Trump sees tariffs as a tool to protect the US economy and in some cases to negotiate a deal but the impact on the wider fashion supply chain and who will win or lose from them is far more complex.

US president Donald Trump has a history of using tariffs to try and boost domestic manufacturing and the wider American economy with his first term in office seeing between 7.5% and 25% tariffs placed on Chinese imported goods.

President Biden also regarded tariffs favourably and kept his Republican predecessor’s existing 301 tariffs in place while increasing others. 

Fast forward to 2025 and Trump’s second term in office and we’ve already seen an additional 10% tariff placed on all imports from China. 

This time round he has also threatened to impose 25% tariffs on neighbouring Mexico and Canada. However these tariffs are on pause for one month following assurances from both Mexico’s President Claudia Sheinbaum and Canada’s Prime Minister Justin Trudeau that enhanced border security measures with the US will be put in place.

Ultimately, China remains Trump’s main target with direct to consumer imported products originating from the region and worth $800 or less no longer qualifying for the duty-free treatment that had existed under the de minimis provision. 

What have we already learned from Trump’s 2018 tariffs? 

Given this is not the first time the US has used tariffs as a political tool there are some key learnings for the fashion supply chain in 2025. 

Dr Sheng Lu, professor of apparel and fashion studies at the University of Delaware tells Just Style he recently conducted a study on tariffs and US apparel retail prices that were based on monthly US trade data from January 2015 to November 2024 (the latest data available).

He explains: “A tariff increase on US apparel imports would generally lead to a rise in US apparel retail prices. 

“However, the magnitude of this effect is moderate, and many US fashion retailers choose not to pass the full burden of tariffs onto consumers, likely due to intense competition in the market. Also, the price effect of the tariff increase typically appears in about two months.”

Another interesting finding is that a tariff increase can sometimes lead to a decline in US apparel import prices. 

Dr Lu points out this result aligns with some studies indicating that following the implementation of Section 301 punitive tariffs in 2018, some Chinese exporters agreed to reduce their selling prices to keep sourcing orders. 

Likewise, he says a puzzle not yet fully answered is that the average price of US apparel imports from China decreased by over 20% from 2018 to 2024 despite the Section 301 tariffs being in place. 

While, over the same period the average price of US apparel imports from the rest of the world went up by 7.8%.

Who are the biggest losers of Trump’s 2025 tariffs?

Dr Lu believes a tariff increase on US apparel imports could hurt US apparel retail sales in the short to medium term as the higher selling prices could suppress consumers’ spending on clothing. 

He explains: “In the short to medium term about 50% to 80% of the variation in US retail prices is explained by its own past values, underscoring the persistence of retailers’ pricing practices. 

“Meanwhile, US apparel retail sales account for about 27% of the changes in US apparel retail prices. 

“In comparison, apparel tariff changes explained only about 5% of the retail price fluctuations.” 

In other words, market factors and in particular consumer demand plays a more significant role in shaping fashion companies’ pricing decisions rather than tariffs.

Nonetheless, he asserts that if tariffs were to increase on apparel products from a broader range of countries beyond China during Trump’s second term, the economic impact on US apparel retail prices could be much more significant and persistent than the Section 301 tariff case in 2018.

As it stands, the US’ only tariff officially in place is the one against China, so GlobalData retail analyst Neil Saunders can say with confidence that China is “one of the big losers”. 

He states: “President Trump is targeting China, and China will not change policies to placate Trump. So, brands know that tariffs will hit the country.” 

China has already announced retaliatory tariffs, however they do not extend to fashion, textiles or fibres. Instead, its tariffs include a 15% tax on coal and liquefied natural gas from the US and a 10% tariff on crude oil, agricultural machinery, pickup trucks and large-engine cars.

Who are the biggest winners of Trump’s 2025 tariffs? 

The tariffs challenge facing China does provide a huge opportunity for its main fashion sourcing rivals. 

Saunders points out that as China has become more expensive, there is likely to be outflows to other Asian hubs such as Vietnam and Cambodia, which he admits has already happened to some extent, but these shifts will likely be accelerated.

Joint Apparel Association Forum Sri Lanka’s secretary general, Yohan Lawrence agrees that Vietnam benefitted from the first round of China tariffs, but he tells Just Style there is an “outside possibility” this time round his South Asian fashion sourcing hub could pick up some market share from it.

He says: “Whilst Sri Lanka is a very small part of the global apparel value chain there’s an outside chance we could benefit.” 

Türkiye is also lining itself up to be a winner from the latest China tariffs with the Istanbul Apparel Exporters’ Association (IHKIB)’s vice president Mustafa Paşahan noting his country is one of few that can complete all components of the fashion supply chain within its borders and with a strong infrastructure.

“The share of inputs provided to Türkiye’s apparel supply chain from East Asian countries, from which the US is expected to distance itself, is quite low and limited. We believe that this production power will be an opportunity for Türkiye within US policies,” he says. 

Paşahan admits Türkiye’s primary focus is increasing market share in the US and with the US under Trump continuing to distance itself from China, he maintains that his country is the “strongest candidate” to fill the emerging gaps in the US market.

Central America and the wider Dominican Republic–Central America Free Trade Agreement region (CAFTA-DR) is another obvious winner from the US’ increased China tariffs given its proximity to the US for nearshoring.

The Sewn Products Equipment & Suppliers of the Americas (SPESA) believes the latest tariffs on China will continue to push more production to Bangladesh, Indonesia, Pakistan, Cambodia, Laos and Vietnam, while also encouraging more nearshoring back to the Americas (primarily Central America).

VESTEX, which represents Guatemala’s apparel and textile sector agrees, stating US companies are increasingly shifting production closer to home. 

It adds that Guatemala’s textile industry can become a reliable partner and provide faster and more cost-effective solutions while transforming logistical challenges into a competitive advantage.

SPESA points out nearshoring is already happening in the US with activewear brands bringing programmes back, but it “still feels kind of small”. 

However, the association, which represents US suppliers to the sewn products industry, anticipates that more will develop over this year and the US domestic fashion manufacturing sector will be looking for growth.

For some sourcing countries, the pendulum could swing either way…

Despite SPESA listing Bangladesh as a likely beneficiary from China’s 10% tariffs, Saunders points out the country is “still struggling after all the political turmoil” it faced last year.

For this reason, he believes Bangladesh’s neighbouring competitor India could be sitting in the “winners’ enclosure”. However, he adds: “While India has the capacity for manufacturing at scale, there would need to be some skilling and training for more intricate production runs”.

The jury is out on the impact of Trump’s tariff threats against Mexico and Canada given he has currently put the proposed tariffs for both countries on hold. 

SPESA believes it is likely that it was “just a negotiation tactic” but notes that if it is “implemented on a broad basis, it would severely hurt the US economy”. 

Europe also remains high on Trump’s hitlist so if it gets struck by US tariffs that will be a huge blow to its fashion sector. 

Euratex, the voice of the European apparel and textile sector says it is deeply concerned about the proposed US tariffs on EU goods as EU-US textile trade is worth more than €9.2bn ($9.54bn). 

However, it is probable that similar to Mexico and Canada, Trump is using tariffs as leverage for a further discussion. Consequently, Euratex is urging “both sides to pursue constructive dialogue and avoid unilateral actions”. And instead of tariffs, it is advocating “for an open, free and fair trade to ensure stability in this vital sector”.