With a new US administration, many brands and retailers are anticipating higher import tariffs. Here’s what we know so far and how you can prepare.
Tariff proposals and predictions
So far, there’s uncertainty about what tariffs might mean for retailers and brands. If tariffs are enacted, timelines and numbers may vary.
According to a new report from the National Retail Federation, consumer prices could increase between 12.5% and 20.6% in apparel and 18.1% to 28.8% in footwear categories, since many brands and retailers will pass costs along to consumers in the form of higher price tags.
China’s fractured relationship with the West makes it a likely target of tariffs this year. BCG estimates that trade between the US and China, whether or not tariffs are added, is already set to contract 1.2% annually on average through 2033. If tariffs reach 60% on Chinese imports (current proposals range between 40% and 60%), US-China trade could fall by another 27%. Aside from China, other countries could be impacted by tariffs as well, such as Canada and Mexico.
Congress gave US presidents the authority to create new tariffs to protect US trade and respond to other countries’ trade practices, as McKinsey noted. Tariffs up to 50% are authorized for certain trade disputes and a tariff of 15% can be invoked temporarily without congressional approval. Once tariffs start, their impact will depend on their effects on demand and supply.
5 strategies for mitigating risk
Although a reactionary approach is tempting, your best bets for responding to tariff uncertainty are strategy and risk management.
1. Nearshoring or friendshoring
If feasible, you can nearshore and choose closer suppliers (often in North or South America) or friendshore and choose suppliers in countries with close trade relationships to the US, such as allies in Europe or the Asia-Pacific region. For example, Steve Madden plans to cut imports sourced from China by 40 to 45% and increase sourcing elsewhere.
2. Strengthening supplier relationships
Work more closely with your favorite suppliers to manage inventory, anticipate demand and manage costs provides your business with more flexibility and options. Ralph Lauren is focusing on their supply chain risk management for 2025, for instance, looking at how they can prepare for abrupt changes and cultivate relationships.
3.Improving inventory management
How you manage your inventory and prevent overstock can help you keep costs down and pivot faster, if necessary. Above all, you’ll need an accurate inventory and view of your sales history – without good data, effective decisions are nearly impossible. Look closely at local, collection, promotion, category, and other trends. With the right information, you can streamline your supply chain and discover gaps and inefficiencies. For instance, you can use your wholesale platform to help you plan and adapt so you’ll have fewer markdowns and less excess inventory to manage.
4. Raising prices
Higher supplier pricing from tariffs may prompt you to consider price increases. Price increases reduce demand, but if you educate your customers, you may be able to retain brand loyalty and mitigate reputational risk.
5. adapting your market and positioning
Look for rising markets locally, regionally, and internationally to develop agility and to prepare your organization for change. You may also need to edit your collections and assortments in response to hyperlocal changes, so preparation is key.
Good information and preparation are your best defenses. Plan carefully and you’ll be in a better position to take advantage of changes in the market this year — regardless of what unfolds.
