President-elect Donald Trump’s proposed 10 to 20 percent (or more) tariffs could cause double-digit price hikes for several retail categories, including apparel. If pushed through, they’re poised to raise consumer prices, disrupt global trade and create economic uncertainty.
With that in mind, e-commerce operating system Swap Commerce has released a playbook for brands as they navigate the uncertain, “America First” economy on the horizon.
The report, titled “Trump Tariffs: Five Things Every Brand Must Know,” outlines the potential impact that these tariffs will have on e-commerce brands before exploring “actionable insights” to “mitigate challenges.”
“We had this idea to aggregate all the [reputable data] in a way that informs brands, to the best of our ability on what’s coming in, what you need to know, how brands are already acting before implementation; a lot of more news will be coming in the coming weeks once President Trump is inaugurated,” Juan Pellerano-Rendón, Swap’s chief marketing officer, told Sourcing Journal. “We wanted to get ahead of that and [help] brands have some semblance of preparation—if they haven’t already started—under one piece of content that’s easy to digest.”
Though Trump’s aggressive plan for imposing tariffs focuses on China and Mexico, Swap said, the ripple effects will be felt globally. The tariffs may be accompanied by the U.S. exit from the United States-Mexico-Canada Agreement, Swap added, causing further trade disruptions.
President Trump has previously said these tariffs would be part of his first Executive Orders on Jan. 20, Swap said, and would remain intact until the “flow of illicit drugs and undocumented migrants” into the U.S. is better controlled by China, Canada and Mexico.
The overall impact these tariffs will have presents a “mixed bag” of possible outcomes, the Pangaia partner found. Stateside manufacturers may see a boost in business, considering these tariffs would make foreign goods more expensive (thus less competitive). This also means, however, that those relying on foreign parts will face higher costs.
Considering that more than 80 percent of apparel is imported, per data from the U.S. Bureau of Economic Analysis, the fashion industry should be particularly prepared.
“The rising costs associated with tariffs create serious challenges for brands and retailers, making it nearly impossible for them to absorb the financial burden,” the playbook said. “Inevitably, this will lead to consumers footing the bill, potentially adding up to $24 billion in additional expenses for apparel alone.”
In fact, a November report from the National Retail Federation (NRF) found that the proposed tariffs on the following six product categories alone would reduce American consumers’ spending power by $46 billion to $78 billion every year the tariffs are in place.
Consumers would pay between $13.9 billion to $24 billion more for apparel, between $8.8 billion to $14.2 billion more for toys, between $8.5 billion to $13.1 billion more for furniture, between $6.4 billion to $10.9 billion more for household appliances, between $6.4 billion to $10.7 billion more for footwear, and between $2.2 billion to $3.9 billion more for travel goods, according to the NRF’s research on the proposed tariffs’ estimated impacts.
By this math, a $50 pair of sneakers could rise to a price between $59 and $64, per last November’s study commissioned by NRF and prepared by Trade Partnership Worldwide LLC.
“In total, for these six product categories alone, the proposed tariffs would cost consumers an additional $46.2 billion to $77.6 billion—or $362-$624 per household—every year that the tariffs are in effect,” the NRF found. “The analyzed categories accounted for just 7 percent of U.S. imports in 2023, putting these results in line with other studies. If the tariffs imposed are even higher, the costs—both for these products and others—would be greater still.”
While brands will struggle to modify their supply chains before the desired effective date, the supplier for The Frankie Shop suggested three, broadly viable strategies. The short-term strategy includes stockpiling as much as possible before the tariffs are enacted. The medium-term solution suggests passing off rising prices directly to consumers. The long-term approach sees brands redefining their approach to supply chain management.
“For the U.S. government, tariffs act as a revenue stream, which could lead to easing the tax burden on individual taxpayers. However, it’s likely that consumers and businesses end up absorbing most of the costs from these tariffs—the ripple effects are major,” the playbook said. “Having higher-priced goods could also exacerbate inflation and force small businesses to raise their prices, potentially driving away the cost-conscious shopper.”
The complexities and logistics of supply chain management further aggravate these challenges. As such, Swap’s solutions largely center around leveraging artificial intelligence (AI) as the system solving back-end e-commerce pain points propagates its embrace of predictive AI analysis.
“We’re able to provide predictive AI analysis of reasons for returns,” Pellerano-Rendón explained. “For brands looking to get into more of the drop culture mentality, where you want to test and learn a lot of things and give yourself the ability to scale at a Zara level even though it’s an e-commerce brand, you’re able to do that with this tool helping you iterate and learn from how consumers are interacting with the products you’re selling.”
