Bonus: The Trade War’s Off, For Now. What's Next for Fashion?

Summary

Summary of "Bonus: The Trade War’s Off, For Now. What's Next for Fashion?"

Podcast: The Business of Fashion Podcast
Host: The Business of Fashion
Episode Title: Bonus: The Trade War’s Off, For Now. What's Next for Fashion?
Release Date: May 15, 2025

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Introduction and Overview

In this bonus episode of The Business of Fashion Podcast, Executive Editor Brian Baskin and Senior Correspondent Sheena Butler Young delve into the recent developments surrounding the US-China trade war and its implications for the fashion industry. Released on May 15, 2025, the episode features insightful discussions with BoF Retail Editor Kathleen Chen and BoF Correspondent and Tariff Expert Mark Bain.

US-China Trade Deal Details

The episode kicks off with the news from Monday, May 12, when the US and China announced a temporary agreement to reduce tariffs for three months. This agreement aimed to de-escalate the ongoing trade tensions that had significant repercussions across various industries, including fashion.

Mark Bain elaborates on the specifics of the deal:

"The US tariff on China goes from 145% down to 30% and the Chinese tariff on US goods went down from 125% to 10%" (01:05).

This reduction represented a substantial easing from previously punitive rates, though it did not eliminate tariffs entirely.

Immediate Reactions in the Fashion Industry

The announcement was met with mixed reactions. On one hand, fashion stocks experienced a significant rally, and business owners breathed a sigh of relief. On the other hand, industry insiders remained cautious about the long-term impact.

Brian Baskin notes the contrast between market optimism and industry worries:

"The market reacted positively, but some reports from professionals were more cautious" (05:02).

Kathleen Chen adds that despite the tariff reductions, uncertainty persists due to ongoing reciprocal tariffs and concerns about consumer confidence:

"There's just a lot of uncertainty still that lingers in the industry" (05:33).

Implications for Supply Chains and Production Hubs

A key focus of the discussion was the impact on global supply chains and emerging production hubs. With tariffs reduced but not eliminated, brands face the challenge of balancing costs and production locations.

Kathleen Chen shares insights from a conversation with the founder of Bog Bags:

"Immediately she got on the PH with her factory in China and green lit the orders that she had suspended for fall and holiday" (06:19).

However, the pursuit of diversification remains crucial. Brands like Bog Bags are maintaining a portion of their production in China while exploring alternatives in Vietnam and Sri Lanka, highlighting the ongoing strategy to mitigate risk.

Mark Bain addresses the broader implications:

"With China specifically we have less time than that with the other countries" (17:01).

He emphasizes that while the situation with China offers a 90-day window of reduced tariffs, the future remains uncertain, potentially affecting freight costs and overall pricing strategies.

Impact on Consumer Confidence and Pricing Strategies

The episode explores how brands are navigating consumer behavior amidst fluctuating tariffs. There's a noticeable shift toward stocking evergreen, core products that offer lower risk and consistent sales performance.

Kathleen Chen explains:

"Retailers are taking a lot more of a conservative approach when it comes to the assortment of items" (15:29).

Additionally, brands are employing various strategies to manage pricing in response to tariff adjustments. Some are transparent about price increases, attributing them to external factors like tariffs, while others opt to raise prices without explicit explanations.

Mark Bain advises:

"You got to tell them why, ideally, and you kind of want to pin it on somebody else" (21:36).

De Minimis Loophole Changes

A significant development discussed is the modification of the de minimis loophole, which affects direct-to-consumer brands like Shein and Temu. The Trump administration had previously closed this loophole, causing chaos for these companies by applying high tariffs on small parcels.

Mark Bain details the recent changes:

"Small parcels sent from China and Hong Kong will not be tariffed at 120%, it'll now be 54%" (18:33).

This adjustment, while not restoring pre-Trump conditions, provides some relief to e-commerce brands heavily reliant on cross-border shipments.

Brand Communication and Transparency

Effective communication with consumers regarding tariff-induced price changes is crucial. Brands are adopting different approaches, from transparent disclosures to strategic price adjustments without detailed explanations.

Kathleen Chen observes:

"A lot of brands have been raising prices just silently, right?" (22:01).

Conversely, some brands are leveraging the situation to foster transparency and maintain consumer trust by openly discussing the reasons behind price changes.

Best Practices for Navigating Post-Deal Uncertainty

The conversation highlights several best practices for brands to navigate the ongoing uncertainty in the trade landscape:

1. Diversify Supply Chains:
   Mark Bain emphasizes the importance of not relying on a single production location:

   "Diversify your supply chain. Don't count on any one place." (24:18).

2. Build Redundancy:
   Having backup production sites ensures resilience against unforeseen disruptions.

3. Strengthen Partnerships:
   Building stronger relationships with suppliers and vendors can lead to shared challenges and solutions, minimizing the impact on consumers.

4. Leverage Legal Solutions:
   Exploring tariff engineering and other legal avenues can help reduce costs. Mark Bain shares examples:

   "Adding fabric flocking on the bottom of the shoe to reclassify product categories" (27:35).

Future Outlook and Predictions

Looking ahead, both guests express cautious optimism. The recent US-China deal sets a precedent for future trade agreements, potentially leading to reduced tariffs with other countries involved in the fashion supply chain.

Mark Bain predicts:

"The expectation is we will see some other deals and that they'll probably lower the tariff rates from what we saw on April 2nd." (29:23).

However, the transient nature of the current agreement means that brands must remain agile and prepared to adapt to ongoing negotiations and policy changes.

