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Executives knew Trump’s latest round of tariffs, announced on April 2, would be bad—but they turned out to be far worse than anyone anticipated.

The so-called “Liberation Day” tariffs, targeting $2.5 trillion worth of imports, sent U.S.-based companies with overseas production scrambling. Executives called emergency board meetings and spent hours on calls with suppliers in countries like Vietnam, Cambodia, and Bangladesh, which faced new tariffs of 46%, 49%, and 37%, respectively. One U.S. brand quickly formed a “tariff task force” on Thursday, pulling together teams from sourcing, production, product development, merchandising, IT, and more. Stock prices plunged, with the S&P 500 losing $2.4 trillion in a single day. Major brands like Nike, American Eagle, Gap, Ralph Lauren, and Tapestry saw their shares drop by as much as 30%.

New U.S. tariffs throw fashion’s supply chain into turmoil

Chaos, uncertainty, anxiety, and volatility dominated conversations with brand executives and founders, many of whom spoke anonymously, fearing retaliation from the Trump administration for criticizing the tariff policy publicly. Companies like American Eagle, Capri, Ralph Lauren, Abercrombie & Fitch, and Levi’s declined to comment or deferred to trade organizations like the National Retail Federation (NRF) and the American Apparel and Footwear Association (AAFA). Gap Inc., Tapestry, Nike, Nordstrom, PVH, J.Crew, URBN, and New Balance did not respond to requests for comment.

“These tariffs are significantly higher than people expected,” said Jonathan Gold, NRF’s VP of supply chain and customs policy. “The administration needs to understand the severe impact this will have on retailers, especially smaller ones that can’t adapt as quickly. They’re already struggling—will they survive these cost increases? The ripple effects could include job losses, business closures, and further drops in consumer confidence, which is already low.”

An NRF survey released on March 31 found that 76% of U.S. consumers were worried about how tariffs would raise prices, while 81% feared small businesses would shut down due to economic strain.

For most brands, tariffs as high as 54% (on China, the steepest under the new policy) leave no choice but to raise prices—likely by around 15% on average, according to sources. Discussions with suppliers have focused on how much of the cost they can absorb without collapsing, but overseas manufacturers already operate on razor-thin margins. Restructuring supply chains or shifting production closer to home could push many out of business. Some have floated the idea of being transparent with consumers—directly naming tariffs as the reason for price hikes, even listing them like taxes—but fears of angering the administration linger.

“This is an existential threat. Everybody is holding their breath,” said Sanjeev Bahl, CEO of Saitex, a denim manufacturer with facilities in Vietnam and Los Angeles, who was in Ho Chi Minh City when the tariffs were announced. “Sourcing teams are exploring alternatives, crunching numbers. But no one has a solid ‘what if’ plan yet. That will come once we know the final numbers and whether negotiations happen.”

Some companies are banking on negotiations to lower the rates, with some even holding off on shipping goods to the U.S. to avoid the new tariffs, according to sources familiar with the strategy. But delaying shipments can’t last forever without risking inventory shortages. Whether the tariffs are negotiable remains unclear—Trump suggested on Friday that talks were possible, but no concrete steps have been taken.Here’s a clearer and more natural version of the text:

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Statements about potential negotiations contradicted an aide’s remarks from the day before. Then, on Friday, Trump claimed Vietnamese leader Tô Lâm was already at the negotiating table, pushing to eliminate tariffs entirely. Nike, which manufactures its shoes in Vietnam, saw its shares rise 4% on the news.

Companies are desperate for a solution—there’s no easy escape. After Trump imposed heavy tariffs on China during his first term, many businesses shifted production elsewhere. Now, with steep tariffs targeting those same countries, brands have few alternatives.

“The problem is these tariffs are taking effect so fast that brands have almost no time to react,” says Gold. “Companies that diversified away from China saw the warning signs and explored other options. But now those countries face higher tariffs too. They’re scrambling to figure out where to go next. It’s unclear how businesses can avoid these costs, and the impact will be immediate—just as they’re planning for the holiday season.”

Trump’s reasons for sparking a global trade war are unclear. If the goal is truly to bring manufacturing back to the U.S., it will be an uphill battle—one many brands say they aren’t ready for.

“I’d be shocked if that ever became a realistic option,” one executive said before the announcement.

Is U.S. manufacturing even feasible?

Experts agree: The U.S. lacks the facilities, materials, and workforce to absorb overseas production at its current scale. “Could some manufacturing return? Maybe, but not overnight,” says Gold. “The capacity isn’t there, the materials aren’t there. You can’t replace global sourcing—it’s just not possible. The scale doesn’t exist.”

Bahl’s company, Saitex, produces denim in Los Angeles, but he admits moving all operations to the U.S. would be impossible. He argues that businesses like his, already operating domestically, should receive incentives—though he knows that’s unlikely. “We should get preferential treatment. Maybe I’m dreaming, but if we import materials, we shouldn’t face the same tariffs.”

Tariffs will also drive up U.S. manufacturing costs as material prices rise. “While the President promotes ‘America First,’ this policy ignores the harm it will do to U.S. manufacturers,” the AAFA stated. “Many rely on foreign inputs with no American alternatives. Tariffs will make domestic production more expensive, and retaliatory tariffs will hurt U.S. exports too.”

Some countries have already responded with their own tariffs. China imposed 34% duties on U.S. imports, while the EU is considering taxes on American goods and tech services. With costs expected to rise across the board—from cotton fertilizer to zipper metals—companies must reassess their entire supply chains.

Katherine Tash, who handcrafts wedding dresses in Santa Monica, sources silk from Korea (25% tariffs), lace from Italy and France (20%), and the UK (10%). “We’re reevaluating our sourcing,” she says. “We’ve been on calls all morning with suppliers, trying to stay calm and maintain our quality.”

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Let me know if you’d like any further refinements!She said on Thursday that she’s determined not to raise prices but admits her profit margins will suffer. “I care deeply about maintaining the quality of our business and the clothes we make, and I don’t want to panic. We want to keep our company going. This is a survival test, and it feels like we just went through this during Covid.”

Many compare the current situation to Covid. “But that was a natural event. This feels self-inflicted,” one executive said. “There’s nowhere to hide, no loopholes. We’re in a full-blown trade war.”

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