Navigating the New Trade Tariffs

Note: While the new tariffs on Canada and Mexico were put “on hold” for a minimum of 30 days as of the end of February 3rd, this information remains relevant and will help your apparel brand prepare for what may come in 2025.

What’s Happening With the 2025 Tariffs?

New international trade tariffs are shaking up global commerce, and the apparel industry is directly in the crosshairs. Starting Tuesday, February 4th, apparel brands and importers in the United States face new tariff rates:

• 25% tariff on goods imported from Canada and Mexico

• 10% additional tariff on goods from China

These new tariffs are essentially taxes applied at U.S. ports. U.S. Customs will assess your shipment and issue an invoice based on the updated tariffs, duties, and taxes — and your business is responsible for paying it.

Let’s say that again:Your business will be responsible. Not your overseas manufacturing partners.

Are Tariffs Normal in the Apparel Industry?

Yes, tariffs and import duties are a regular part of international trade, especially in fashion and apparel. In fact, duty rates for apparel imports already range from 0% to 32%, depending on the product. These additional 2025 tariffs represent a substantial increase that brands need to budget for immediately.

Remember the tariff hikes on Chinese goods several years ago? Those ranged from 7% to 15%. The 2025 changes are a strong reminder that trade policy is unpredictable, and every apparel brand must build flexibility into their sourcing and pricing strategies.

How New Tariffs Will Affect Apparel Brands

Tariffs directly impact your cost of goods sold and, by extension, your profit margins. Here’s a real-world example:

• A men’s cycling jersey imported from China previously faced a 32% duty.

• Add the prior 15% tariff and the new 10% tariff, and you're now paying 57% in duties on that one product.

This might force businesses to:

• Absorb the added costs, putting pressure on cash flow and profit.

• Raise retail prices, which could reduce demand or drive customers to cheaper competitors.

• Negotiate cost-sharing with manufacturers.

• Re-evaluate production locations, considering countries not affected by the new tariffs.

Talk to Your Manufacturers Now

If your products are made in Canada, Mexico, or China, now is the time for honest conversations with your suppliers. While not all manufacturers will agree to share the burden, some may be open to negotiation — especially if you have a strong, respectful relationship.

This is one more reason to build partnerships with your manufacturing partners instead of placing blame when challenges arise. Respect and collaboration matter more than ever.

End of the De Minimis Loophole

Another significant change in 2025: the end of the $800 duty-free threshold for international shipments directly to consumers (known as the “de minimis rule”).

If you’ve been leveraging this loophole in your direct-to-consumer (DTC) model, it’s time to re-evaluate. Products shipped straight to customers from overseas will now incur duties — a major shift for many e-commerce apparel brands.

Should You Consider U.S. Manufacturing?

Tariffs are increasing interest in domestic apparel manufacturing, but here’s what you need to know:

• U.S. manufacturers are generally best equipped for smaller orders (hundreds to a few thousand units).

• Larger brands with tight deadlines may struggle to find adequate domestic capacity.

• Onboarding new vendors takes time — often months or even years — to fully establish quality and production systems.

While the idea of U.S. manufacturing is appealing, switching is not a quick fix. It’s a long-term strategy that requires planning, capital, and a willingness to adapt.

How Tariffs Could Affect Your Customers

As your costs increase, the question becomes: Do you pass that on to your customer?

Many businesses will have to raise prices, which could:

• Lower customer retention

• Shift demand toward cheaper fast fashion options

• Force rebranding or repositioning

We recommend conducting consumer research to understand price sensitivity within your customer base before making any drastic pricing decisions.

Action Steps for Apparel Brands in 2025

Here’s what you can do now to protect your brand and bottom line:

1. Evaluate Current Inventory Consider front-loading production or imports to beat potential increases in March.

2. Stay Informed on Trade Policy Monitor announcements from the U.S. Trade Representative and Customs.

3. Communicate with Your Customers Let them know how tariffs may affect your pricing — and how they can support your brand.

4. Analyze Alternative Sourcing Regions Look into Central America and other regions not affected by new tariffs.

5. Review and Adjust Pricing Strategies Maintain margins while staying competitive.

6. Advocate for the Industry Join coalitions or associations lobbying for tariff relief or clarity.

The apparel industry is no stranger to change, and 2025’s trade environment is another test of our ability to adapt, pivot, and thrive. Whether it’s through sourcing changes, domestic production, or smarter financial planning, brands that stay agile will come out stronger.

Check out our latest videos on this topic for even more insight and strategy tips.

Stay tuned. This is only the beginning.