Since the announcement of sweeping tariffs by the Trump administration, the fashion industry has been grappling with a complex array of challenges. For smaller, independent brands, particularly those producing goods overseas but with significant sales in the US, the impact has been especially pronounced. Stockholm-based label Lisa Yang, which produces luxury knitwear in Inner Mongolia, has initiated plans to streamline its operations in the US. According to CEO Samuel Stenberg, moving goods directly into the US instead of routing them through Belgium will mean reduced customs duties. This strategic shift, prompted by the need to navigate complex tariff implications, illustrates a broader trend among brands prioritising operational efficiencies amidst uncertain trade policies.
Many independent fashion labels operate on tight margins and often lack the diversified supply chains that larger companies possess, leaving them especially vulnerable to tariff fluctuations. Joanna Rangarajan, managing director at Alvarez & Marsal’s Consumer and Retail Group, noted that these brands can no longer afford to be reactive. Instead, they must proactively model various pricing and supply chain scenarios to accommodate the dynamically shifting landscape.
Brands like Miista, which manufactures in Spain and Portugal and derives over 40 percent of its revenue from the US, are acutely aware of this complexity. Co-founder Pablo Villasenín Sánchez has indicated that moving to US-based fulfilment centres is essential in mitigating surprise duties. The uncertainty surrounding tariffs has already forced Miista to adapt its strategies, including a recent decision to proceed with a planned pop-up in Canada, despite the added costs associated with retaliatory tariffs on US goods.
Further illustrating the proactive measures being undertaken, Freja NYC has adopted the strategy of front-loading inventory, ensuring that warehouses are stocked well ahead of key sales periods. Founder Jenny Lei shared that they have secured stock to last through significant retail events like Black Friday, a move intended to safeguard against the consequences of fluctuating tariffs.
As brands strategise their pricing in the face of rising costs, many are grappling with the difficult decision of whether to increase prices or absorb greater costs. For example, 3sixteen, a menswear brand that produces its flagship denim in Japan, has opted to hold off on price increases, even while paying higher tariffs. Instead, co-owner Andrew Chen emphasised the importance of creative problem-solving and cost-cutting elsewhere, such as adopting virtual meetings to reduce travel expenses.
For brands like Lisa Yang, the threshold for price increases hinges on internal assessments of brand positioning and customer tolerance. Stenberg expressed that a modest price rise of 10 percent could be feasible, but a hike beyond 20 percent would risk alienating buyers.
Amid this turmoil, many smaller brands are also exploring new markets to counterbalance the volatility of the US market. Stenberg indicated that while the US will always be a priority, opportunities in regions like the Middle East, Canada, and Australia are becoming increasingly appealing. This sentiment is echoed by Rangarajan, who believes that targeting markets where brands have already established a presence will yield better results than pursuing entirely new territories.
The challenge of adapting production strategies further complicates the landscape. While some brands aim to diversify their manufacturing to countries with lower tariffs, others, such as Miista, are honouring the craftsmanship intrinsic to their European production. Their commitment to quality, particularly in the luxury sector, means they are unlikely to abandon established supply chains even in economically challenging times.
Ultimately, as the fashion industry navigates the complexities of tariffs and supply chain disruptions, a willingness to adapt—whether through cost-cutting measures, innovative pricing strategies, or geographic diversification—will be crucial for small brands aiming to thrive amid uncertainty. As the landscape continues to evolve, flexibility and foresight will define which brands emerge resilient on the other side.
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Source: Noah Wire Services
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