Trump Tariffs Update: What Fashion Brands Must Know About New U.S.-China Trade Shift
Apr 22, 2025
3
min reading
Trump Tariffs Update: What Fashion Brands Must Know About New U.S.-China Trade Shift
This current article is the second in our Tariffs Series (Read Part 1 here), where we zoom in on the latest developments surrounding 2025 Trump-era tariffs and their ongoing impact on global sourcing strategies.
As trade tensions continue to shift, so do the risks and opportunities in fashion supply chain. Therefore, this piece offers a sharp, up-to-date view of what’s unfolding and what it means for your business.
Tariff Whiplash: Republican Reactions and Policy Shifts in U.S.-China Trade
On 9 April, after hearing from Trump donor Bill Ackman that small businesses he invested in would not be able to meet their margins and that the new tariffs should be paused for 90 days, the Trump administration did just that.
It pulled back from its draconian tariff strategy and put on hold for 90 days the high reciprocal tariffs on nearly 60 countries, making their new rates equal to the new rates for all other countries, of 10%.
📌 Reminder that these new 10% rates are on top of any pre-existing country or product tariffs, with some product exceptions.
The case of China is less sanguine. Trump increased the reciprocal tariff on China to 125%, which means an effective total tariff burden to about 156%, as estimated by the South China Morning Post, on 11 April.
This includes the original effective rate of 11%, plus two rounds of 10% tariffs in February and March, and the new reciprocal 125%. For all other countries, the 10% baseline tariff that went into effect April 5 has not changed, so far.
The New York Times and other outlets are reporting Republican criticism of the new tariffs and the underlying confusion and risk aversion that the constant changes are causing for the financial markets and businesses. Several Senators going so far as to co-sponsor bills that would re-claim Congressional authority over tariff policy.
Overview:
April 9th: Trump admin paused new tariffs for 90 days after pressure from donor Bill Ackman, citing small business concerns.
Tariff freeze affects about 60 countries, aligning them at a 10% rate, on top of existing tariffs.
China: Faces a 125% reciprocal tariff, totaling an estimated 156% effective rate.
Markets react: Ongoing changes are causing volatility, with Republicans criticizing the strategy.
Legislative response: Some GOP Senators are pushing to reclaim Congressional power over tariff decisions.
De Minimis Exemption Removed
In the flurry around the new Trump Tariffs, one critical update may have slipped under the radar: the De Minimis Exemption — which previously allowed low-value shipments (valued at $800 or less) to enter the U.S. duty-free — has been partially rolled back.
More than 4 million imports into the US qualify as de minimis each day. However, a new Executive Order issued on April 2nd revokes this exemption specifically for shipments coming from China and Hong Kong.
This means that individual packages valued at less than $800 sent from China or Hong Kong will be charged tariffs, effective May 2.
Added to that, during a recent Accessories Council webinar, experts opined that the administration plans to extend this elimination to other countries once systems to collect the duty revenue are in place and are very likely to be implemented.
It’s important to note that, currently, 60-70% of de minimis shipments come from China.
eCommerce Update: Insights for Digital Retailers
What is truly occurring in the field? This segment presents important insights from an eCommerce briefing held on April 9 by Cart.com, featuring expert responses and practical considerations from the retail sector.
These insights reveal the operational challenges that actual brands are encountering, including issues with compliance, inventory management, legal oversights, and strategies for fashion eCommerce sourcing.
If you're navigating supply chain decisions this quarter, this part is essential reading:
Highlights of an eCommerce briefing led by the cart.com on 9 April
Experts are not sure if goods that meet US-Mexico-Canada Agreement (USMCA) standards will get a tariff exemption (meaning no extra tax at the border).
Brands are pre-placing inventory in advance, as it is uncertain if the higher reciprocal tariffs will be imposed or not at the end of 90 days.
Intra-company transfers, e.g. moving inventory from one subsidiary abroad to a US based subsidiary, would be subject to the tariffs.
Popular strategies for mitigating tariffs, like using First Sale Rule or Free Trade Zones (as discussed in our first Tariffs blog), will continue to be viable remain, as the administration has not addressed them directly, yet.
What should businesses do?
1️⃣ Stay updated through the right channels → Don’t rely on news headlines alone. Only Federal Registry publications and Customs and Border Protection (CBP) rules count as official. Executive Orders do not have the force of law until they are published there.
