Linda Geib – On April 2nd, 2025, President Donald Trump enacted what he dubbed “Liberation Day Tariffs,” which imposed sweeping import duties on goods entering the United States (“U.S.”) from countries across the globe. These tariffs were implemented under the International Emergency Economic Powers Act (IEEPA)−a 1977 statute that grants the President authority to regulate international commerce after the declaration of a national emergency. While framed as a response to global economic threats on the U.S., the policy carried immediate consequences for industries dependent on global supply chains. Few sectors felt the consequences more than the fashion industry. As brands struggled to absorb the steep tariff increases, legal uncertainty surrounding the “Liberation Day Tariffs” placed the future of the global fashion supply chain in a precarious position.
- The U.S. Apparel Industry’s Structural Dependence on Imports
In the 1980s, the U.S. was producing 70% of the global apparel market; however, in an effort to lower costs and increase margins, the percentage of clothes now “Made in America” lies at around 3%. Thus, due to the overseas shift in production, the U.S. is now the world’s leading apparel-importing country and accounts for about 20% of global apparel imports. Today, the U.S. apparel market is now primarily supplied by Asian manufacturing hubs, with China, Vietnam, India, Bangladesh and Indonesia together accounting for 63% of U.S. textile and apparel imports. The industry’s reliance on Asian manufacturers is a result of fashion companies reducing production expenses through low labor costs and increasing production efficiency through the established textile manufacturing infrastructures within Asia. Significantly, while production moved overseas, consumer demand for apparel within the U.S. remained strong, creating a structural dependence on imported garments within the U.S. fashion market.
- How the Tariffs Ripple Effects on the Global Fashion Industry
The fashion industry supply chain is composed from several moving parts: (1) brands design the garments and accessories; (2) brands then send the designs to manufacturers who source from suppliers the raw materials needed to produce the goods; (3) the manufacturer then creates the products and ships them to wholesalers or retailers; and finally (4) wholesalers and retailers are responsible for getting the products sold to consumers through online or retail promotion. Consequently, the implementation of “Liberation Day Tariffs” impacted every level of the supply chain as the industry attempted to swallow the increasing costs.
Fashion brands have attempted to mitigate these steep rate increases by implementing price adjustments, cost reduction through efficiency optimization, and redirection of their sources to countries that have more favorable trade agreements with the U.S. Many brands also attempted to push the cost burden onto their suppliers, who are now faced with strategic decisions including moving their sourcing hubs outside of Asia. Gokaldas Exports, for instance, is exploring moving their hubs to Kenya and Ethiopia, countries with more favorable trade policies with the U.S. The industry has also pushed the cost burden onto consumers. In the U.S., many consumers directly felt the impact as 55% of fashion executives said that increasing consumer prices was their preferred action to mitigate the tariff impacts on the brand’s bottom line. As brands have tried to navigate the “Liberation Day Tariffs” and keep their businesses afloat, fashion executives across the industry must also consider the pending questions as to the legality of the tariffs’ implementation and the unpredictability of future rates.
- The Supreme Court’s Tariff Takedown & It’s Legal Implications
On February 26, 2026, the Supreme Court struck down the “Liberation Day” tariffs in its Learning Resources Inc. v. Trump decision. The Court held that the president does not have the power to impose tariffs on imports, highlighting that the president lacks the inherent authority to impose tariffs during peacetime under the IEEPA. This does not mean that the president has lost all authority to impose tariffs. As a result, Trump declared that he would raise the global tariff rate on imports under Section 122 of the Trade Act of 1074 to 15%. This new blanket rate increase will be in effect for 150 days following its enactment. Thus, brands that have based business decisions in reliance upon the “Liberation Day” rates are now faced with new rates to consider.
Not only are the future rates in flux, but the potential fallout from the decision also raises questions about whether refunds will be issued to importers who paid the duties and, if so, what kinds of legal processes may be necessary to obtain recovery of those funds. For many importers litigation in the Court of International Trade may be required in order to recoup their 2025 import duty payments. The reimbursement of already-paid tariffs does not seem imminent for many brands or consumers. Thus, if the blanket rate of 15% remains, fashion executives will have to decide to cut or shift this cost, a decision that should not be taken lightly.
- Conclusion
As the fashion industry continues to plan for future seasons, executives must exercise discretion as to how they will combat the volatility of tariffs rates in the current legal climate. As the president continues to explore other avenues of tariff implementation, both brands and consumers must adjust and absorb the costs accordingly to stay in business. Fashion executives across the industry say that “responses to trade disruptions and tariffs will be the single most important factor shaping the industry in 2026.” Thus, as companies attempt to predict next-season’s trends, the most important fashion prediction may concern tariffs, not the runway.
