London/New York — Clothes and accessories retailers throughout the US are delaying orders and freezing hiring forward of tariff hikes that take impact on Wednesday on merchandise imported from Vietnam and China.
These companies, very like Nike and Lululemon, face an inconceivable selection: offset the price of tariffs by elevating costs by about 40% — doubtlessly cratering gross sales — or soak up the associated fee improve and additional pressure already-thin revenue margins.
Not like their larger rivals, nonetheless, the smaller clothes and shoemakers lack huge provide chains, making them extremely depending on Vietnam and China.
Ian Rosenberger, CEO of Day Owl, a six-year-old New York firm that makes backpacks in Vietnam, has paused future orders. Except there’s a deal to considerably decrease Vietnamese tariffs, Rosenberger estimates Day Owl has 30 days earlier than it folds. However with a manufacturing cycle of about 100 days, ready for much longer dangers lacking the essential back-to-school purchasing season.
“The harm is already vital sufficient to be an existential menace,¨ he mentioned, including that his seven staff had been asking if they need to put together to be out of a job.
Rosenberger mentioned tariffs would improve his responsibility to $22 from $5, prompting him to extend the worth of his top-end bag to $212 from $155.
Footwear Distributors and Retailers of America — whose members embody Nike, Walmart, Skechers and Deckers — calculated {that a} $155 operating shoe made in Vietnam must be marked as much as $220 in US shops to offset the 46% tariff.
Vietnam important
Vietnam has developed specialised factories producing the whole lot from hi-tech trainers to trace fits. It’s the second-biggest supply of garments and footwear imported to the US after China, and a key manufacturing hub for Nike, Adidas and others.
Vietnam has requested for a 45-day delay within the imposition of US tariffs, and mentioned it will purchase extra US items, after Trump and Vietnamese chief To Lam agreed on Friday to debate a deal to take away the levies.
Nike shares have dropped 14% since markets closed on April 2, the day Trump introduced tariffs, whereas Adidas shares misplaced 16%, Puma shares are down 18%, and North Face-owner VF Corp’ shares fell 31%.
These huge firms work with factories around the globe, offering them with some negotiating clout to separate tariff prices with suppliers. VF Corp is “effectively diversified throughout our provide chain to handle tariffs”, a spokesperson mentioned.
Small companies, resembling ladies’s operating model Oiselle, have much less capability to soak up the associated fee and fewer assets to plan options.
Arielle Knutson, CEO of Oiselle, has requested her 14 full-time staff to work on two or three tariff contingency plans, on high of their common jobs.
Oiselle, which sources leggings, sports activities bras and operating tops from Vietnam, has delayed spring 2026 orders that may ordinarily be going out now.
Ordering the correct amount of product — and never being caught with an excessive amount of money tied up in stock — is vital. “It’s an nearly inconceivable needle to string,” Knutson mentioned.
Outerwear model Wild Rye sources ski jackets and mountain biking pants from suppliers in China, which will probably be topic to a further 34% tariff beginning on Wednesday.
“That is going to create an enormous quantity of pressure on the enterprise,” mentioned founder Cassie Abel. She has frozen hiring and any raises for her 11 staff, and mentioned the enterprise must soak up a part of the tariff improve to keep away from climbing costs by 40%.
Day Owl, Oiselle, and Wild Rye mentioned that they had beforehand tried to provide domestically however high quality was poor, so transferring manufacturing to the US was not sensible.
Reuters
