After months of uncertainty, Americans are beginning to see the price impact of President Donald Trump’s tariffs – on their wardrobes.
Fast-fashion giant Shein announced that its prices would increase April 25 “due to recent changes in global trade rules and tariffs,” according to a customer notice on the retailer’s website. Temu made a similar announcement about hiking its prices, also starting April 25.
On Friday, some social-media users said prices for the items in their carts had gone up, with one saying that a set of items that would have usually cost $300 had gone up to $500. Shein and Temu (PDD) did not respond to requests for comment.
American consumers have been cutting back on nonessential spending this year – including on apparel – as they continue to cope with inflation and the economic uncertainty set off by Trump’s trade war.
As the new trade rules result in higher prices, some environmentally conscious shoppers are questioning whether demand for fast fashion could decline in response, reducing apparel waste. However, experts say fast-fashion companies with agile supply chains may actually benefit from these trends as price-sensitive consumers shift to lower-cost goods.
Second-hand retailers like ThredUp (TDUP), discount retailers like TJMaxx (TJX) that buy excess inventory from other retailers, and clothing-rental companies are also expected to absorb consumer demand for cheaper options.
In an Intuit (INTU) Credit Karma survey, among the nearly 50% of consumers who adjusted their spending in anticipation of tariffs, nearly 60% of those with household incomes less than $100,000 were looking for cheaper alternatives, according to data shared with MarketWatch.
“Bottom line, what’s going to happen is a curtailing of expenditure across the board,” Vincent Quan, a business-management professor at the Fashion Institute of Technology, told MarketWatch.
Yet fast fashion – which is inexpensive and trendy by design to incentivize high levels of consumption – may be well positioned for this moment. Some fast-fashion retailers may see a decline in revenue, but many already diversified their supply chains to countries like Vietnam, Bangladesh, India, Turkey and countries in Northern Africa and Eastern Europe after the tariffs Trump implemented during his first term. This will help them minimize the impact of tariffs as middle- to upper-middle-income consumers switch to fast-fashion retailers, Quan noted.
These adaptations could help mitigate price increases for fast-fashion consumers, but they could also “have broader implications, including changes in labor standards, environmental oversight and long-term sustainability goals,” said Jay Yoo, a professor of apparel merchandising at Baylor University.
Tariffs’ unintended consequences on fast fashion
Despite the challenges posed by tariffs, Shein – which is based in Singapore and known for its wide assortment of extremely low-cost apparel, with many items priced under $10 – was able to use a loophole in Trump’s last trade war to its advantage to powercharge its business in the U.S. In response to the first Trump administration’s tariffs, which exempted small packages worth less than $800, the Chinese government lifted the tariff on exports on direct-to-consumer companies. As a result of both the exemption and China’s response, “Shein pays neither export taxes on most of its products nor, in the case of the U.S., import taxes,” Bloomberg reported.
Despite ongoing criticisms of the labor practices and environmental impacts of fast-fashion companies, Shein has steadily grown its market share as price-sensitive consumers seek affordable options, Pippa Stephens, senior apparel analyst at GlobalData, said in a statement. Shein’s sales skyrocketed during the pandemic, and by November 2022 it claimed about 50% of the U.S. fast-fashion market share, exceeding competitors like H&M and Zara that had more established footholds, according to Bloomberg Second Measure.
“The ability to pivot quickly and manage sourcing across diverse regions is one of the key reasons fast fashion has remained resilient, even in the face of rising trade barriers,” said Yoo.
Yet facing the possibility of sustained, high tariffs today, “the largest brands may be able to adapt, but smaller or midtier companies could struggle to keep pace,” Yoo added. “I anticipate that many will make difficult decisions, such as laying off employees, in order to stay afloat.”
“As a global company we’re accustomed to adapting to external factors impacting our business,” an H&M spokesperson said in a statement – noting that their focus is “offering our customers the best combination of fashion, quality and sustainability, at the best price possible.”
