Tariffs Will Hurt, But They Won't Kill Ultrafast Fashion

A week ago, President Donald Trump whipped out a poster board and announced a slew of logic-defying tariffs on goods from the countries that make pretty much all of Americans’ clothes and shoes.

Business leaders made desperate appeals to Trump, economists called the plans “totally silly.” And this week, as markets spiraled, he “paused” most of them for 90 days, leaving the China tariff in place. But Thursday afternoon, he said the tariff on China would be not 125 percent, as previously understood and widely reported, but 145 percent. A 10 percent tariff remains in place for other countries.

Basically, no one knows for sure what’s happening with tariffs! Is the pause really a pause? Trump could change his mind and announce something different at any moment. I almost wonder if he’s doing all this because he loves talking in the press about his “deals” and all the people who want to make big, beautiful deals with him. (Of course, he has provided no details on the countries with which he claims to be making these deals and what these deals may involve.) His press secretary even used the phrase “the art of the deal” when talking to the media.

Things look bleak for pretty much all fashion companies except maybe Hermès, whose customers are thought to be so rich as to be able to withstand any price increase. (And Hermès already runs a brilliant Birkin racket — it’s going to take more than a color-coded chart to put a real dent in that.) But, while things look especially dire for China-based ultrafast fashion, that industry will probably find a way to be okay.

Low-cost goods from China, like the $10 tank tops you can buy from Shein and Temu, had been exempt from tariffs under the de minimis loophole — but the Trump administration is ending that for packages shipping from China and Hong Kong on May 2.

This loophole was bound to end (Joe Biden wanted to close it, too). Since 1938, the exemption allowed packages under $800 to come into the U.S. duty-free so long as they were being shipped directly to consumers (versus being bulk-shipped and then taxed, which is what companies like H&M and Zara do). After May 2, those packages will face tariffs, costing Americans an estimated $11 billion to $13 billion annually. This burden would be disproportionately shouldered by minority and lower-income households.

Beginning May 2, packages from Shein and Temu will be subjected to either a 90 percent tariff or $75, whichever is higher. And beginning June 1, it’s either a 90 percent tariff or $150, whichever is higher. Other goods made in China — say, your iPhone or Nike shoes — face the 145 percent tariff (or whatever number Trump divines tomorrow, etc.). The tariffs are so bad for the apparel industry, that it’s being likened to Covid, when many smaller labels went out of business, clothing demand went down, and supply chains became totally chaotic.

If you do the math on a $10 dress, it would seem like an untenable position for these ultrafast fashion companies, which have been associated with immense environmental damage and sweatshop labor. However, evidence suggests that they’re going to figure out a way to satisfy Americans’ appetite for cheap goods.

Some have pointed out that the tariffs could induce sweeping changes to the fashion industry to make it slower and more sustainable. But, as sustainability expert and former Timberland COO Ken Pucker pointed out in Business of Fashion, the industry had such fantasies during Covid, too, and nothing improved — rather, people turned to shopping online, which helped Shein and Temu explode.

“This is not going to kill them off by any means,” Aaron Rubin, the chief executive of ShipHero, a warehouse management software firm, told the New York Times. “This will just change the business model.”

In 2023, Shein issued a press release announcing that its CEO, Donald Tang, supported “a complete makeover” of the de minimis exemption, suggesting that the company was prepared for its shipments to lose their special duty-free status. He claimed in 2024, “Shein has a competitive advantage because of its on-demand model and not the de minimis rules.”

That model involves using algorithms to work with suppliers to create a product assortment, making around 100 of each item to test its market appeal, and avoiding holding too much inventory. Actions Shein could take to lessen the impact of tariffs include making more stuff outside of China (in its 2023 impact report, it said it was expanding to Brazil and Turkey) and building warehouses in the U.S.and bulk-shipping here (both Shein and Temu have started building these).

Prices could still increase — but it’s unclear by how much. Neither Shein nor Temu has publicly commented about it. The Wall Street Journal reports both have raised prices in recent months and some suppliers are seeing a 20 to 50 percent reduction in orders, but, as I type, a $13 dress is for sale on Shein’s home page. One financial analyst pointed out in a report on H&M that “all major competitors are in a similar position, and the burden of these tariffs is likely to be felt by consumers through pricing adjustments However, in our view, the scale of these new tariffs will be difficult for H&M to fully pass on to customers…”

The same is surely true for Shein and Temu, even if the landscape looks challenging. Sheng Lu, professor of fashion and apparel studies at the University of Delaware, has pointed out that if China — which is hitting the U.S. back with a 125 percent retaliatory tariff — lets Shein diversify its supply chain to, say, Vietnam, the country is small and could only produce so much. Plus, Shein’s appeal is its constant churn of cheap, trendy pieces, which makes it hard to import products to the U.S. ahead of time.

Shein has been deploying the media-friendly Tang as a PR offensive in its ongoing quest to go public in London, which Reuters reported this morning has been approved by regulators there. The company obviously is not run by people so daft as to suddenly charge $75 for an “I Want Cheese Not Your Opinion” T-shirt currently priced at $12.69, and to implement such price hikes across the board. Even if it has to raise prices some, it’s still in a much better position than, say, the typical upstart brand showing at New York Fashion Week, trying to sell $1,300 shift dresses made anywhere overseas. (Shein’s revenue was $38 billion in 2024; Ralph Lauren’s was $6.6 billion.)

Plus, as I’ve pointed out before, even if ultrafast fashion becomes more expensive than it is today, it could still be the cheapest option. Just about all apparel is going to cost Americans more, and the ultrafast variety could still be cheaper than mall brands or ye olde fast fashion brands like H&M.

And the prices being bandied about right now are not great! A $150 pair of sneakers could go up to $230. If those sneakers were made in the U.S. (which is not something any major apparel company seems to be seriously considering) they could cost $300 to $400.

Finally — and this is admittedly a gut feeling — I’d put my money on fashion business leaders figuring out tariff workarounds more than I would the Trump administration to come up with water-tight policies that will somehow bring clothing manufacturing back to the U.S. Clothing manufacturing isn’t coming back to the U.S. Ultimately, a lot of people buy ultra-fast fashion not because they feel like climate change can suck it or because they don’t give a fuck about sweatshops. They buy it because it’s what they can afford and because we live in a social-media fashion culture where most people just want an endless IV drip of new stuff.

Let’s say my gut is wrong and Shein and Temu fall on their faces and close. Other businesses — probably even worse ones — will just replace them. Or, Amazon could siphon off their business. As long as Americans have an appetite for cheap clothing, someone is going to figure out how to sell it to them.

Earlier in Back Row: