Fashion industry ‘nervous’ over potential Vietnam tariffs

As an industry that relies heavily on imported goods, fashion stakeholders are prepping for a wave of proposed and potential tariffs on the countries from which it sources.

President Donald Trump has proposed various tariff policies that would impact the fashion industry’s bottom line, and companies are responding accordingly.

Though China is still the top sourcing country for the industry, “We’re all kind of nervous about Vietnam,” said Nasim Fussell, senior vice president for Lot Sixteen, a Washington, D.C.-based lobbying and communications firm.

Fussell spoke at the American Apparel and Footwear Association’s executive summit last week about trade policy within the first 100 days of Trump’s second term.

Vietnam is the second largest apparel and footwear supplier behind China, and increased U.S. tariffs could become a large headwind.

“What we just saw…with very high tariffs on two of our closest trading partners, Canada and Mexico, who have a longstanding trade agreement with us, unfortunately shows that it doesn’t really feel safe wherever you go right now,” Fussell said.

In recent years, Vietnam has become one of the key sources for the apparel and footwear industry, and in response, the country has improved its infrastructure with roads, railroads and ports to service the factories, said David Swartz, senior equity analyst for Morningstar Research Services. 

Wages in Vietnam are lower than in China, and some China-based manufacturers have opened factories in the country, Swartz said.

Had Trump won reelection in 2020, Fussell said it was likely the president would have applied tariffs on Vietnam along the lines of those applied to China at the time. Now it remains to be seen whether the administration will take the reciprocal tariff approach to the country or apply the duties another way.