Clothing companies fear Trump tariffs will leave them worse for wear

Nina Kharey poses in this undated handout photo. Kharey, a Calgary-based designer behind luxury womenswear line Nonie and workwear brand Folds, says she wakes up every morning with anxiety because of U.S. President Donald Donald Trump's tariffs. THE CANADIAN PRESS/HO

TORONTO — When Nina Kharey wakes every morning, the first thing she does is search online for U.S. President Donald Trump in hopes that the global trade war he sparked is dissipating.

Most of the time, her hunt ends in disappointment.

“It’s a lot of uncertainty at the moment,” said Kharey, a Calgary-based designer who runs luxury womenswear line Nonie and workwear brand Folds. “I wake up every day right now with anxiety.”

The refrain is similar across the fashion industry because of its global nature: material, buttons, zippers and more often zig-zag across tariff-targeted Asia before being turned into garments there or sent on to North America. The weblike nature of apparel supply chains can leave Canadian brands dinged by tariffs if they ship goods from foreign partners directly into the U.S. for manufacturing or distribution.

In addition to Canada, Trump has imposed tariffs on most other countries including European fashion meccas France and Italy as well as places with low labour costs and easy access to textiles such as Bangladesh, Cambodia, India, Indonesia, Malaysia, Pakistan, Turkey and Vietnam.

Most of these countries were whacked with varying double-digit tariffs before recently receiving a 90-day reprieve and instead being hit with a 10 per cent duty, at least temporarily.

Clothing production powerhouse China has been subject to a 145 per cent tariff from the U.S., which was not lifted, and lobbed a 125 per cent levy back.

“I have many colleagues that are in the fashion industry, and so many of them do get their products made in China and it’s really difficult to hear their struggles,” said Kharey.

“The bigger guys, they’ll figure out a way to get through this. It’ll be hard for them, but it’s the small businesses right now where it almost feels like they’re like pawns.”

Daniel Baer, a partner at consulting firm EY Canada focused on retail, said apparel companies of all sizes with products passing through countries ensnared by tariffs are doing whatever they can to cope.

For many, that means rethinking where they source components from, where they manufacture clothing and what route products take to make it to shoppers.

“But these types of changes are not changes you can do on the flick of a switch or do overnight,” he warned.

Kharey knows rerouting production is time-consuming because Folds recently moved production from Canada to Tunisia, which was subject to a 28 per cent tariff from the U.S. until Trump put a 90-day pause on the duty and replaced it with a 10 per cent charge.

Even though shipping from Tunisia to Canada is not impacted by those tariffs, Kharey imagines Folds won’t be unscathed.

“The costs in Tunisia probably will go up, especially since one of their biggest main exports is textiles, and that’s where we are,” Kharey said.

“We have to juggle, do we leave our pricing where it is and see how this goes or increase our pricing?”

For now, she’s not hiking prices.

Neither is Hayley Elsaesser, a Canadian fashion designer who runs a self-named label.

The company is “doing everything we can to avoid” raising prices, because with “inflation and the rising cost of living, it’s something that affects our customers deeply, and we’re always mindful of that,” she said in an email.

Baer thinks apparel brands coping with the trade tensions will eventually have to pass on the costs of the tariff war to consumers, especially if Trump follows through with his promise to remove the de minimis exemption on May 2. The legal mechanism allows many goods valued at or under $800 to enter the U.S. without paying duties.

Many clothiers have staved off immediate increases because their spring and summer inventory is already in hand and they’re placing orders for fall. That could mean higher prices will hit just in time for back-to-school shopping, Baer said.

By then, consumers’ ability to spend may be even lower than it is now.

Its current, depressed level is a worry for Elsaesser, who called it the “biggest impact” her business is seeing.

“We have customers all over the world, and there’s a lot of concern and uncertainty about how things are changing,” she said.

When consumer confidence dips, Baer said shoppers tend to trade down to more affordable brands, seek more discounts or go without discretionary purchases altogether.

While parents may not have the option of avoiding purchases for kids outgrowing their clothing, adults may decide to stick with what’s already in their closet for several more seasons, weighing on retailers.

“Can I wear this jacket two or three or four more seasons? For sure, I could,” Baer offered as an example.

“Would I like to wear two or three or four more seasons? No, because it will be out of fashion ... but nothing will prevent me from doing that because it is discretionary.”

This report by The Canadian Press was first published April 15, 2025.

Tara Deschamps, The Canadian Press