U.S. trade policy impact on fashion industry's supply chain
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U.S. President Donald Trump announced yesterday during a press conference the highest tariff package in recent decades, and the countries where some of the largest manufacturing plants are located, such as Cambodia, Vietnam, China, and Bangladesh, have come under the White House's radar.
The United States Fashion Industry Association expressed its disapproval and stated that the new tariffs will significantly impact U.S. clothing brands. Just hours after Trump’s announcement, the stock prices of major clothing brands took a considerable hit: the well-known brand Lululemon lost over 10%, while Nike and Ralph Lauren experienced a 7% drop. The new tariffs will cause several problems for the fashion industry, as in the case of Walmart, which has already announced that it will negotiate with its suppliers.
Currently, brands will have to decide whether to absorb the higher costs in order to keep prices stable or pass them on to customers. The second option could negatively impact consumers' wallets, already strained by rising inflation and the economic uncertainty caused by the tariffs, as evidenced by the drop in consumer confidence in the United States recorded in February.
The luxury sector also appears particularly vulnerable to the impact of the new tariffs: many companies do not produce in the U.S., which will lead to a significant increase in production costs – with the exception of LVMH, which opened its third facility in the U.S. in 2019.
The United States Fashion Industry Association expressed its disapproval and stated that the new tariffs will significantly impact U.S. clothing brands. Just hours after Trump’s announcement, the stock prices of major clothing brands took a considerable hit: the well-known brand Lululemon lost over 10%, while Nike and Ralph Lauren experienced a 7% drop. The new tariffs will cause several problems for the fashion industry, as in the case of Walmart, which has already announced that it will negotiate with its suppliers.
Currently, brands will have to decide whether to absorb the higher costs in order to keep prices stable or pass them on to customers. The second option could negatively impact consumers' wallets, already strained by rising inflation and the economic uncertainty caused by the tariffs, as evidenced by the drop in consumer confidence in the United States recorded in February.
The luxury sector also appears particularly vulnerable to the impact of the new tariffs: many companies do not produce in the U.S., which will lead to a significant increase in production costs – with the exception of LVMH, which opened its third facility in the U.S. in 2019.