How U.S. Tariffs Affect U.S. Apparel and How to Mitigate Them?

If you're importing apparel into the United States, tariffs can feel like a moving target. Rates shift, rules change, and the impact on your bottom line can be massive. For many brands, these costs come out of nowhere—and hit hard.

U.S. tariffs increase the cost of imported clothing, forcing brands to raise prices, cut margins, or change sourcing strategies. But with the right planning, brands can reduce the impact.

Let’s explore how tariffs affect the apparel industry and what businesses can do to protect themselves.

How will tariffs affect clothing?

Tariffs are taxes on imports—and in fashion, that tax often lands on clothing, footwear, and accessories. If your goods come from certain countries, you might pay much more than expected.

Tariffs increase the landed cost of clothing, leading to higher retail prices, reduced profit margins, and sourcing shifts for brands and manufacturers.

What types of clothing are most affected?

Some categories are hit harder than others. For example:

Garments made in China often carry extra duties due to Section 301 tariffs¹, adding up to 25% more in some cases.

How do brands respond?

When tariffs rise, brands must choose between:

• Raising retail prices (risking customer loss)
• Reducing profit margins
• Re-sourcing from lower-tariff countries²
• Absorbing the cost short-term to stay competitive

At Fumao, we help clients navigate this by offering split production (e.g., partial orders from Vietnam or Bangladesh) and advising on tariff codes³ for lower-cost classifications.

What are the positive and negative effects of tariffs?

Tariffs aren’t just penalties—they’re also policy tools. Some industries benefit from them. Others struggle to survive.

Tariffs protect domestic manufacturers from foreign competition—but they also raise prices for importers, retailers, and end consumers.

What are the benefits of tariffs?

• Supports local industries⁴: Encourages “Made in USA” by raising costs for foreign alternatives.
• Generates government revenue: Billions in customs duties help fund infrastructure and defense.
• Negotiation leverage: Used in trade deals to push for better terms.

What are the drawbacks?

• Higher consumer prices⁵: Tariffs are passed down to buyers.
• Supply chain disruption⁶: Brands scramble to change suppliers.
• Limited domestic capacity: U.S. factories can’t always meet demand.
• Global backlash: Other countries may retaliate with their own tariffs.

For clothing brands, the negatives often outweigh the positives, especially when margins are already thin.

How did tariffs impact the US economy during the Great Depression?

Tariffs are not new. They’ve shaped trade policy for centuries—and one of the most infamous examples shows just how damaging they can be.

During the Great Depression, the Smoot-Hawley Tariff Act of 1930 raised tariffs on over 20,000 imported goods, worsening the global economic crisis.

What was the purpose of Smoot-Hawley?

The goal was to protect American farmers and industries by making foreign goods more expensive. But the result was the opposite.

• Other countries retaliated, adding tariffs on U.S. exports
• Global trade collapsed⁷, dropping by over 60% between 1929 and 1933
• Unemployment soared, as U.S. exporters lost markets

This history shows why tariffs must be used carefully—especially in consumer industries like apparel that rely on complex global supply chains.

What is the tariff in the USA?

Tariffs in the U.S. aren’t a flat rate—they vary by product, country of origin, and trade agreements. That makes navigating them complex, especially for smaller fashion brands.

A tariff in the U.S. is a tax on imported goods, calculated as a percentage of the product’s declared value. Apparel tariffs can range from 0% to over 30%.

How are tariffs applied to clothing imports?

Tariffs are based on the Harmonized Tariff Schedule (HTS)¹⁰. Each product has a 10-digit code that determines its duty rate.

Example:

Additional tariffs (like Section 301 on China) may stack on top of these.

How can brands reduce tariff impact?

• Reclassify products with legal HTS adjustments
• Diversify suppliers to countries with lower duties
• Use Free Trade Agreements (FTAs)¹¹ like USMCA or CAFTA
• Shift production to DDP suppliers who cover tariffs in the price

At Fumao, we work under a DDP model¹² (Delivered Duty Paid), meaning clients don’t need to worry about surprise customs charges—we handle it end-to-end.

Conclusion

Tariffs are a growing challenge in the U.S. apparel industry, raising costs and forcing brands to rethink sourcing. But they’re not the end of the story. With smart planning—like working with DDP suppliers, adjusting product classifications, or diversifying factories—brands can protect their margins and continue to grow, even in a high-tariff world.