The tariffs on Chinese imports continue to unsettle the fashion apparel industry in the US. The impact will vary based on how exposed companies and brands are as well as how nimble they are in diversifying their sourcing. The costs will vary by sector. Apparel manufacturers and brands with the highest exposure to the department store channel are seeing the greatest impact from an uptick in tariffs. Apparel manufacturers may be more nimble relative to footwear companies in their ability to shift production out of China. Footwear manufacturers would likely follow the same playbook as apparel manufacturers in dealing with tariffs by diversifying production, negotiating vendor concessions, and taking price increases. The near-term impact of a tariff on footwear may weigh more heavily on margins as pricing and shifting supply out of China takes time.

For specialty retailers, exposure to Chinese-sourced goods averages about 30 per cent. Retailers in this segment have shifted their sourcing from China over the past few years. For department stores, the approach requires diversification of private label sourcing. Being a step removed from manufacturing in China can help buffer both department stores and off-pricers on the margin front from any potential tariff impact. Department stores’ private label goods may take a similar approach to apparel manufacturers including diversifying sourcing, negotiating with vendors and taking price increases.