consumer sensitivity and price perceptions. The duo highlights the complications of supply chain diversification, revealing that even alternative production hubs are facing tariff challenges. Their insights shed light on the fashion industry’s evolving strategies amidst economic uncertainty.
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insights INSIGHT
Tariffs Now Affect Apparel Prices
Apparel prices in the US are now rising due to the impact of tariffs starting to affect inventory.
Initial price drops reversed as merchandise subject to duties begins reaching retail shelves.
insights INSIGHT
Supply Chain Diversification Challenges
Supply chain diversification is increasingly unreliable as new tariff threats hit alternative countries.
Brands face unpredictable challenges shifting production to avoid tariffs, like newly threatened 50% tariffs on Brazil.
volunteer_activism ADVICE
Build Redundancy in Supply Chains
Brands should build redundancy into their supply chains beyond just sourcing from different countries.
Having multiple factory options for the same product helps manage chaos and unpredictability.
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After turning to other matters for a few weeks, President Donald Trump has reignited his aggressive tariff strategy, threatening sweeping new duties on key fashion-producing nations starting Aug. 1, as well as a fresh set of new levies on the EU, Brazil, South Korea and other trade partners.
On this episode of The Debrief, correspondents Joan Kennedy and Marc Bain join hosts executive editor Brian Baskin and senior correspondent Sheena Butler-Young to unpack how brands are reacting, where prices are headed, and why diversification may no longer be the solution it once was.
Key Insights:
Apparel prices in the US are finally starting to reflect the cost of tariffs. "We got the first bit of evidence that tariffs are actually having an impact on prices," said Kennedy, pointing to new CPI data showing apparel prices up 0.4% in June. "They're starting to rise because we're seeing inventory start to trickle onto shelves that are affected by these new duties." Bain added that shoppers are particularly sensitive: "It’s about managing perceptions... It’s why you see these brands putting out Instagram posts about tariffs and why they’re raising prices."
Supply chain diversification isn't working like it used to. Brands once counted on shifting production as a way to dodge tariffs. But now, alternative hubs are also getting hit. "It is kind of like a game of whack-a-mole," said Kennedy. "One of the countries that was expected to benefit was Brazil... but we've seen a new 50% tariff threatened on Brazil." Bain noted that brands are now being advised to build in redundancy. "It’s not just about finding another source. It’s having some layer of redundancy built in."
In response to rising costs and consumer fatigue, brands are reducing product variety and pricing selectively. Levi's, for example, announced they’re going to discontinue certain less popular styles during the holiday shopping season. Bain explained the logic: "If you know these are more sure bets, you’re less likely to have to discount them later... so as you're trying to offset the cost going up from tariffs, you can try to reduce your costs in other places too." Kennedy added: "We've seen brands get smart about where exactly they make these price hikes... like upping the price on a more fashion item, but keeping prices on staples stable."
The Business of Fashion Podcast 