How European fashion brands are responding to US tariffs
Luke Hodgson, Co-founder of Commerce Thinking and Greg Thorndick, Director at Whānau share potential strategies for how European fashion brands can navigate US tariffs.
US tariffs have landed and fashion brands across Europe are scrambling to adapt.
The truth? No one really knows what to do. There are no gurus, no playbooks, no prescriptive advice, and certainly no silver bullet when it comes to navigating US tariffs.
But one thing is certain. Brand leaders want to know how others are approaching the challenge, and what practical steps they're taking to navigate it, so they can make informed decisions based on their own circumstances.
US tariffs—where we’re at*
Since the tariff situation is changing, here’s a current snapshot of where things stand:
A 10% duty has been applied to all goods entering the U.S. as of April 5th, 2025.
The US has temporarily reduced its overall tariffs on goods from China from 145% to 30%, while China's reciprocal tariffs have been cut from 125% to 10%.
A 90-day pause has been placed on tariffs exceeding 10%, delaying enforcement until the end of July for 59 countries. The US/China tariff truce is also observing a 90-day pause while the two countries work towards an agreement.
While it hasn't been made official yet, it's reported that the De Minimis exemption will now be reduced from 120% to 54% on goods coming from China valued under $800.
*accurate as of 14 May 2025
Control the controllables
With this much uncertainty at play, here are three guiding principles that leaders can keep in mind when trying to navigate the tariff storm.
Avoid knee jerk reactions. The most prepared brands are taking the time to model the potential impacts of US tariffs to assess their level of exposure. It’s an obvious step, but arguably the most valuable one brands can take.
Use control as a decision filter. Every move should be evaluated against a simple question: does this decision maximize our level of control in an unpredictable environment? Brands are benchmarking choices based on how they affect their exposure. With this, they can prioritize where to allocate money, time, and resources.
Be patient. Everything is still playing out, and the tariff situation is likely to continue shifting, so the key is to react, but not overreact.
Ways to tackle US tariffs
There’s no one-size-fits-all approach here. Every brand needs to take a hard look at where they stand before figuring out the path that makes the most sense. For most, it’ll end up being a combination of a few strategies.
Pricing recalibration
Review pricing and margins to figure out how much of the tariff impact can or should be passed on to customers. Focus on total cash contribution, not just percentage margins. Try some price elasticity testing to see what the market can bear—test, learn, and adjust as needed.
Diversifying supply chain
Supply chain changes don’t happen overnight, so now is the time to consider exploring alternative production locations like Morocco (which faces a 10% tariff). Regardless of how things evolve with tariffs, there will come a time when sourcing from China won’t be the most efficient option. Speed up that transition.
Market reallocation
Some brands with a lower market share of their overall revenue in the US are choosing to shift resources away from the US market towards EU, UK, and Australia where trade conditions are more favourable. If a brand isn’t heavily reliant on the US market, it’s a fortunate position to be in. However, the other side of the coin is that the UK and Europe market will get more competitive as a result of this, driving marketing and customer acquisition costs up.
Inventory relocation
Working with 3PLs in the US allows brands to import at cost price rather than retail price. This is especially helpful for brands that have a high percentage of revenue coming from US customer spend, and for many, it may be the only way to make the US share of a business viable. This is the most prevalent, immediate reaction to reduce US duties.
Bonded warehouse
Some brands are also exploring bonded warehouses with their 3PL partners, which allows them to defer duty payments until point of sale, improving cash flow as a result.
Lead with transparency
While now may not necessarily be the time for drastic action, it is absolutely the time for reflection. Brands should be speaking to other leaders, considering all scenarios, having regular leadership stand ups and putting cross-functional teams in place to work on any changes that may be actioned.
Above all, clear and early communication will be critical. Brands need to maintain transparency with their customers on any pricing or product changes as a result of US tariffs. The brands that communicate well with their customers are the ones that will ultimately land safely.
Luke Hodgson is global tech leader and co-founder of Commerce Thinking, providing tech strategy for New Luxury brands, such as Adenola, Nobody’s Child, and Liverpool Football Club. For more insights from Luke Hudgson, subscribe to Commerce Thinking’s newsletter.
Greg Thorndick is the Director of Global Trading & Ecommerce at We Are Whānau, an advisory investment consulting business that helps scale-ups with international aspirations. Follow Greg on LinkedIn.
