How fashion and beauty are preparing for triple-threat Trump tariffs

Some companies are leaning on technology to solve tariff problems. Margaret Bishop, assistant professor and textile supply chain management expert at the Parsons School of Design, anticipates a surge in artificial intelligence-driven inventory optimisation. Brands will leverage AI to refine assortment planning and boost full-price sales, offsetting higher costs without resorting to price hikes, she says. Some may even eliminate replenishment stock altogether, mirroring Zara’s just-in-time model.

Steve Lamar, CEO of the American Apparel and Footwear Association, acknowledges generative AI’s potential in navigating tariff-related supply chain challenges but raises concerns about the tech’s contribution to intellectual property vulnerabilities and counterfeiting risks.

There’s no one-size-fits-all strategy for managing tariff-related inventory challenges, says Paul Magel, president of the supply chain technology division at retail software provider CGS. Stockpiling ahead of tariff hikes works for some businesses but can leave others with ageing inventory that may not sell.

Smaller brands are making changes where they can. Nicky Clarke, the premium hair tools brand, is exploring operational efficiencies, alternative packaging and improved shipping rates to offset tariff costs, according to CEO Robin Young. Meanwhile, Samreen Arshad, CEO of beauty brand Samreens Vanity, anticipates a 15 to 20 per cent increase in packaging costs due to tariffs on Chinese-made materials, a significant challenge given that packaging accounts for up to a quarter of total product costs. The brand is approaching these changes with targeted adjustments, absorbing some of the impact through reduced profit margins while selectively raising prices on product lines where market positioning and consumer demand allow. At the same time, Samreens Vanity is diversifying its supply chain, exploring partnerships with Mexican suppliers for secondary packaging to mitigate reliance on Chinese-made materials.

Some companies may consider utilising the tariff exclusion process if it becomes available, as it was during Trump’s initial term. However, the decision to pursue this option often hinges on the potential value gained from the time-intensive process, weighed against the typically low probability of success, according to Jonathan Todd, vice chair of transportation and logistics law at Benesch Law.

Todd elaborates on a key concern: “One potential sensitivity that sometimes concerns companies is the public availability of competitive or otherwise valuable information that you submit.” He explains that submitting requests often necessitates disclosing confidential information, which must be carefully marked during the submission process. If an exclusion is granted, the precise product description may indirectly reveal the company’s identity, potentially allowing competitors with similar products to benefit from the same exclusion for their imports.

Duty drawback and de minimis

Though Trump’s executive orders focused on new tariffs, they also suspended duty drawbacks along with the de minimis provision. The recess on duty-free $800-or-less shipments is set to impact not only major Chinese-founded e-commerce players such as Shein and Temu but also a range of smaller fashion and beauty retailers that have relied on this provision to optimise their international supply chains and facilitate direct-to-consumer shipments.