With the onset of tariffs across fashion, I wanted to take a brief look at the potential impacts.

Resale Gains

Upcoming research from ThredUp suggests that 60% of U.S. consumers anticipate higher fashion costs due to tariffs, leading them to consider second-hand shopping more favourably. 54% of brands and retailers are considering resale as a more stable supply source. Combined with new legislation in Europe and the U.S., these factors could further accelerate resale growth, as consumers seek value in second-hand goods amid rising prices.

Less Luxury Pricing

We have seen this shift in luxury resale with the increased prices of new bags leading to a growth of resale. Whilst their clientele is less price-sensitive, and the allure of exclusivity often outweighs the sting of a higher price tag, the luxury segment is at a uniquely sensitive juncture – consumers are not accepting luxury price increases as they used to.

“High Street & Main St” and Shoppers

Fast fashion stands to be negatively impacted with the abolition of an exemption for low value goods below $800. This exemption goes, and as a result, low value items will be subject to a 10% tariff. It’s likely that large businesses such as Shein and Temu will be able to absorb the cost, smaller brands less so. If the cost cannot be absorbed, the environmental impact will not be positive. The re-working of supply chains to alternative locations will likely lead to larger footprints not smaller ones.  The likely losers in this: smaller brands and consumers, both faced with increased costs and prices that are not easily passed on or absorbed.

A Catalyst for Tech?

Tariffs will inadvertently accelerate the move to more sustainable materials and circular fashion. These are the next-gen materials that we have looked at – these closed loop systems may avoid cross country supply chains that follow from the use of virgin materials. Tariff regulation will also force more traceability; blockchain, product passports, and enriched product data will be a requirement to facilitate compliance and potentially avoid tariffs. The continued growth in resale and a continued focus on profitability will also likely see more AI used to address challenges linked to expensive garment processing as well as enhancing the shopper experience. In a growing competitive market of resale, technology will provide a point of difference and advantage. Any excess inventory will be even more financially impactful – with digital clothing or AI powered virtual fitting rooms, companies can reduce the need for physical inventory and lower the risk of overproduction.

The questions of who wins is not so easily answered.  What is clearer is that the impacts are significant and will have un-intended consequences – tariffs are likely to catalyse technology, accelerate segment growth in resale and force more adaptation and innovation in a way that we would not have predicted a few months ago.

What do you think? 

I’d love to hear your thoughts.