Can Tariffs Really Revive 'Made in USA' Fashion?

0:07Hello and welcome to The Deep Brief from the Business of Fashion, where each week we delve into our most popular BoFace professional stories with the correspondents who created them. I'm senior correspondent Sheena Butler-Young. And I'm executive editor Brian Baskin. The Trump administration has offered up many reasons for imposing tariffs as high as 145 % on goods imported from China. The two most relevant to fashion are that tariffs will revive American manufacturing and that they will stop a flood of cheap Chinese imports from undercutting American businesses. Joining us today are BOF correspondents Malik Morris and Mark Bain, who have been looking into whether either of those theories are becoming reality.

0:48Hi, Mark and Malik. Welcome to the Debrief podcast. Hi, Sheena. Hi, Sheena. Hi, Brian. So let's start with the basics. Malik, can you remind us what exactly are the tariffs that the Trump administration has proposed and how are those affecting the fashion industry right now? Yeah, it's actually been a bit of a roller coaster on Trump's Liberation Day on April 3rd, as I'm pretty sure. Underplaying it there, Malik. Underplaying it, yeah. But, you know, then Trump showed a chart with tariffs he would impose on goods imported from other countries. And not only were they astronomically higher than anyone expected.

1:19I mean, we were talking about like 46 percent for goods coming from Vietnam, 37 percent for Bangladesh. But they were targeting some of fashion industry's go to manufacturing hubs. And like no one was spared, really. You know, even the EU was facing 20 percent tariffs, which would have curb spending in the U.S. You know, a market, the luxury sector was is heavily leaning on for growth. But in true Trump fashion, those tariffs were delayed in favor of a 10 percent tariff for all countries, except, of course, China, which is subjected to more than 100 percent tariffs and has some retaliatory tariffs of their own.

1:51So most of the clothes sold in the U.S. come from China. So that's not great. Right. And I mean, there are very few brands that will be unaffected by this. You know, some have already been diversifying the supply chains out of China, but most still have tons of exposure there. So that's a bit of a mess to start with. But on top of that, on May 2nd, the Trump administration is actually axing this tax loophole called De Minimis that lets brands import packages below the value of$800 without paying any duties. So the administration had teased a crackdown on that loophole in February, but the borders got so crazy sorting through products and instituting more rigorous clearance requirements that the Trump administration had to pause the end of the minimus.

2:32But that ban is back in full effect. And that will impact really big brands like Xi 'an, Tamu, and even an up and coming brand Quince that's been doing gangbusters in numbers while potentially being a boon for others, which is a little more complicated. I'm sure we'll get into that later. But as you can see, there's a lot going on, a lot to account for that, you know, fashion has to figure out a way to navigate through. And what kind of messaging is coming out of the administration around the value of this to U.S. jobs, U.S. manufacturing? What is the headline? Why this is a good thing? Well, yeah, I mean, that's funny you bring that up because the goal here is pretty noble on the surface.

3:08If you think about it, you know, the tab is supposed to be about bringing manufacturing jobs back to the states and lessening the U.S. reliance on foreign factories. But really, honestly, it's just forcing other territories to negotiate with the U.S., as is the case with countries rushing to appease the administration to ward off the works of the tariffs. But that, you know, level of negotiating via strong arming is something that China appears to have no desire to do. So now the economy is in jeopardy and there's no guarantee that the U.S. will be able to revive its manufacturing prowess across industries, especially in apparel.

3:39I think no guarantee is probably an understatement. I mean, something like 99 % of clothing is imported from overseas, right? So what are the prospects that we could see more garment manufacturing coming to the U.S., assuming these China tariffs are sticking around? You know, what's so interesting, I wrote a story recently about brands that actually make goods in the U.S. And there's a surprising number of startups that have been making a lot of their goods in the U.S. for a decade or more. I don't have an exact number, but I encountered close to a dozen that produce most, if not all, of their products in the U.S.

4:14And some have been in business for over a century and managed to keep most of their supply chain domestic. Now, are we going to see a ton of brands being able to do that? Probably not, but there's a good chunk of them that already do. And those brands aren't feeling the same pressures to raise prices because they aren't importing finished products into the States. And many of them are importing at least some of their materials here. And that's a potential that they'll take a hit on margins there. But all these brands spoke to would not anticipate passing any jarring price increases on to their customers.

