Bonus: The Trade War’s Off, For Now. What's Next for Fashion?

May 15, 2025

Marc Bain, a tariff expert and technology correspondent, teams up with retail editor Cathleen Chen to discuss the recent temporary tariff reduction between the U.S. and China. They explore how this pause, while offering short-term relief, doesn't resolve the looming uncertainties in the fashion industry. Bain emphasizes that costs remain high despite lower tariffs. Chen highlights the vital role of consumer sentiment in shaping demand, indicating that the fashion landscape may continue to shift as retailers reassess their strategies in response to evolving trade dynamics.

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INSIGHT

Tariff Reduction Eases Import Ban

The U.S. tariff on China goods dropped from 145% to 30%, easing but not ending high costs.
This reduces the effective import ban to a costly import scenario, not a full reopening.

ANECDOTE

Brand Responds Quickly to Tariff Pause

Kim, CEO of Bog Bags, immediately restarted 90% of suspended orders after tariff pause news.
Despite resuming China orders, she continues diversifying production in Vietnam and Sri Lanka.

INSIGHT

Emerging Hubs Face Uncertainty

The drop in China tariffs dampens expected windfalls for production hubs like Vietnam and Cambodia.
These countries face uncertainty as production shifts depend on future negotiations.

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On May 12, the US and China reached a deal to temporarily reduce tariffs for 90 days, offering a breather from an escalating trade war. Stocks surged on the news, but experts warn this relief might not fully resolve deeper industry uncertainties or consumer anxieties.

BoF retail editor Cathleen Chen and technology correspondent Marc Bain join hosts Brian Baskin and Sheena Butler-Young to unpack the ramifications of the tariff pause and what the fashion industry can expect moving forward.

Key Insights:

Tariffs have reduced, but costs still remain high. The Trump administration’s initial 145 percent tariff effectively banned imports from China, a situation now alleviated but not fully resolved. "Lowering that to 30% is a different situation," Bain explains. "It's saying, go ahead, import your stuff, but it's gonna still be expensive."

The tariff pause offers temporary clarity, but major production hubs like Vietnam and Cambodia face continuing uncertainty. "Depending on what happens with those negotiations, the whole landscape could shift," Bain notes, as retailers remain cautious about long-term production decisions.

Tariffs are not the industry's only concern as consumer sentiment will significantly shape demand. "Beyond what's going to happen with tariffs with dozens of countries, there's also the issue of consumer confidence and sentiment and whether there will be demand to drive sales for the products that do end up in the U.S.," Chen highlights, questioning the robustness of future sales.

Despite an easing in the tariff rate for small shipments from platforms like Shein and Temu, the overall uncertainty around the future of the “de minimis” loophole might dampen consumer enthusiasm. "All the news about Shein and Temu has been enough to just keep that customer away," Chen suggests. "I feel like there might be this attitude of, we had a good run of really cheap stuff for a couple of years and maybe you've had enough of it now."

Brands should focus on diversifying their supply chains and strengthening industry partnerships. Bain advises brands to "have some redundancy built in. So if one location becomes untenable, you can shift to another spot." Meanwhile, Chen emphasises the importance of collaboration: "Now is a really great time to forge stronger ties to your suppliers, your vendors, even your retail partners," ensuring shared responsibility and minimised impact on consumers.

Additional Resources:

With the Trade War on Pause, Here’s What’s Next for Fashion | BoF

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