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How the U.S.–China Trade War Is Reshaping Fashion E‑Commerce



The 2025 escalation in U.S. tariffs—combined with changes like the de minimis rule—have significantly disrupted fashion e‑commerce, squeezing margins and reshaping sourcing strategies for small apparel brands.

According to a Reuter’s article, as of June 2025, U.S. tariffs on Chinese imports have risen to 55%.  The end of the $800 de minimis parcel exemption in May has dismantled the duty‑free route that ultra‑fast fashion platforms relied on—Temu and Shein’s U.S. daily active users dropped sharply, by 52% and 25% respectively (cnbc). Tariffs on apparel from traditional outsourcing countries like Vietnam (currently at 20% with a 40% penalty on goods suspected of transhipment), Bangladesh (currently 9-10%, but has a proposed increase to 37% on the table that has not yet been implemented), Cambodia (49% imposed early 2025) and Indonesia (32% set to take effect July 8, 2025) now double import duties, pushing landed costs up by 10–25% in recent months. 


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What It Means for Small Apparel Brand Owners

For small apparel businesses, these shifts mean production costs and shipping duties have soared. Unlike major brands, small and medium sized businesses (SMBs) lack scale to absorb cost increases—many are forced to pass them on to price-sensitive consumers or compromise on margins. Some Etsy and independent sellers have stopped shipping to the U.S. entirely, while others scramble to shift inventory to domestic or bonded warehouses to avoid tariff exposure.


Immediate impact: Your COGS may be up 15–30%, severely narrowing net margins.


Strategic pressure: Line assortment decisions now hinge on tariff-aware sourcing. Will these styles fetch premium perceived value post‑tariff?


Operational complexity: Customs, paperwork, duties—these are new line items in your P&L and risk blindspots in your supply chain.


Four Ways to Buffer the Trade‑War Shock


1. Diversify sourcing beyond China

Explore Vietnam or India, but beware—new reciprocal tariffs hit these regions too (46%+). Still, multi-country sourcing spreads risk  .


2. Leverage U.S. or bonded warehouse inventory

Platforms like Temu pivoted to U.S.‑based stock to beat tariffs  . For a small brand, a bonded warehouse approach could be a viable way to front-load spring stock duty-free and ship post-clearance.


3. Reassess assortment with margin discipline

Prioritize higher-perceived-value styles—fewer SKUs, higher margins to offset duties. Use limited pre‑tariff promos to drive urgency and customer loyalty.


4. Enhance customer experience to justify pricing

Invest in faster delivery, premium packaging, or personalization. Higher customer experience can support elevated prices without eroding brand loyalty.


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Next‑Steps for Smart Leaders


  • Monitor policy shifts closely—a 90‑day pause on some reciprocal tariffs (except China) may open temporary relief windows  .
  • Integrate landed‑cost pricing tools into your P&L to see margins clearly by SKU.
  • Implement small‑batch test runs with new suppliers to assess cost, quality, and delivery trade‑offs.

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Conclusion:

Rising tariffs and tighter customs regulations are turning fashion e‑commerce into a strategic test in supply‑chain dexterity and pricing discipline. For small apparel brands, the combination of burning cost pressures and shifting sourcing dynamics demands a recalibrated operating model—based on both structural resilience and consumer‑focused sophistication.


-Naima W.

Cloth & Coin Staff


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