4:43But I think, you know, a big question, too, is consumer sentiment, which is already in the toilet because of tariff uncertainty. certainty. So really, right now we're looking at brands that are already produced here that can tell the customer that they won't be raising any prices because their goods are made here could actually help them sustain, maintain sales growth in the U.S. But in terms of how much manufacturing can come back to the U.S., that's, I mean, I don't know how feasible that actually is, but there are a cohort of brands that are currently making it work in the States. Well, just to start, I mean, what are some of those brands?

5:14What types of brands actually are able to manufacture in the U.S. right now? Well, I spoke to this brand called American Giant. They do everyday apparel basics. And a lot of their, I understand their product is, you know, cotton-based, things of that nature, which I know is grown here and sourced here. And also, obviously, denim brands, you know, for a very long time, denim manufacturing has been huge in the U.S. and L.A. But it's premium, right? I mean, I'm looking at American Giant. These are$55 t-shirts. The denim brands here tend to be$200 jeans, right? We're not talking. Yes, yes. Well, That's always the sticky part of consumers and why these brands that manufacture elsewhere have risen so greatly is because the product, the prices are cheaper and the product that's made here is a little bit more expensive.

5:55So, yes, it is brands that are premium and, you know, they have a locked in customer base, but a lot of those brands are still small and niche. And a big challenge for them is going to be actually to get more consumers to care about the fact that products are made here and be willing to spend on those products and to grow their customer base as tariff uncertainty continues to unfold. Yeah. I mean, I think a lot of rhetoric says that brands should lean into this made in the USA labeling, but it's so politicized now. Is there value in doing that when the conversations become so polarized? Could you really lean into that as a brand and expect to do well?

6:29Or does it feel like you're getting into politics now? That's the interesting part of all this, right? Like consumers don't rank a pair of belly fats or silk blouses country of origin super high when they're deciding on what they're going to buy. And right now, honestly, a lot of them probably aren't feeling good about buying belly fats or silk blouses from anyone if the consumer sentiment index is to, you know, taking into account here. So these American made brands, I said before, have to get people to care about where their products are coming from. And they also can't look like they're giving Trump's tactics a thumbs up either.

7:00So really what they have to do is put a spotlight on how making goods in the U.S. provides great value in terms of product quality, the rich storytelling it brings and how it makes those items, the items they sell unique. And, you know, some brands already bake an American made sentiment into their content, but they have to make it romantic and cool. And there's one brand that did this pretty effectively, which was Filson, right? Tell us about them. Yeah. So Filson is this Western wear brand. And they're like favored by like the Yellowstone crowd, I call it, which, you know, is not a knock because, you know, it's a huge thing.

7:33You know, you know, what a great story when Beyonce's Cowboy Carter's album came out about how that's just been taken off. But, you know, they have a manufacturing facility, this brand Philson in their Seattle headquarters, actually in the same building as their flagship store there. So the brand is actually organizing walking towards the factory where they'll shed light on the materials they make, you know, their classic goods with and how they've been doing that for over a century. And that ties into this experience factor of the physical retail playbook that consumers are really buying into these days.

8:02So it's not necessarily God bless America. It's look at these cool things we can do because we have this facility. And there's also the opportunity to shine a light on local makers. There's this online jewelry retailer that I spoke to called At Present. And they mostly sell very intriguing accessories from American craftspeople. Like, you know, putting the story, there's like this$350 gold ear cuff that's made in Los Angeles. And, you know, that brand has a sort of designer to know link very high up in their homepage on their online site that talks about the artisan, where and how they source their materials and what goes into creating those silhouettes.

8:40So, you know, fashion is already an emotional purchase and consumers do care about the story behind a brand. That's why brand marketing is so important for building a label. And this is another way to tap into that. You know, again, it's storytelling, not nationalism, you know. Now, yeah, so I think that those are some really, really interesting and I think effective ways that brands that make in the U.S. can actually get consumers to care about that fact. These are really amazing examples of, you know, brands that produce in the U.S. and can lean into that a little bit. But there's just such a small number of them.

9:12Like, yes, there's proof of concept, but the infrastructure doesn't really support this happening at scale. Can you talk us through what infrastructure exists right now for manufacturing and where the potential can go from here? Because it doesn't seem like it can happen in, you know, five to 10 years or even our lifetime. No, it can. But I think there's some important caveat. So obviously making goods in the U.S. hasn't been viable for most brands for decades. You know, first is more expensive because the cost of labor is higher. Also, there aren't enough skilled workers in the U.S. to support demand for making goods here.

