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Background:
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.
Business of Fashion retail editor Cathaleen 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 percent 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 US,” 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.
