Key Takeaways:
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- U.S. apparel brands, including VF (parent of North Face and Dickies), REI, and Burton, are pressuring overseas suppliers to absorb part of the costs from President Trump’s tariffs, which have added billions to import expenses.
- Suppliers, operating on razor-thin margins, argue that tariff-related discounts could make their businesses unprofitable, citing rising labor costs, currency shifts, and sustainability demands.
- Some brands, like Walmart, emphasize fair treatment of suppliers, while others, like Macy’s, are taking a hardline approach to pricing negotiations.
- The tariff disputes are diverting attention from innovation and product development, potentially disrupting the apparel industry’s long-term growth.
What Happened?
U.S. apparel brands are negotiating with overseas suppliers to share the financial burden of tariffs imposed by President Trump’s “Liberation Day” trade policy. VF, the parent company of North Face and Dickies, has asked suppliers for a 3.5% cost reduction, while REI and 5.11 Tactical have requested suppliers absorb 50% and 5% of tariff costs, respectively.
Suppliers, many of whom operate in countries like Vietnam, Bangladesh, and Cambodia, argue that their profit margins—often below 3%—cannot sustain such discounts. Rising labor costs, unfavorable currency shifts, and sustainability requirements are already straining their operations.
Some suppliers, like ABMT Textiles, are resisting blanket reductions, instead offering cost-saving measures like standardized paperwork. Others, like Canadian brand Unbound Merino, report that suppliers are reluctantly sharing some of the tariff burden to maintain business relationships.
Why It Matters?
The tariff disputes highlight the fragility of global supply chains and the challenges of balancing cost pressures with fair treatment of suppliers. Apparel brands risk alienating their suppliers, who are critical to maintaining production and quality standards.
The focus on tariff negotiations is also diverting attention from innovation and product development, which could stifle the industry’s ability to adapt to changing consumer demands. This “pause on development” may have long-term consequences for competitiveness and growth.
For consumers, the cost-sharing disputes could lead to higher prices for apparel, as brands like VF and Walmart have already signaled plans to raise prices on select products.
What’s Next?
As tariff-related negotiations continue, apparel brands and suppliers will need to find a balance that preserves profitability for both parties. Brands may explore alternative sourcing strategies, such as relocating production to countries with lower tariff exposure, but such moves could take time and disrupt existing supply chains.
The apparel industry will also need to refocus on innovation and product development to remain competitive, particularly as global economic uncertainty persists. Policymakers and industry leaders will monitor the broader impact of tariffs on trade relationships and supply chain stability.
