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Tariffs fuel global sourcing shakeup for fashion in the U.S.

Aug 1, 2025

4 min

Sheng Lu
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Be prepared to see more Made in Vietnam or Made in Bangladesh labels on clothing in the coming years. That’s because U.S. fashion companies are rethinking their global sourcing strategies and operations in response to the Trump administration’s trade policies and tariffs, according to new research by the University of Delaware's Sheng Lu.


Lu, professor and graduate director in the Department of Fashion and Apparel Studies, partners with the United States Fashion Industry Association (USFIA), on an annual survey of executives at the top 25 U.S. fashion brands, retailers, importers and wholesalers doing business globally. Members include well-known names like Levi’s, Macy’s, Ralph Lauren and Under Armour, among others.


The report covers business challenges and outlook, sourcing practices and views on trade policy.


“We wear more than just clothes; we wear the global economy, the supply chain and the public policies that jointly make fashion and affordable clothing available to American families,” Lu said. “We want to know where these companies source their products and what factors matter to them the most. It’s a classic question and it evolves each year.”


This year’s report, released on July 31, shows tariffs and protectionist policies are the top business challenge for companies, with nearly half reporting declining sales and more than 20% saying they have had to lay off employees. This was followed closely by uncertainty around inflation and the economy, increasing sourcing and production costs, and changes in trade policies from other countries.


In response, more than 80% of companies said they will diversify the countries from which they source their products, focusing on vendors in Asian countries such as Vietnam, Bangladesh, Cambodia and Indonesia. Despite the push for “Made in USA” garments, only 17% of respondents plan to increase sourcing from the U.S.


Lu shared his findings in the following Q&A:


What surprised you about the survey results?


Two things surprised me. First, contrary to common perception, the results do not indicate that the tariff policy so far has effectively supported or encouraged more textile and apparel production in the U.S. This actually makes sense. U.S. mills are as uncertain about the tariff rates as our trading partners are. A U.S. company may manufacture the clothes here, but use yarns, fabrics and zippers from other countries. When tariffs drive up the cost of these raw materials, it reduces the price competitiveness of apparel “Made in the USA.” Many domestic factories are in a “wait and see” mode, holding back on making critical investments to expand production due to the lack of a clear policy signal.


Second, I was struck by the wide-ranging impact of the tariffs, which has gone far beyond what I originally imagined. Tariffs have not only increased U.S. fashion companies’ sourcing costs but have also affected their product development, shipping and overall supply chain management.


Nearly 70% of the survey respondents said they have delayed or canceled some sourcing orders due to tariff hikes. Should consumers be prepared for less variety in clothing or shortages?


Later this year, we may see fewer clothing items from our favorite brands on store shelves — especially during the holiday shopping season — and many of those items may come with a higher price tag. That said, fashion companies are doing what they can to avoid passing on tariff costs across the board, as they recognize that consumers are price sensitive. Many surveyed U.S. fashion companies say they intend to strengthen relationships with key vendors as a strategic move, and there is a growing public call for U.S. companies to provide more support and resources to their suppliers in developing countries.


Sustainability is a huge issue in the fashion industry, as millions of tons of textiles end up in landfills every year. Companies say they are spending less on sustainability efforts. What would you tell companies about their sustainability efforts?


Our survey suggests that sustainability can open up new business opportunities for U.S. fashion companies. Respondents said that when sourcing clothing made from sustainable fibers — like recycled, organic, biodegradable and regenerative materials — they are more likely to rely on a U.S. sourcing base or suppliers in the Western Hemisphere. In other words, even if apparel “Made in the USA” or nearby cannot always compete on price with lower-cost Asian suppliers, there is a better chance to compete on sustainability. Based on what I’ve learned from our Gen Z students — who expect better quality and more sustainable products if they have to pay more, and are critical consumers for many brands and retailers — it is unwise to hold back on investments in sustainability.


What do you see as the biggest takeaway from the survey?


One key takeaway is that the $4 trillion fashion and apparel business today is truly “made anywhere in the world and sold anywhere in the world.” In such a highly global and interconnected industry, everyone is a stakeholder — meaning there are no real winners in a tariff war.


The study is also a powerful reminder that fashion is far more than just creating stylish clothing. Today’s fashion industry is deeply intertwined with sustainability, international relations, trade policy and technology. I hope the findings will be timely, informative and useful to fashion companies, policymakers, suppliers and fellow researchers. I plan to incorporate the insights, as well as the valuable industry connections developed through my long term partnership with USFIA, in my classroom, giving UD students fresh, real-world perspectives on the often “unfashionable” but essential side of the industry.


Reporters interested in speaking with Lu can contact him directly by visiting his profile and clicking on the contact button. UD's media relations team can be reached via email. 


Connect with:
Sheng Lu

Sheng Lu

Professor, Fashion and Apparel Studies

Prof. Lu's research focuses on the economic and business aspects of the global textile and apparel industry.

Trade Warsapparel retailingTariffsTextile and Apparel IndustryFashion apparel supply chain
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