New Tariffs, New Rules: Impact of Trump’s Tariffs on Fashion

Delivery

This report comes in PPT.

Key Findings

Risks of lower growth and higher inflation

Implementation of President Donald Trump’s full agenda may drive the US economy into recession, while reducing global GDP growth, affecting consumer spending power and income growth globally. Fashion businesses reliant on complex globalised supply chains are particularly vulnerable and exposed to new tariffs.

Tariffs will result in higher consumer prices

The US fashion industry is largely reliant on Asian-centric supply chains, making it very exposed to the new tariffs. Price increases and supply disruptions are thus expected. If prices rise significantly, US consumers are likely increasingly to turn to the secondary market, forcing fashion players to review pricing strategies.

Diversification in global supply chains

Political tensions and the risk of retaliatory tariffs is fuelling interest in sourcing diversification among fashion players. In the short term, India and ASEAN nations are set to benefit from movements away from China, given their growing domestic markets and competitive labour costs. Regional and bilateral trade ties will gain significance, creating opportunities for nearshoring in Latin America, but this will require significant investment.

Diversification in global trade and retail markets

The current political tensions are pushing for new trade agreements and different export strategies for Chinese players which need to seek new markets for their goods. Large mass markets in emerging economies like India, Brazil and Indonesia will not only be prime export targets for Chinese-made garments and footwear, but the pressure will also grow on European markets to protect their fashion industries from Chinese imports. New regional and bilateral trade ties will gain significance.