9:41And I know you had great stories about like retail, which I used to work in, like even getting young people to aspire to work in. retail and not be an influencer is difficult. Imagine trying to get them to work in a factory, right? And the crackdown of immigration, which is a source for a lot of the current manufacturing labor, doesn't help. It's not clear how much of, again, the younger generation want to work in factories and make clothes. So yeah, who knows if the ideal of manufacturing in the U.S. is not only achievable, but sustainable in the long term. But I think the benefits for the brand that do make here are fabulous.

10:11Firstly, the brands that do this are smaller and they don't have tons of volume to begin with. So they often make a smaller batch of items to test demand and they can produce more quickly once those pieces take off. And it's also easier to manage things like quality control. If you can visit your factory partners often, a couple of times a week or a couple of times a month rather than maybe once or twice a year, or especially if you don't own at least one of your own facilities. And also freight costs are lower because you're not importing it from another country and they can avoid supply chain bottlenecks like those poor congestions and strikes that have bubbled up in recent years.

10:44But also, I think a big part of it is you get to be more nimble. If you need to move manufacturing or supply chain, it's easier to do when you already produce goods in the state because you're more attuned to the best factories and suppliers in the states in a way that companies that have long been making stuff overseas may not be as tapped into. So yeah, I think that those are important considerations. Again, the reality of the majority of American brands being able to bring this back here has yet to be seen, and it's probably a grim one. but I think more people can lean into this for sure. We'll be back with more of The Debrief right after this.

11:24Mark, let's bring you in here and talk about the other side of this trade war, which is Chinese manufacturing, the brands that are relying on that for their business. And from what I understand, there are a handful of brands that are just being absolutely clobbered by the particular dynamics of what has been unfolding this past week. Tell us about those. There are a lot of small brands that depend really heavily on China for their manufacturing. When you think about a diversified supply chain, it's typically these really large brands like Nike and Adidas and these multinational corporations. Small brands might have their supply chain concentrated in one area and maybe even one factory.

12:05And so if that's the case, if that area happens to be China, that factory happens to be China, and suddenly there's this giant, more than doubling of tariffs, you are in serious trouble. And it's already tough for big brands. If you're a small brand, it's really not easy to just pivot and be like, all right, well, we're going to just do this in Vietnam now or wherever else. Kind of like what Malik was talking about with the lack of infrastructure in the US, China is the exact opposite. And that's part of what's kept manufacturing there consistently, why it makes it hard to leave China is like they have all the infrastructure set up and like right nearby.

12:43If you're a small brand, again, you might be manufacturing in a factory. If you need zippers or buttons or whatever inputs, those things might be like literally down the street. It's like not something that you have to worry about importing, shipping back and forth, that sort of thing. So yeah, small brands in particular are in some serious trouble at the moment. And a lot of them wouldn't be able to even find a factory that would take their business in other countries, right? Yeah. So those factories in places like Vietnam, a lot of them are set up to serve those big brands that we talked about.

13:17And they might have order minimums that are like 10 ,000 pieces or more, that is just a huge amount. If you're a small brand, I worked for a small brand that made everything in the US. We'd have some orders that were like 50 pieces, 100 pieces, 300 pieces. You could not go to a factory in Vietnam and ask them to make that. They would just laugh at you. One of the things that's actually also made China attractive for small brands is they have a pretty big array of factories serving different sizes of brands. And you can actually find factories that will produce smaller order quantities. You know, one of the things like if you're a small brand in the US, you can go on Alibaba and find a factory pretty easily that can produce maybe 300 or 500 pieces for you.

14:05So what are these brands going to do? They don't know. Everyone I talk to is like, they're just freaking out. Everyone is scrambling, trying to figure out what's happening. I was talking to Joe Eng, the founder and CEO of Shift Fashion Group, which is a studio that helps brands with product development and manufacturing. And he was saying that they work with brands of all different sizes and everyone is just kind of panicking right now. And what some brands have actually done, there were some brands that were going to, you know, their plan was to put stuff on planes and send it out to the US for a product launch.

14:45Now they're actually loading it onto ships because their hope is that even though it takes a lot longer to get to the U.S., maybe the tariffs will be gone by the time it actually hits U.S. ports. So nobody really knows exactly how to get around it other than, you know, some brands are just going to have to eat the costs. That's the pray and hope it works out approach, basically. Yes. I actually have seen some brands on social media, like preemptively, like really small ones, announce that they're going to just shut down. I don't know if you all have seen this. It's like a kid's brand that makes stamps so you can put your name on your clothes.

