Fashion retail is embarking on yet another unprecedented era. US tariff policies are now in place and are set to cause potential supply chain and pricing overhauls in the lead up to Black Friday, and the holiday shopping season. At the same time, retailers and brands are beginning to plan, forecast, and place orders for next year.
There’s a lot for fashion businesses to consider; however, the key to staying afloat relies on inventory and pricing decisions that cater to customers and cash flow. Here, we break down the new tariff and de minimis policies, the shopping sentiments from consumers, and what retailers should know to ensure successful trading throughout this year and into the next.
Tariffs as of 1 August 2025
The White House announced new tariff rates for 92 countries on August 1, with a baseline rate of 10%. All new rates took effect on August 7, including:
- An increased rate for Canada from 25% to 35%
- A 90-day pause on additional 25% tariffs on Mexican goods with Trump citing progress in talks
- Europe landed a 15% tariff rate deal after initially being threatened with 30%
- China faces a separate deadline of August 12 for negotiations
- India incurred higher than expected new tariffs at 50%
- Taiwan at 20% and South Africa at 30%
- Swiss imports face the highest tariffs at 39%
- New rates include 41% on Syrian imports, 40% for Laos and Myanmar, 35% for Iraq, 30% for Libya and 20% for Sri Lanka
- Brazil is now subject to 10% tariffs, down from the previous 40% rate
- The tariff on Australian products has been kept at 10%
De minimus rule suspension as of 29 August 2025
Alongside new tariff policies, President Trump placed an executive order for the de minimis rule to be suspended globally as of August 29 for all low-value imports. Ahead of the worldwide repeal of the rule set for July 1 2027, this means regardless of country of origin, no commercial import under $800 will qualify for duty-free treatment under de minimis and will incur duties.
For retailers, this means all orders calculated at the checkout should account for the total landed cost based on the most current policy, which you can calculate based on these guidelines.
Smart inventory management is vital
Even with the rollout of US tariffs, the number one issue still plaguing fashion businesses is the uncertainty regarding unconfirmed rates for key sourcing countries such as China and Vietnam, which are set to impact shipments through the first quarter of 2026.
In May, Morgan Stanley Retail Equity Analyst Alex Straton said, “The pressure becomes more acute in the third quarter, given the possibility that tariffs will be imposed on all inventory, and the 90-day pause will have run out.”
However, not knowing whether their suppliers will be subject to further changes is making it difficult for all fashion brands and retailers to plan and forecast supply and demand for key trading periods. The global tariffs will influence higher price tags from brands if they choose to offset the costs; otherwise, if they choose to absorb the costs, there is the potential for less product availability when stock hits the stores.
Straton suggested that retailers with the flexibility to adjust future inventory orders according to demand volatility should fare better under this uncertain scenario, especially now.
Treat price changes as a test-and-learn
The reality is that tariffs disproportionately affect clothing and textiles, with consumers facing 64% higher apparel prices in the short run, and 27% higher in the long run, according to the Yale Budget Lab.
And, the pricing changes have already begun to roll out in the luxury sector, according to a study by Vogue Business. The publication revealed US pricing increase data across luxury handbags, sunglasses, coats, t-shirts, and more as a result of the changing US tariff policies, and found handbags saw the most price increases from March, including 5% more for a Louis Vuitton Neverfull, 12% more for a Burberry tote, and 8% more for a Bottega Hop bag.
However, other apparel brands remain wary of passing on the higher duties through price hikes to customers. L’Oreal, Golden Goose, Ferragamo, and Moncler are among the brands looking at implementing the "First Sale" rule, which allows companies to pay lower duties by applying tariffs to the value of a product as it leaves the factory, much lower than the eventual retail price.
As reported by Reuters, Moncler estimates the production cost at around half the import price, and Golden Goose said 15% tariffs could potentially translate into a 3% impact on the US retail price, with the US accounting for roughly 35% of the sneaker brand’s revenue.
Remember, there’s no harm in waiting to assess pricing against customer demand, especially where newness is concerned. According to a report by the Wall Street Journal, global tariffs had recently delayed new arrivals for luxury brand Vince by three weeks. Interestingly, the late delivery meant shoppers continued buying its spring collection at full price longer into the season, when it was originally due to go on markdown.
What will hold retailers back from making smart pricing decisions is static spreadsheets and outdated costing methods that don’t show the real impact on profit. Style Arcade’s Margin Calculator offers real-time, SKU-level visibility, broken down by product, supplier, currency, and channel. This level of detail empowers smarter, faster decisions across the business to keep up with fluctuating rates and demand.
Enter into key shopping events with caution
It’s not just retailers bracing for impact; customers are feeling the anxiety too. A Wunderkind July 2025 survey found that US shoppers are responding in tangible ways to continued price increases and tariff-related pressures. The report found the majority of respondents have made noticeable changes to their purchasing habits, with 32% saying they are more aggressively looking for discounts, followed by 31% buying fewer non-essential items.
This sort of behavior was evident during Amazon’s four-day-long Prime Day shopping event, which saw a significant increase in retail traffic driven by generative AI products, including chatbots and browsers. According to Adobe Analytics, GenAI traffic to US retail sites increased by 3,300% year-over-year, surpassing forecasted results. As for the Prime Day sales themselves, the first two days were initially down 35%, then increased by day three to be up 165% YoY. The day three and four earnings uptick could have possibly been due to further reductions on sale prices.
In this landscape ahead of Black Friday and the holiday shopping season, transparency with customers is key. Marketers should ensure clear communication across time-limited offers, while merchandising teams should look at historical data to capture customers with compelling discounts. Businesses should aim to reassure or be empathetic with customers about future pricing structures, in order to drive engagement and uphold brand loyalty.
Ready to learn more? Tap into Style Arcade’s tariff resources to ensure you’re making inventory, assortment, and pricing decisions with confidence.
- Fashion retailer’s guide to tariff pricing strategies
- 7 expert merchandising strategies to navigate change
- How to calculate US tariffs
- Forecasting inventory amid fluctuating demand
- Style Arcade Margin Calculator
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