2️⃣ Be flexible with your supply chain → If your materials or manufacturing partners are concentrated in a few countries, experts recommend seeking “optionality” fashion sourcing flexibility:
Look at other places to store inventory
Explore different shipping methods
3️⃣ To avoid increasing prices for your consumers → Cart.com President Illias Simpson shared strategies that help brands manage tariff-related costs without compromising transparency:
Switching transportation and fulfillment options
Reduce costly perks (like free returns)
Pre-position stock before 90 day deadline
Fashion SMEs Fight Back Against Trade Pressures
Business groups are making their voices heard on the new Trump tariffs.
A coalition of 38 female-founded small businesses with a combined revenue of $800 million from various sectors sent a letter to Trump, USTR, and Congress reported Forbes.
Calling themselves “unintended collateral damage” of the trade war, they said sourcing from China is their biggest concern. The founders expect costs to increase and gross margins to fall.
They propose a 3-pronged relief plan:
assessments of tariff impact on small businesses before tariffs are put into effect;
tariff exemptions for small businesses;
support for domestic supply chains, through tax incentives, grants, and technical assistance.
The apparel and textile industry has pushed for such incentives in recent sessions of Congress, only to see their efforts die on the vine, such as the FABRIC Act and Americas Act.
In New York, the FASHION Act was not passed in the last two sessions. Only in California has legislation passed that provides any incentives – the new Responsible Textile Recovery Act (SB 707), with incentives and grants to support textile reuse, repair, and recycling infrastructure, according to CalRecyle.
This small business pushback comes at the same time the Trump administration announced they will consider tariff relief for the country’s largest companies who are “hit especially hard through no fault of their own, “ according to Fox News.
Why Tariffs Cut Deeper for SMEs
Tariffs may hit small and medium businesses (SMEs) harder than large businesses.
The New York Times points out that although SMEs are less likely to export than larger ones, and thus may not be as impacted by retaliatory tariffs, they do depend on imports, and tend to have less flexibility in changing their suppliers to avoid tariffs. Of businesses surveyed by the National Small Business Association, 42% reported costs have already increased.
In addition, the new tariffs exacerbate an increasingly difficult operating environment for SMEs since the Trump Administration took office in January.
SMEs say they are seeing consumer confidence falling, which means fewer purchases, according to the New York Times, and shipment and fulfillment delays, according to Forbes.
In addition to tariffs, other Trump policies make operating costs unpredictable. Depending on the industry, this includes reductions in federally funded public services, staffing cuts at supportive agencies such as the Small Business Administration, Community Development Financial Institutions Fund and Minority Business Development Agency, stricter immigration policies, and federal funding freezes.
The administration is in the process of dismantling the set asides which would cut the share of federal purchasing dollars that go toward small and disadvantaged businesses.
Unless they can diversify revenue, change business models, or partner with large businesses, the impact on small businesses – and the economy – could be significant.
Not only are small businesses an innovative source of new ideas, but also businesses with less than 500 employees generate 99.9% of all American jobs, contributes the majority of US GDP, and may be increasingly important to building local community as federal support dries up.
For data on imports/exports by company size in the US, see the Census Bureau’s A PROFILE OF U.S. IMPORTING AND EXPORTING COMPANIES, 2022-2023.
How to Future-Proof Your Fashion Brand with Smart Sourcing Solutions
Fashion brands navigating these disruptions need efficient, transparent, and sustainable solutions.
World Collective’s digital textile sourcing platform is designed to help brands like yours streamline operations, reduce risk, and gain a competitive edge through smarter sourcing.
Here’s how:
🔹 You gain access to a global network of verified suppliers → Tap into a broad range of sourcing options, allowing you to diversify your supply chain and safeguard profit margins.
🔹 You’ll have full transparency across the sourcing journey → Our platform ensures traceability, certification verification, and compliance with key international standards.
🔹 Have a curated selection of sustainable and high-performance materials → Choose from an expansive range of responsible materials and fabrics—organic, recycled, and next-gen innovations—all vetted for performance and sustainability.
Want to build resilience, stay agile, and lead with sustainability? Clicking here is your first step.
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Tariff regulations and trade policies are in constant flux, and these changes can have a direct and immediate impact on your sourcing strategies.
So, to stay informed with the latest developments and actionable insights, follow our blog and social media channels. We’ll be sharing a series of posts on the evolving tariff landscape, its effects on global supply chains, and strategies to stay ahead.
All content will be curated by Patricia, Sustainable Supply Chain Advisor at World Collective, as she expertly navigates the complexities of global trade.
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Written by Patricia E. Langan | Sustainable Supply Chain Advisor, World Collective
Edited by Maria Eugênia Lima | Content & Marketing Intern