Shares of H&M (SE:HM.B) (HNNMY), Zara owner Inditex (ES:ITX) (IDEXY) and Uniqlo owner Fast Retailing (JP:9983) HK:6288 (FRCOY) are up since Trump’s tariff announcement on April 2. Inditex and Fast Retailing did not respond to requests for comment.
Tariffs’ unsustainable environmental impact
Fast-fashion companies have developed recycling programs and set goals for carbon emissions and renewable-energy use. Still, every year, 92 million tonnes of textile waste is produced globally, according to the United Nations Environment Programme. Tons of used clothes that are discarded or donated also end up in landfills or as waste in the ocean, clogging up beaches in foreign markets that accept large volumes of used-clothing imports. The UN Alliance for Sustainable Fashion estimates textiles account for about 9% of annual microplastic losses to the oceans.
“The biggest wildcard here is consumer values.”Julia Yan, CEO of Baleena
By causing prices to increase, there’s a “meaningful opportunity here” for tariffs to slow down overproduction and shift both brands and consumers toward quality over quantity, said Julia Yan, chief executive of Baleena, a startup that developed a microplastic filter for washing machines. “If consumers begin to question why a $25 dress falls apart after two washes and choose to rent, repair or buy higher-quality pieces instead, the environmental benefits could be significant,” Yan said. “The biggest wildcard here is consumer values.”
While tariffs stand to curtail some demand, experts said that alone will not result in critical changes that will make the fast-fashion industry more sustainable. If apparel brands chase lower production costs in response to tariffs, “we could see even greater use of fossil-fuel-derived fabrics like virgin polyester, less investment in garment testing, and shorter product lifespans – all of which accelerate microplastic pollution, textile waste and emissions,” said Yan.
“??The true impact,” noted Baylor University’s Yoon, “will depend on whether this shift is maintained and accompanied by broader changes in production methods and consumer culture.”
Yan is not alone in worrying that higher costs brought on by tariffs will lead manufacturers to cut corners on sustainability and labor rights. “Basic, affordable garments are already produced on razor-thin margins,” Elizabeth L. Cline, author and lecturer in fashion policy at Columbia University, told MarketWatch. “We can expect to see backsliding on responsible production as a result.”
She added: “Where we’re headed is a decline in consumption overall, not just the ‘bad’ kinds of consumption like fast fashion.” The tariff plan has so far rattled the stock market and increased fears that the U.S. economy is tilting towards a recession. “Making people poorer is not sustainable,” Cline said.
For reduced consumption “to be effective, lasting and to minimize unintended consequences on workers and the environment, it should be done by design, not [economic] disaster,” Stephanie Feldstein, population and sustainability director at the Center for Biological Diversity, said in a statement to MarketWatch. “Trump’s chaotic tariffs fall in the disaster category.”
Tariffs could create opportunities for the secondhand market
The secondhand market remains a relatively undertapped alternative for consumers looking for low-cost clothes, in part because fast-fashion retailers tend to offer a more convenient alternative. As Trump recently closed the “de minimis” tariff loophole for small packages that allowed direct-to-consumer companies like Shein to grow – making fast fashion more expensive – secondhand retailers now say they have a fair shot at competing for price-sensitive consumers.
“Clothing – especially women’s and children’s apparel – is a huge sales driver and we anticipate this will continue to be the case” as consumers face economic uncertainty, Steve Preston, CEO of Goodwill, told MarketWatch.
With the average American adult storing 6.2 unworn clothing items in their closet, there are an estimated 1.6 billion garments sitting unused nationwide, according to Garson Shaw, a secondhand-clothing wholesaler.
Demand for secondhand goods is growing, particularly among Gen Z shoppers, as consumers look both for savings and to reduce their environmental footprint, Garson Shaw’s survey showed. The U.S. used clothing market expanded by 14% to $49 billion last year, and is expected to grow by 9% annually through 2029, according to ThredUp, an online retailer of used clothing.
“The de minimis loophole has contributed significantly to the textile waste crisis, where millions of tons of clothing end up in landfills annually,” ThredUp said in a statement earlier this month. “By leveling the playing field, this tariff order encourages a shift towards a more circular economy, where clothing is given a second life, reducing waste and carbon emissions.”
