How Trump’s tariffs will push up the price of your trainers – and trip up impulse buyers

Fast fashion brands like Shein and the athleisure market of JD Sports, Nike and Adidas face significant challenges from the new tariffs, writes James Moore – and American consumers face unpleasantly hefty price rises on their impulse purchases

Liberation day? Donald Trump declaring a trade war on the world is certainly liberating the American consumer from cheap consumer goods. His tariffs are a tax on Main Street, USA, as much as they are on his nation’s trading partners. Levies can be imposed overnight but onshoring manufacturing – the stated aim – is not so easy.

Some of the numbers, announced by a president playing the role of a dollar-store PT Barnum as he brandished a scorecard highlighting the perceived baddies, are mindboggling. The baseline charge is bad enough at 10 per cent. It includes the UK, Australia, Brazil, Turkey and Saudi Arabia among others, with steel facing 25 per cent and vehicles the same.

However, the EU faces double that. Japan will pay 24 per cent, Thailand 36 per cent, Vietnam 46 per cent and Cambodia 49 per cent. The charges imposed on Chinese goods rack up to 54 per cent including levies that have already been announced. The word “bazooka” has been used to describe what Trump has fired at global trade. In the case of China and the other countries at the upper end of the scale, that underplays the impact.

Needless to say, those at the upper end of the tariff scale are major players in the global garment trade, where minimal wages have facilitated the growth of fast fashion. It isn’t just the price of cheap clobber that is set to rise. The same production lines often churn out gear sold at much higher prices by fancy designer labels.

Their margins are such that they have the capacity to absorb some or all of the extra costs – whether they will or not is another question. It’s a different matter at the price points favoured by the likes of Shein, the flotation of which would be the biggest seen on the London Stock Exchange in years.

Shein’s business practices have long been controversial. Yinan Zhu, general counsel for the group’s European arm, said she was “not qualified” to answer questions about the company’s supply chain, which led to her being accused of “wilful ignorance” during tense opening exchanges at a hearing of the business and trade committee in January.

Concerns have been repeatedly expressed over labour practices in China’s northwest Xinjiang region, and the accusation that Shein uses cotton made there played an important role in shutting it out of Wall Street, the preferred destination for the company’s float.

The Trump administration moving forward with an end to duty exemptions granted to low-value packages entering the US raises questions over the planned initial public offering of Shein’s shares in London and, indeed, the firm’s business model

Shein’s float – which had been expected in the first half of this year – may have to be mothballed until investors can gauge the impact of the tariffs on its business (PA Wire)

The exemption has been key to the success enjoyed by it and other internet-based fast fashion firms such as Temu, allowing them to ship ultra-low priced clothes made for pennies to US consumers.

The tariffs will not kill their business. But they may have little choice but to increase prices. That matters. Ultra-low price points facilitate impulse purchases. When you can buy a printed T-shirt for less than the cost of a novelty latte, it is possible even for relatively low-income consumers to click “buy” without worrying overly much.

Those with a little more disposable income can and do purchase clothes they may never wear, a practice that frustrates critics of the fast fashion industry, given the environmental problems it creates.

Shein’s float, which had been expected in the first half of this year, may have to be mothballed until investors can gauge the impact of the tariffs on its business. Even with the relatively low federal minimum wage in the US – it is $7.25 an hour, but states and cities can impose their own higher rates – this is not an industry that can look to move production onto US shores. The numbers just don’t add up.

Nor is it just Shein who will feel the impact. Businesses ranging from Gap to Britain’s “king of trainers” JD Sports – which boasts a growing US business – to the makers of the shoes JD sells, such as Nike and Adidas, will take a hit. This is at a time when the athleisure market is struggling.

But it is China that faces the greatest challenge. Preliminary estimates for 2024 have suggested that its economy expanded by five per cent, which is Formula One fast by European standards. It was also in line with its government’s target and a tad higher than economists had forecast. However, much of its expansion was driven by a surge in manufacturing that was, in turn, driven by the expectation of US tariffs and the desire to get in ahead of them by sending product to the US before their imposition.

China’s economy is a two-headed beast, and the second head is sickly. The domestic scene has been struggling with symptoms including weak consumer confidence, the threat of deflation, and a flailing housing market. The tariffs are a direct strike at the healthy head. Perhaps political calculations and a revolt by price-conscious US consumers, who punished the Democratic Party because of the perceived inability of the Biden administration to control inflation, among other things, may yet help to de-escalate this crisis and stave off a global recession.

However, it is a long time until the midterms and the dismal Democrats have become terribly disconnected from middle America.