Tariff Turmoil: Small Apparel Brands Face Existential Threat in the U.S.

Small clothing and accessories retailers in the U.S. are struggling with tariff increases on imports from Vietnam and China. This has led to delayed orders, frozen hiring, and potential closures. Unlike larger brands, they lack the flexibility to absorb costs, posing existential threats to their survival.

Across the United States, clothing and accessories retailers are pausing orders and halting hiring in response to looming tariff hikes on goods imported from Vietnam and China, set to take effect Wednesday.

These retail businesses, following in the footsteps of giants like Nike and Lululemon, face a stark choice: either hike prices by around 40% to counterbalance the tariff burdens, risking drastic sales drops, or shoulder the incremental costs themselves, which would further erode their already fragile profit margins. Their challenges are compounded by an over-reliance on supply chains from Vietnam and China, unlike larger competitors.

Facing the Crunch
Ian Rosenberger, CEO of Day Owl, shares the bleak outlook for his New York-based brand that relies on Vietnamese manufacturing for their backpacks. With a mere month's buffer before insolvency without reduced tariffs, and facing a $17 increase to his duty rate, the crisis has prompted Rosenberger to consider price hikes on products like his premium backpack.

The stakes are high, with footwear and apparel industries estimating significant hikes in retail prices to offset tariffs as high as 46% for items like running shoes. Industry giants maintain a buffer through diversified supply chains, but smaller operations like women's athletic wear brand Oiselle and outerwear startup Wild Rye are resorting to hiring freezes and exploring alternative tariff strategies to manage their constrained resources.

This pressure is further aggravated by logistical complications. Delay in orders significantly weakens preparation for key seasons such as back-to-school, putting additional strain on brands with limited financial padding and bargaining power.

(With inputs from agencies.)