15:17One of their messages recently on Instagram was we're just going to preemptively shut down because we know we can't sustain. And even the uncertainty right now means we can't find a path forward. We've talked a lot about the brand side. There's also a consumer side to like if you're used to getting your$2 T-shirt or your$10 denim and you can't get that anymore, what are you going to do? Are there other brands consumers are going to be able to turn to here in the U.S.? I think the answer is probably no. but is there another place to find cheap clothing if these tariffs stick? No. Yes, but it might be different clothing.

15:51I don't know how much the price of something from Shein would go up necessarily. I haven't seen a specific breakdown of that. It would still be really cheap. So it might still be your best option. You might also end up going to Walmart or Costco, places like that instead. If you're looking for basics, I don't see why people wouldn't turn to those places. They already shop at them a lot. But the reality is prices are probably just going to go up and people will probably just spend less. I think the hope here really is that people will just stop desiring to buy those$10 jeans and$2 tees. And this idea of, especially when they're middle class consumers, that they'll, even if they're not going to buy American made brands that are significantly more expensive, maybe they'll go secondhand.

16:39Maybe they go vintage. And there's a sustainability piece to all this. I'm pretty sure those advocates would love nothing more than, you know, the minimists to go away and for Shein and Temu to implode for those reasons as well. So, you know, it's not necessarily just like, what is a one-to-one alternative? I think the hope here is that people will just get conditioned out of thinking that they can get$2 jeans and, you know, a$10 dress. Let's talk, though, about Shein and Temu. I don't think we've really unpacked just how almost surgically targeted a lot of these measures the US has imposed on China are on their business model.

17:12Yeah. I mean, that's a very specific nail going, it's a very specific coffin for this very fast growing ecosystem and fashion. And again, it's just sort of this death blow to dupe brands that we had written about earlier and with Xi 'an and Temu and even Quince as well. They drop ship imitations of luxury products directly from factories in China to consumers in the US. And so I think how bad it's going to be obviously remains to be seen. But I think a big sticking point is going to be diversification. I know from what I understand in reporting, I've done, you know, Quince already makes things in other countries outside of, works with factories in countries outside of China.

17:56And, you know, they've claimed to use the minimis for a very small portion of the goods that they import. But Xi and Ntenmu are Chinese companies and they have very robust supply chains in China. So how quickly they can diversify or if they can at all is really not clear. But this will cause all of them to raise their prices. Even if they start working with factories outside of China, the proposition of selling luxury dupes at rock bottom prices is definitely compromised. So it's going to be a wait and see in terms of how they react to this. But I will say that the end of De Minimis could be good for, and we've written about this before as well for like these mid-priced brands that were getting squeezed by the ultra fast fashion players and by the really ultra luxury players who were kind of just sitting in the middle you know some of these brands like a quinto they compare their their prices to some of these mid-priced brands like a todd snyder and you know theoretically speaking if the new brands have to raise their prices then there goes their differentiation and you know they haven't really built brand independent of their pricing so sexy names like a todd snyder could win even more middle class customers who can afford at least one or two pieces a year rather than 20, you know, and really sort of like investing in that whole buy less, buy better theory as well.

19:08The one hang up on that is I believe Todd Snyder and most of the brands you're talking about also make a lot of their clothes in China. So they're not exactly. Yes, they're not exactly exact. But in terms of, you know, the the minimus portion of it, you know. There's one other element here that you briefly touched on there, which is, whether Xi 'an can move its supply chain out of China. And that's an open question because Bloomberg reported last week that China's government was actually discouraging Xi 'an and presumably other major garment manufacturers from leaving China. I'm sure they don't want many thousands of workers put out of their jobs as a result.

19:43And that's a big factor there. But Mark, can you tell us what is the role that China's government could play in applying pressure both on the brand I mentioned and on American brands that are selling in China? So China's government doesn't really hold back and, you know, sort of inserting itself in these matters. I think, you know, we've seen that with TikTok, for instance, like the TikTok deal really depends on whether or not the Chinese government is going to allow ByteDance to sell TikTok. And so similarly, you know, if you're a business that is in China, you kind of have to listen to the Chinese government.

20:18But even US businesses that sell in China have their own version of this. China, for instance, when PBHCorp, the company that owns Tommy Hilfiger and Calvin Klein, talked earlier this year about not using Xinjiang cotton, which has been the subject of accusations of forced labor by the Uyghur population in China. China did not take kindly to that and actually added PBH to this, what it calls an unreliable entities list, which allows China to restrict its business in the country. PBH has said so far that they haven't actually enacted any measures that are limiting them, but it's a very real thing where it's like, if you want access to the Chinese market, you kind of have to play ball with the Chinese government.

