The future of fashion in the face of the world trade crisis

Commerce has always been the circulatory system of human society – its existence is the existence of life itself as would be its absence. Today global trade is a capillary tangle of relationships, influences, market values as well as a multitude of infinitesimal and titanic moving parts, all regulated and represented by the trends of stock markets and financial centers. In the last fifteen days or so, this complex mechanism has been disrupted by the US administration, whose president, Donald Trump, first imposed tariffs on the entire world except Russia, then suspended them for ninety days while maintaining and increasing them (albeit with specific exemptions) for China, which in turn responded to American tariffs with counter-tariffs, suspended exports, and even psy-op campaigns on TikTok, marking the beginning of a trade war that the entire world is now watching with bated breath. And while the Italian Prime Minister, Giorgia Meloni, traveled to America to negotiate with Trump, the President of the European Commission, Ursula Von Der Leyen, stated in a lengthy interview with Die Zeit that «the West as we knew it no longer exists». As global markets fall and the World Trade Organization estimates that tariffs could reduce global trade by up to 1.5% this year, Europe finds itself increasingly squeezed between these two rival superpowers – not to mention the anxieties stirred by Russia and its propaganda and interference in EU elections. But in such chaos, what place is there for an industry as seemingly frivolous as fashion?

If “frivolous” is perhaps an excessive term, fashion can certainly be described as the most voluptuous and “discretionary” industry of all. Yet this industry, which sells dreams along with clothes and handbags, represents a turnover of $1.79 trillion as well as a huge cultural capital for society. Given its relative fragility, as well as its dependence on delicate international exchanges and its proximity to power, it finds itself, like many others, caught in the crossfire of a global trade suddenly more difficult and confusing than ever. From Bangladesh to the coasts of Guangdong, from the Chilean deserts to the Parisian salons de couture, passing through Italian factories and major Swedish and Spanish corporations, the great fashion network not only spans the entire world but concerns the entire world. At the moment, the prevailing feeling remains one of uncertainty: stocks crash at the announcement of new tariffs and recover when they’re lifted, but nothing is clear about the medium- to long-term future. And for European luxury fashion, with its publicly traded shares, sky-high prices, its scandals and the pressure of quarterly results, uncertainty is a terrible poison. «The fashion sector has always been subject to tariffs for imports into the US», an analyst who preferred to remain anonymous explained to us. «Even consumer prices have always reflected these tariffs. The addition of +10%, for now, complicates things a bit – which is why I believe the fashion sector is a primary victim, especially in the luxury market». Another of our interviewees, specialized in logistics, told us that the major players in the market are in a waiting period: «In reality, there hasn’t been enough time to understand a clear behavior from companies. There have definitely been some reactive moves», he told us. «Many, in my opinion, are waiting to understand what the medium- to long-term scenario will be before making longer-term choices».

This is exactly the crux of the matter. During our conversations, the European interviewees tried to read the tariff chaos as an opportunity for European fashion, which doesn’t have production in the USA, to «ask whether the commercial policy followed so far has actually been correct. We’ve seen a price increase beyond the intrinsic value of the good, which has grown significantly. So even understanding our positioning within the American market can be a cue and a long-term advantage». On the other hand, «now that the de minimis clause [which exempts shipments under $800 from duties, ed.] has been removed, fast fashion and generally Made in China will be heavily impacted and sales will contract». According to the American finance manager as well, «tariffs are indirectly contributing to a slowdown in fast fashion». The analyst instead says «Made in Europe is still very strong for luxury and seems to be holding up well for now. Personally, I believe reshoring from Asian areas is impossible, except for small segments. If things don’t change, many brands, including American ones, will suffer. That, in my opinion, is the real problem». Returning to the topic of commercial policies, the logistics expert adds that «the reduction in volumes by luxury has been offset by a price increase. This has actually distorted the market. The new awareness about what constitutes luxury must necessarily lead to a price rethink. Safeguarding the margin isn’t about the single product but the company’s overall profitability», especially if one wants to access the aspirational segment. However, it’s clear that limiting fast fashion is a good solution against social phenomena such as overconsumption (Temu and Shein, for example, have already raised their prices in America) but at the same time the road to the paradise of slow and sustainable fashion, which produces and sells at a slower pace and with less pollution, is paved with closed factories, layoffs, and lower product availability.

But what’s happening to American brands? «The smaller brands, with supply chains concentrated in China, are the most exposed. If your factory is all there, and duties are at 245%, you’re up against a wall», says the American finance manager. «Those who have already invested in local production are now more competitive: faster turnaround, quality control, and a strong message for the consumer». Nonetheless, caution is needed when considering a Made in USA renaissance: «Many think it’s enough to want it to bring everything back home. The truth is we lack the factories, the machinery, and above all the people with the right skills. Doing everything in America looks good on paper, but even here we depend on foreign suppliers. If the yarn comes from Pakistan, even ‘Made in USA’ has its vulnerabilities. ‘Made in USA’ works when it’s authentic, not patriotic rhetoric», he continues. An example of authentic Made in USA he gives us is the Cone Denim Mills factory or the Camber USA brand, whose production, however, is extremely niche and certainly not ready for mass consumption at the same prices.

In fact, he tells us, «producing in the USA often means working with less automated facilities and shorter cycles. This brings more variability and pressure on quality control, which many companies aren’t structured to manage internally». And for now, «talking about total reshoring is misleading. The most you can achieve is partial nearshoring, perhaps with a final phase in the USA to obtain the ‘Made in USA’ label. But real production remains elsewhere, with everything that entails». According to him, if these dynamics continue (he told us with a certain, practical resignation that «at least with China, tariffs won’t disappear tomorrow») we could see a «polarization» in American fashion, with «on one side, smaller brands trying to diversify only logistics, on the other, premium or luxury ones internalizing costs and leveraging brand value to justify higher prices». He still holds on to a glimmer of patriotic hope: «This could be the moment for the US fashion industry to show that it’s possible to produce closer to home, more humanely, and with real added value. But it will take time and, above all, long-term vision».