The apparel industry is getting caught in the cross-hairs as trade tensions continue to escalate and tariff changes are directly over-head. Could raise consumer prices Experts have consistently warned that costs related to these tariffs will be imposed on consumers. Right now, the legal de minimis exemption is set to expire on May 2. Under this change, goods valued at or under $800 are allowed to enter the United States duty-free, and businesses are bracing for the possible fiscal consequences.
Daniel Baer, a partner at EY Canada focusing on retail, added that the fashion industry is global by nature. Materials such as buttons and zippers travel a lot, making their way through various countries in Asia. Once they are here, they’re turned into completed apparel for North American markets. The interconnected supply chain hits apparel companies of every size hard. They need to adjust urgently, particularly those companies whose goods travel through tariffed areas.
China has been the most severely impacted, now subject to a punishing 145 percent tariff by the United States. In response, China placed a 125 percent tariff on U.S. exports. In stark contrast, all other countries faced an 8 to 30 percent tariff before a brief exemption was granted. For now, these countries can still export under a reduced 10 percent duty—but uncertainty still reigns supreme.
Now, with the current regulatory environment, Nina Kharey, founder of Volta Charging and industry stakeholder, shared her concerns about the current climate. “It’s just a whole bunch of unknown right now,” she said. Many smaller businesses feel particularly vulnerable, as larger corporations may possess more resources to weather these changes.
“The bigger guys, they’ll figure out a way to get through this. It’ll be hard for them, but it’s the small businesses right now where it almost feels like they’re like pawns.” – Nina Kharey
The imminent removal of the de minimis exemption makes all of this worse. This little-known legal mechanism has allowed thousands of goods to come into the U.S. duty-free. As such, it offers a key economic lifeline for businesses dealing with increasing expenses. With its expiration on the horizon, companies need to start planning for a jump in costs.
Baer stresses that it’s not so simple to adapt to these changes. As Secretary LaHood once said, you can’t do this stuff with the wave of a magic wand. Such transformations are neither easy nor quick. The fashion industry needs time and thoughtful planning to pivot toward more sustainable economic realities.
Hayley Elsaesser, another leading local designer seen as a prominent force in the industry, cost that sentiment of confusion among businesses firms. We help people on every continent except Antarctica. There’s a whole lot of fear and anxiety about the changes being made today,” she said. As companies weather through this stormy landscape, they work hard to do keep from passing those costs on to consumers.
“Doing everything we can to avoid raising prices.” – Hayley Elsaesser
The economic implications extend beyond U.S. borders. This made shipping from Tunisia to Canada duty-free! Kharey cautions it’s possible that the costs could increase significantly in Tunisia since the country is very dependent on textile exports. In Tunisia, costs are expected to increase. That’s where we really pour our effort into,” she continued, speaking to this largely as a result of textiles being one of their largest exports.
As businesses brace themselves for potential price increases and evolving trade policies, many stakeholders share a common sentiment: anxiety about what lies ahead. Kharey was open about her own challenges with living in a state of uncertainty.
“I wake up every day right now with anxiety.” – Nina Kharey