21:09There seems to be at least one Chinese handbag manufacturer who is loving this. Malik, tell us about Sendbags. Yeah, so from my understanding, there's this clip from a TikToker named Sendbags, who from my understanding manufactures handbags in China going viral, basically teasing the fact that a lot of the high-end bags that consumers love to buy from brands that are not based in China, obviously, actually are made there. And saying, you know, hey, the things that you buy elsewhere that are made here, we can make here without actually dealing with the luxury brands. Now, if that's, you know, the glorifying counterfeits or what have you that I'm not clear on.

21:54But it definitely is sending a message of we don't need your participation to sell products that are yours or look like yours, which is pretty jarring and alarming. Again, I could be misinterpreting that, but that is what it seems like from this TikTok that has now gone viral. I just love that trade policy is going viral on TikTok. I think that's just great. Well, I mean, it showed that it is top of mind, not just for fashion industry excited, but for casual consumers as well. So story of the year. I was talking to this agency that works with a lot of like American and European brands in China.

22:26It's the stuff that's in the story. And he was talking about how it's just jokes and memes. It's like, it's not even like real anger directed at the US right now. It's a lot of just like, you guys can't be serious, right? I wanted to bring it back to sort of the one of the original premises of this episode, which is the long term play of Made in America. Like, are we really any closer to this being a reality of being, you know, there being robust manufacturing of clothing and footwear here and people buying it? What is the final verdict on that? It's ever changing. But I think the immediate verdict on that is no, that that does not seem like an immediate reality.

23:07either for the jobs to come back or that consumers are going to care. But obviously, that's just another challenge for the industry to take on. I mean, obviously, their hands have been forced in taking it on. But again, so we'll have to see sort of approach. And obviously, I'll be monitoring it very closely in terms of how brands are going to respond. Those who already manufacture here and those who are maybe thinking about doing so. So I've talked to the heads of a bunch of trade groups, like the American Apparel and Footwear Association, footwear distributors and retailers of America, and they say just flat out, they're like, it's not coming back.

23:44Like we're not restoring American manufacturing of sneakers and clothing on any sort of mass scale in our lifetimes. Like the circumstances for this to actually work and happen are like, it's just not a realistic thing unless we wall off the country so much from other nations in trade that like you don't really have a choice but to buy American. But even so, as Malik talked about, the infrastructure just literally isn't here. Even half the people manufacturing in other countries right now wanted to reshore their stuff to the US and even assume the higher labor costs and all that. They literally couldn't.

24:26There just isn't the factory capacity. And not to mention all the other stuff, even if you use US-grown cotton, most of the time that cotton is shipped out of the US to be spun into yarn and woven into fabric somewhere else. These are all sorts of things that we just don't have that here. It's been lost over decades. And it would take decades to get it back. And to the point that you both were making earlier, Americans don't say they really want those jobs. I think there was a poll in the Financial Times this weekend where it was like more than 80 % of Americans say that reviving manufacturing in the US would be a great thing.

25:05And only 20 % said that they would want to work in a factory. Don't you love data like that? Yeah. So it's a negotiating tactic that so far we are not winning against China. Well, I think we're not winning in the sense that manufacturing isn't coming here. But I think these tariffs could push a lot of fashion manufacturing out of China. So we could win by hurting China, even if we don't win by reviving American manufacturing. I think the tricky part there is there's not as clear a picture of where to go at this point. A lot of brands have diversified to places like Vietnam and Indonesia and Cambodia over the years.

25:47And the returns on that are shrinking as those countries mature, their labor costs go up. And again, there isn't the same sort of infrastructure built up there. So, you know, brands are now looking to places like Pakistan, parts of Africa, like Ethiopia. But it's, you know, it's definitely challenging. Again, like leaving China is just not a really easy thing to do. I don't think this is one of these episodes where we can end on a positive note. I think that we can end it there. Thank you, Malik. Thank you, Mark, so much for joining us today. This was so insightful. Thank you for having us. Thank you.

26:23Thanks. Always enjoy being here. You can read Malik's story, how made in America brands turn tariff turmoil into opportunity, as well as an explainer from Malik and Mark on the U.S.-China trade war and how it affects the fashion industry at businessoffashion.com. Those stories and others are available to BOF professional subscribers and will include a link in the episode notes. You've been listening to The Debrief, produced and edited by Olivia Davies and Eric Bria. I'm Brian Baskin. And I'm Sheena Butler-Young. Thanks so much for listening and we'll see you next week.