Tariff uncertainty clouds US apparel sourcing decisions, say industry experts

"I would say uncertainty is the word that everyone uses to say how it's difficult to make decisions when there is so much uncertainty in the supply chain," said Julia Hughes, president of the US Fashion Industry Association, during a panel discussion Wednesday at Texworld NYC, the largest textile sourcing trade show on the US East Coast.

Hughes noted that importers, customs brokers, and buyers are grappling with unanswered questions.

"It's kind of scary talking to the brokers and the folks who are filing their entries -- how this will proceed is something we just don't know," she said.

"How it's going to be managed and how it's going to be handled by customs is unknown."

The Trump administration's latest round of tariffs on a wide range of imports is slated to take effect on Aug 1, leaving limited time for negotiations.

Yet, few countries have secured new trade agreements with Washington, and many of the ongoing discussions lack detail -- a situation that has left many firms in limbo, according to industry insiders.

"I think everyone recognises they need to diversify, probably location and maybe vendors," said Hughes. "But they're not yet pulling the trigger on where to diversify to until we see what the tariffs are."

Even when companies decide to diversify, the process is far from immediate.

"You can't certify a new factory overnight. That takes a long time," said Hughes. "There are a lot of issues, not just on quality and the product, but also on compliance and logistics. So that's going to take a while as well."

The impact on costs is also becoming more evident.

"The kind of self-evident point is that, obviously, prices are going to go up," she added.

Laura Siegel Rabinowitz, a trade lawyer and shareholder at Greenberg Traurig, said importers are already feeling the pinch of existing tariffs.

"The retailers that I work with are tracking their increased costs, their increased tariff payments, monthly, quarterly, and the numbers are astounding. It's very high," she said.

Hughes noted that fashion brands are already delaying or cancelling orders, with negotiations now centred on who bears the cost of tariffs. "Everyone has been affected by the tariffs already because orders have not been placed, things have been held back, and negotiations with suppliers on who pays the tariffs."

While there is interest in revitalising US-based apparel manufacturing, structural challenges remain. Hughes shared a recent case of a buyer comparing options in Bangladesh, China, and the US.

"They found somebody in the United States who was really good, but the price was double. The price was too high for them in the short term to make that shift."

Still, some companies are trying to remain flexible despite the uncertainties.

Chris Warren, vice president of sales and merchandising at menswear brand Turtleson, told Xinhua that uncertainty around tariffs continues to complicate sourcing decisions.

"There are so many unknowns about the tariffs that we try not to think too much about it. We look for unique items we like, and then figure out the pricing," he said.

Warren said that while his company has no fixed pricing strategy due to the ongoing uncertainty, it remains open to modest cost increases if the product is innovative and marketable.

Elena Brandyberry, founder and CEO of her namesake brand, echoed the challenges.

"It's very complicated," she said, noting that higher costs could lead to either cutting corners or raising retail prices.

"Everything is going to be more expensive, so we need to be prepared to produce better products with good quality."

-- BERNAMA