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Over the past few weeks, the Trump administration has signed a slew of executive orders imposing tariffs on Mexico, Canada, and China – the United States’ largest trade partners.
According to Vogue Business, “these tariffs would impact one-third of all goods shipped into the US – including clothing, footwear, and beauty products.” [1]
To navigate this volatility, retailers must stay informed and agile with full visibility into the market, the impact on their profitability, and shifting customer behaviors.
Though the latest tariffs focused on these three countries, Trump has threatened tariffs on all manufactured goods from abroad, meaning companies wouldn’t be able to avoid manufacturing costs by switching operations to a different country.
Additionally, he has suspended the “de minimis” exemption, which allows goods $800 or less to enter the US tax-free, affecting fast fashion retailers across the board.
As stated by the U.S. Fashion Industry Association, nearly 98% of apparel consumed in the U.S. is imported.[7] And, with over thirty percent of all fashion brands currently producing in China, retailers will feel the pressure of the new 10% tariff on their margins.[4]
These tariffs will raise prices from materials to finished products, causing a ripple effect on sourcing, production, and retail pricing.
As so much remains unknown, “fashion brands are reassessing their supply chain strategies to stay ahead of potential disruptions.” [2]
Beyond higher costs, the fashion industry’s reliance on Chinese manufacturing introduces risks of shipment delays and logistical bottlenecks.
With China retaliating by blacklisting companies, any retailers sourcing from affected suppliers may struggle to fulfill orders efficiently. [9]
According to Vogue Business, annual tariff costs for apparel and accessories could double, increasing from $13 billion to $26 billion. [2]
Because the burden of the tariff falls on the US company doing the importing, and not the foreign entity, retailers now face a critical question: do they absorb rising costs, or pass them on to shoppers? Either option impacts profitability.
And, with inflation weighing on household budgets, price-conscious consumers may select cheaper alternatives, buy less, or turn to secondhand and sustainable fashion options instead.
While focusing on how tariffs impact retailers’ internal business is essential, ultimately, it comes back to the impact on the customer and understanding what’s happening in the market.
Retailers need to know how key players in their space are adapting to tariffs. Are they passing costs on to customers through higher prices, renegotiating supplier contracts, or shifting sourcing? Or, are they making changes to their assortment and exploring private labels or alternative materials?
Retailers could downgrade care and composition or increase new discount messaging, and you need to be aware of their strategies to remain competitive.
Tariffs affect more than just fashion, and customers will be forced to make trade-offs as to how they spend their money. Retailers need to be able to anticipate consumer demand and how shoppers are reacting to changes.
Customers are having to make tough choices around their spending, and this information is crucial in determining how to structure assortment and pricing. By connecting internal and market data, retailers can understand which customer segments to focus on to protect profits.
To make smart decisions during this tumultuous time, retailers need visibility into competitive, customer, and company data – simultaneously.
These connected, AI-powered insights give retailers a holistic understanding of the tariff’s effect on their business, helping them identify successful price points and products, track promotional shifts, and reveal competitive strategies.
To adapt, retailers can:
Retailers should identify their most profitable alternative supply bases and re-focus their efforts accordingly. These insights can help reduce reliance on tariff-heavy regions by seeking out suppliers and materials in non-affected countries.
Retailers need to remain competitive without eroding margins. Analyzing promotional trends can guide smarter markdowns, price adjustments on high-margin products rather than essentials, and targeted discounting instead of blanket price hikes.
To retain customers, brands must identify and double down on what keeps them engaged – quality, design differentiation, and customer experience. Tracking how messaging and assortment makeup change in the market can ensure retailers are resonating appropriately.
Targeting regions less affected by tariffs can provide a hedge against volatility. AI tech can help retailers identify where demand is growing and understand how to launch and localize pricing and assortments in new markets.
Retailers must align internal data with real-time market trends to optimize inventory and minimize excess stock. Automating supply chain operations further streamlines costs, ensuring agility in an unpredictable tariff environment.
Arun Rai, Director and Co-Founder of the Robinson College of Business Center for Digital Innovation at Georgia State University says, “In the past, brands reacted to tariff hikes after the damage was done – scrambling to cut costs or absorb losses once duties were applied. AI flips that script, giving companies the tools to simulate, adjust, and optimise before tariffs cut into margins.” [3]
Understanding how competitors are reacting, how consumers are adjusting their spending, and how to optimize assortment, sourcing, and pricing is key to survival.
EDITED is the only solution that combines competitor, company, and customer data. By using our AI-powered technology to stay market-informed, profit-aware, and customer-centric, retailers can mitigate risk, protect their margins, and seize new opportunities — even in an unpredictable tariff landscape.
Book a demo today and see how EDITED can help you navigate the effects of tariffs on your margins.
Sources:
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