Apparel, Footwear Retailers Delay Orders, Freeze Hiring as Tariffs Hit

Clothing and accessories retailers across the United States are delaying orders and freezing hiring ahead of tariff hikes that take effect Wednesday on products imported from Vietnam and China, reports Reuters. These businesses, much like Nike and Lululemon, face an impossible choice: offset the cost of tariffs by raising prices by some 40 percent — potentially cratering sales — or absorb the cost increase and further strain already-thin profit margins. President Trump announced on Tuesday even greater tariffs on Chinese imports, increasing duties to a staggering 104 percent.

Smaller clothing and shoemakers lack vast supply chains, making them highly dependent on Vietnam and China. Ian Rosenberger, CEO of Day Owl, a six-year-old New York company that makes backpacks in Vietnam, has paused future orders, according to Reuters. Unless there's a deal to significantly lower Vietnamese tariffs, Rosenberger estimates Day Owl has 30 days before it folds. Rosenberger said tariffs would increase his duty to $22 from from $5, prompting him to increase the price of his top-end bag to $212 from from $155.

Idaho-based outerwear brand Wild Rye sources ski jackets and mountain biking pants from suppliers in China, which will be subject to an additional 34 percent tariff starting Wednesday. "This is going to create a huge amount of strain on the business," founder Cassie Abel told Reuters. She has frozen hiring and any raises for her 11 employees, and said the business would have to absorb part of the tariff increase to avoid hiking prices by 40 percent.

Footwear Distributors and Retailers of America, whose members include Nike, Walmart, Skechers, and Deckers, calculated that a $155 running shoe made in Vietnam would have to be marked up to $220 in U.S. stores to offset the 46 percent tariff. Consumers could start seeing price hikes immediately on certain goods.

Total Retail's Take: The whiplash felt by retailers and brands from President Trump's significant tariffs cannot be understated. The current administration said in a statement that "these tariffs seek to address the injustices of global trade, re-shore manufacturing, and drive economic growth for the American people." However, there isn't enough domestic manufacturing to support our current consumer demand or enable retailers to pivot to American-made goods. Many retailers are instead looking to diversify their supply chains to other foreign countries that are lesser impacted by tariffs.

For example, according to Reuters, Vietnam has developed specialized factories producing everything from high-tech running shoes to track suits. It's the second-biggest source of clothes and shoes imported to the U.S. after China, and a key manufacturing hub for Nike, Adidas and others. The United States lacks these specialized production facilities needed for retailers to turn their supply chains away from global sources in a matter of weeks as tariffs come into effect. Additionally, companies would pay a much higher price for American labor, a cost which would most likely also be passed onto U.S. consumers. Day Owl and Wild Rye said they had previously tried to produce domestically but quality was poor, so moving production to the U.S. wasn't practical for their brands.

Nearly three in four companies (74 percent) say they’re likely to increase prices in response to tariffs — with most planning to do so by the end of Q2 2025, according to a new ResumeTemplates survey of 735 import-reliant U.S. companies. Hiring freezes (38 percent), delayed raises (33 percent), and layoffs (27 percent) rank among the top actions corporations plan to take in response to tariffs. Notably, 18 percent of surveyed businesses do plan to shift manufacturing back to the U.S.; however, 6 percent plan to replace skilled U.S. workers with offshore talent, particularly in IT support, software development, and customer service roles, to make up costs.

While many retailers are facing difficult decisions to either absorb tariffs cost, pass them onto consumers through price hikes, freeze hiring or layoff American workers, or even possibly close their business, there has been some positive messaging. The National Retail Federation (NRF) last week said it doesn't expect tariffs to have much impact on prices and growth. However, it's clear the retail industry and American consumers face many uncertainties in the coming months.