As if the rumored return of ripped skinny jeans wasn’t enough of a threat to the fashion world, a newer and even bigger villain has emerged: tariffs. I’m sure by now, most of you have heard about the heavy downpour of tariffs on imports from April 2nd. Although the Administration’s long term intention is to decrease the price of goods by encouraging domestic production of all items, the immediate impact was a shock to U.S. and foreign industries, especially fashion. Now the overarching question that lingers above us is “What does the future of American consumerism look like? And what does this mean for the future of fashion?”.
For those who aren’t familiar with economic terms, and the current state of affairs that the U.S. is in, here’s my Hot Girl’s Guide To Tariffs! Tariffs are a type of tax put on goods that are being shipped into one country from another, which raises the price of those goods. Most of the time, tariffs are used to prevent competition with other countries, promote consumers to buy locally, and show political power in trade deals. Now that the boring terms are over, here’s a more digestible explanation. Say you’re going to buy a new Prada bag that you’ve been eyeing for a year, but when you glance at the price your eyes go wide because it’s $500 more than the last time you checked. This price increase is because the cost to make the bag in Italy went up due to a steep 20% tariff on all Italian goods that are imported into the U.S. So the brand, Prada, isn’t the only one facing price increases, but you (the shopper) get handed the extra cost. This might just be another reason to do all your designer shopping abroad!
The Fashion Industry is a huge global web, weaved by international relationships. Raw materials like cotton from India are sent to weaving factories in China, which are then sewn together in Bangladesh and sent to retail distributors in the U.S. like Zara. But now with tariffs, how likely are average American consumers to buy these heavily inflated items? This final step in the global supply chain will be greatly interrupted, because no one is going to want to pay an even higher tax on a top that you could’ve bought last year for almost half the price. And if you thought your Peppermayo packages already took forever to get to you from Australia, you best believe that shipping delays are going to be more common than ever.
In recent days, we’ve already seen major luxury acquisitions happening as a result of the uncertainty and panic brought by these tariffs. The biggest one being the Prada Group’s $1.4 billion deal to acquire the iconic Versace from Capri Holdings. Capri is also searching for a company to acquire Jimmy Choo, another timeless brand. The acquisition of Versace had been in the books for a hot minute now, but the uncertainty of the tariffs presented Prada Group with an attractive price and would expand their competitive portfolio. With Donatella Versace stepping down from Versace’s design pedestal, and this new acquisition, who knows what’s next for the luxury brand. All we can hope is that the bold and glamorous fashion house will preserve these characteristics with all of this change!
Fashion stocks and share prices like LVMH, PVH, Lululemon, VF Corp, and Steve Madden are dropping by the day. Also, consumer confidence fell to its lowest point in years just this March. Even with the 90-day pause on tariffs, with the exception of China which is expected to rise from a 104% tariff to 125%, there is little market optimism for these fashion companies. What does this mean for the future of fashion?
Well, here are some of my predictions! I expect there to be a huge shift to thrifting and consignment shopping, since prices are affordable compared to retailers like Aritzia and Zara, that are expected to be heavily inflated. On the bright side, society will be forced to lean into the sustainable aspect of fashion! Also, clothing rental websites are going to gain traction since more consumers won’t want to spend large sums of money on fashion pieces that will go out of style by the time they make their way into the country. People are also going to be willing to sell their handbags and accessories that they claimed to be “investments” when they bought them. This is the perfect time to sell, because more people will be willing to buy these bags close to original retail price when the cost of new bags skyrocket.
As much as I love to see grown men get into catfights, this trade war has become a problem for everybody. This is just the beginning of the whirlwind of supply chain disruptions, and as consumers the price hikes are yet to come. So if you’ve been wanting to buy a new statement piece to add to your collection, this might just be the perfect excuse to make that big buy!