In the post-2025 tariff landscape, apparel brands face a tough question: who takes the hit—retailers or customers? Surprisingly, the answer might depend on your position in the market.
Luxury brands are proving more resilient against import tariffs, while fast fashion players are feeling the burn—slashing margins, cutting styles, or raising prices more visibly.
As a Chinese manufacturer working with both premium and mid-market brands, we’ve seen how tariff absorption strategies vary. Let’s examine why the rich styles hide the damage, and fast fashion exposes the cracks.
Why Are Luxury Brands Better Positioned to Absorb Tariffs?
Luxury apparel operates on high markups, low volume, and exceptional brand equity. That model makes tariff surcharges a rounding error.
Even a 25% tariff on imported luxury goods often equals less than 7% of retail price—small enough to absorb without alarming customers.
Example: Cashmere Coat from China
| Metric | Value |
|---|---|
| FOB Cost | $120 |
| Import Tariff (25%) | $30 |
| Total Landed Cost | $150 |
| Retail Price (MSRP) | $1,200 |
| Tariff % of MSRP | 2.5% |
Luxury brands like Gucci, Max Mara, or Loro Piana can absorb that or use storytelling (heritage, sustainability, exclusivity) to justify price hikes without demand shock.
Are Consumers Even Aware?
Not really. According to McKinsey, luxury shoppers are 10x less price-sensitive than mass-market buyers. Brands may embed tariffs into existing seasonal pricing refreshes or re-engineer product mixes.
How Is Fast Fashion Struggling Under the Tariff Burden?
Fast fashion thrives on ultra-thin margins, rapid SKU turns, and price-sensitive consumers. When a $4 product pays $1.20 in tariffs, something breaks.
Brands like Shein, H&M, and Forever 21 struggle to mask cost hikes—forcing them to cut quality, raise prices, or shrink assortment.
Case Study: Polyester Top
| Metric | Value |
|---|---|
| FOB Cost | $2.80 |
| Tariff (43%) | $1.20 |
| Landed Cost | $4.00 |
| Target MSRP | $7.00–$8.00 |
| Tariff as % of MSRP | ~15–18% |
That cost increase wipes out margin. These brands don’t have the pricing flexibility of luxury competitors, nor the storytelling power to justify hikes.
How Are They Reacting?
- Shrinking fabric GSM and embellishments
- Moving production to tariff-free countries (e.g., Bangladesh, Vietnam)
- Raising prices on core items while offering “loss leaders”
- Launching U.S. fulfillment hubs to offset duty costs via reclassification
Still, the result is visible strain. Brands relying on synthetic imports from China face landed cost inflation >20% YoY in 2025.
Are Mid-Tier Brands Caught in the Middle?
Yes. This segment is the most exposed. Premium brands with mass appeal—neither luxury nor fast fashion—must preserve quality while controlling price.
They often can't fully absorb tariffs—but can’t raise prices significantly either. So they trim quietly.
Example: Kidswear Polo Shirt
| 2024 Version | 2025 Version |
|---|---|
| 100% organic cotton | 80/20 cotton-poly |
| Embroidered logo | Printed heat transfer |
| Branded woven tag | Printed neck label |
| Retail: $22 | Retail: $22 (unchanged) |
Brands reduce cost per unit by 10–15% to absorb tariffs and maintain retail parity. But repeat buyers start noticing quality decline—risking brand equity.
Some move to direct factory DDP models to control cost layers and delay price hikes, especially on basics like tees, joggers, and uniforms.
What Strategic Moves Are Brands Making to Navigate Tariffs?
Across segments, brands are reacting with smarter sourcing—not just pricing changes.
From material reengineering to DDP partnerships and HTS code optimization, successful brands are surgically managing tariff impact.
Common Moves in 2025:
- Switching from synthetic to cotton blends to reduce HS duty rates
- Using OEKO-TEX certified mills to justify cost increases with sustainability
- Partnering with factories offering DDP terms (especially in China)
- Grouping SKUs under lower-risk codes (e.g., shifting from HS 6204 to 6104 where possible)
- Launching “Made for US” collections with simplified specs for tariff relief
Platforms like TrusTrace, Maersk Flow, and SimplyDuty are helping brands simulate tariff scenarios before PO confirmation.
Conclusion
Tariffs don’t hit every brand equally. Luxury fashion can absorb and conceal duty increases behind margin and brand power. Fast fashion, built on razor-thin economics, can’t. Mid-market players? They must walk the tightrope—quickly adapting sourcing and messaging.
At Shanghai Fumao, we help brands navigate tariff chaos with DDP quotes, certified inputs, and HTS optimization support. Whether you sell $20 tees or $200 blazers, we’ll show you how to maintain margin without sacrificing quality.
If you're restructuring your sourcing due to tariffs, email our Business Director Elaine at elaine@fumaoclothing.com—and let’s build a product strategy that keeps you profitable in any duty climate.
