Here's what you need to know:
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Last week, President Donald Trump signed a sweeping executive order imposing new reciprocal tariffs on dozens of countries, a major shift for US trade policy that for decades made sourcing goods from abroad relatively inexpensive.
For retailers, these duties—many of which are in the double-digits—make maintaining business-as-usual impossible and throw supply chains into chaos. Imports from major apparel-producing countries including Bangladesh, Vietnam, and India will be taxed at 20% or higher. Before Trump took office, businesses paid minimal duties on imports from those countries.
The latest tariff changes follow Trump’s “Liberation Day” in April, when he hiked import taxes across the board, a move that ignited fears of a global recession. Trump ultimately delayed the April tariffs just hours after they took effect, and set August 1 as the new deadline for trade agreements with foreign partners.
But the agreements reached last week aren’t set in stone. While the latest tariffs took effect on August 7, the president has the authority to change them at any time. Retailers are anticipating ongoing macroeconomic uncertainty in the months to come.
The retail industry relies on a complex global network to produce apparel and footwear, meaning that they bear the brunt of the financial impact of tariffs. In 2024, retail accounted for less than 5% of all imports by value yet accounted for more than 25% of all tariffs the US government collected, according to CNBC.
“Retailers have been able to hold the line on pricing so far, but the new tariffs will impact merchandise in the coming weeks,” the National Retail Federation wrote in a statement following the latest tariff announcement. “We have heard directly from small retailers who are concerned about their ability to stay in business in the face of these unsustainable tariff rates.”
In the US Fashion Industry Association’s 2025 survey, more than 70% respondents said that higher tariffs have increased sourcing costs, squeezed profit margins, and led to higher consumer prices. Further, almost half reported declining sales and 22% have already laid off employees due to increased trade costs.
Some companies will absorb the cost of higher tariffs into their bottom lines, which may impact their stock market performance and ability to attract investors. To avoid a hit to their profit margins, brands may also consider negotiating prices with existing suppliers or diversifying their sourcing strategies. That said, finding reliable factories takes time, and there’s no guarantee that the current tariff rates will hold long enough to make investment in major operational changes worthwhile.
As a result, many brands will resort to raising prices. Adidas said last week that tariffs will add $231 million in costs in the second half of this year, and that it may have to raise prices in the United States. In June, both Lululemon and Nike said they plan to increase prices to offset the impact of tariffs, while Carter’s estimates a net earnings impact of approximately $35 million in the second half of 2025 from incremental tariffs.
The effective tariff rate is now 18.3%, up from 2.4% at the start of the year and the highest since 1934, according to research from Yale’s Budget Lab—equivalent to an average income loss of $2,700 per household. Additionally, the latest tariffs disproportionately affect clothing and textiles, with consumers facing 40% higher shoe prices and 38% higher apparel prices in the short-run, the Yale research shows.
Those price increases are expected to lead to a corresponding decline in demand for new products. Consumer spending growth is expected to slow to just 1% in 2026, down from 2.7% this year, according to Deloitte estimates. In other words, even if brands don’t immediately absorb the higher tariffs into their bottom lines, passing the cost along to consumers will hit their profit margins as shoppers prioritize lower-price options.
Ongoing macroeconomic uncertainty and supply chain chaos call for innovative solutions that go beyond reshuffling sourcing strategies, negotiations with suppliers, and price hikes.
Some brands are paralyzed by a "wait and see" mentality as tariff policies continue to shift, but retailers that consider new business models now are most likely to hedge against ongoing supply chain shifts. Multi-year diversification strategies require factory approvals and operations teams. For instance, Nike’s aim to reallocate supply from China to other countries is expected to have gross margin impacts through the end of fiscal 2026. Resale, on the other hand, is a revenue-generating solution that can be implemented immediately.
Given the unpredictable nature of trade policy, circular business models are no longer a nice-to-have but an urgent diversification strategy. Branded resale, which relies on domestic supply of secondhand goods rather than products made abroad, shields companies from tariffs. Rather than pay duties to import outdoor gear or leather boots, brands can generate profitable revenue from products that are sitting idle in brand warehouses or customer closets throughout the US.
In addition, resale programs help brands offer consumers the products they love at a much lower cost. As retailers increase prices on new goods to offset the impact of tariffs, 59% of consumers say they will turn to resale for more affordable products from the quality brands they’re loyal to. Companies that don’t move quickly will miss this new wave of demand for secondhand products. Not only will they lose business to third party marketplaces, they’ll forgo an important customer acquisition channel for the value-driven consumer.
While demand for secondhand goods is expected to rise, it's already surging and has been for some time. Approximately one-third of clothing and apparel items purchased in the US over the past year were secondhand, according to a report from Capital One Shopping. Brands that meet this demand are more likely to maintain and grow a loyal customer base—up to 66% of shoppers on branded resale platforms are new to the brand, according to Archive data.
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With volatility proving to be the new normal for retailers, brand-owned resale is a proven channel to diversify revenue, ensure profitability, and keep customers engaged.
Archive's team of industry experts is here to help you navigate the crisis so you can protect your margins and your customers. Reach out to us here or email us directly at info@archiveresale.co.