Conclusion

The episode provides a comprehensive analysis of the temporary US-China trade deal and its multifaceted impact on the fashion industry. While the immediate reduction in tariffs offers a reprieve, the enduring uncertainty necessitates strategic planning, diversification, and transparent communication from brands to navigate the evolving trade landscape successfully.

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Note: For full access to the articles discussed in this episode, BOF Professional subscribers can find the links in the episode notes.

Transcript

[Brian Baskin]

Hello and welcome to the Debrief from the Business of Fashion, where each week we delve into Our most popular BoF professional stories with the correspondents who created them. I'm executive editor Brian Baskin.

[Sheena Butler Young]

And I'm senior correspondent Sheena Butler young.

[Brian Baskin]

On Monday, May 12, the US and China announced a deal that would have both countries lower tariffs for three months. The rest of the day played out like liberation day in reverse. Fashion stocks rallied and business owners across the industry breathed a huge sigh of relief. But is the trade war really over? And even if it is, can fashion ever go back to how things were on April 1st?

[Sheena Butler Young]

Joining us to discuss are BoF retail editor Kathleen Chen and BoF correspondent and tariff guru Mark Bain. Hi, Kat. Hi, Mark. Welcome to the Debrief podcast.

[Kathleen Chen]

Hey, guys.

[Mark Bain]

Hey, Sheena.

[Sheena Butler Young]

So I think we should start with what is becoming my favorite reoccurring opening question on the debrief, which is, Katmark, what just happened?

[Mark Bain]

So, on Monday, after a weekend of talks between the Trump administration and China, we got a deal that would essentially de escalate the trade war for a 90 day period. You know, we'll see what happens at the end of that period. But for now, the, the giant tariffs that the US And China had put on each other's goods have come down. Not all the way, but down significantly. So the US tariff on China goes from 145% down to 30% and the Chinese tariff on US goods went down from 125% to 10%.

[Sheena Butler Young]

Why did the US and China decide to ease tensions now? Like, what was driving the decision now? Or do we even know? Because it seems like we often don't know.

[Mark Bain]

I mean, I think it's just because both sides were aware that this was not going anywhere good. The analysis that I've generally seen is that the Trump administration blinked, that China really held firm and the US Is kind of the side that backed down first. I think it's clear that neither side really felt like things were going well. We saw the chaos that has already started to sort of unfold here in the US We've seen, you know, cargo volumes dropping, investors panicked, even just the.

[Kathleen Chen]

Recession projections going up in March and in April, coupled with the news that GDP contracted in the first quarter, I think there would have been pretty catastrophic effects on the economy at large. And Trump would have obviously taken the blame for that. And we can't say what were the conversations behind closed doors, but there was a lot, lot of doom and gloom, at least in the US Just about where the economy was headed.

[Brian Baskin]

All those cries of pain from the fashion industry that we've been reporting, someone was actually listening. It sounds like, well, I don't know.

[Mark Bain]

If they were listening to fashion, but they were certainly listening to other parts of the economy. Didn't Walmart and Target go and like have a meeting and basically say, like, we're looking at empty shelves in the months to come, like, this is, this is going to be bad.

[Brian Baskin]

I actually agree with you, Mark. I think that was a real turning point when two of the biggest retailers in the country said we're talking empty shell, you know, annoyed to panicked consumers. That's hard to brush off. And Kat, we'll talk in a little bit about a story you're working on on exactly this topic and how realistic that prospect is. But first, I did want to say, you know, even with what was announced on Monday, you know, the tariff landscape is looking quite different than it did a little over a month ago. Is that right, Mark?

[Mark Bain]

Yeah. I mean, I spoke yesterday with Steve Lamar, the president and CEO of American Apparel and Footwear association, you know, giant trade group. They talked a lot of brands. The way he described it to me is that 145% tariff was in effect an import ban. I mean, you know, the Trump administration never phrased it that way, but he's like, that is effectively what it did. It was saying like, you do not import products here from China. The costs are just too high. Like no company could like reasonably do that. Lowering that to 30% is a different situation. You know, it's, it's saying like, go ahead, import your stuff, but it's going to still be expensive. So it's a little bit more nuanced in this way that it like the tariffs apply on top of any existing tariffs that were already in place, like the most favored nation tariffs, as well as the usual customs duties on products and those vary by product. So some products, it could still be prohibitively expensive to import them. In some small companies, you know, a 30% tariff might still be too high to bear. But other companies are certainly saying like, okay, we can resume shipping. We can get things back. Like, this is a cost we can handle. So we'll see how things play out. But you know, some different scenarios.

[Brian Baskin]

I found the reaction quite interesting too. I mean, in the market, you know, stocks just zoomed up, basically erasing most or all the losses that a lot of companies had seen since April 2. But then the people that you and Kat talked to for the story that we ran on Tuesday really, really struck a Different tone. I mean, you know, Steve Lamar, who you mentioned, you know, he talked about how we're still going to see an inflationary situation. A lot of people saying, well, this is nice, but not quite enough to. To quiet our concerns.

[Kathleen Chen]

Yeah, for sure. I think, look, it's not just the China tariffs, right. There's still the reciprocal tariffs and deals being ironed out now, hopefully. And there's just a lot of uncertainty still that lingers in the industry. I think, you know, especially on the sort of analyst, industry observer side, it's even harder to say on behalf of brands that their headaches are over. Yeah, I think beyond what's going to happen with tariffs with dozens of countries, there's also the issue of consumer confidence and sentiment and whether there will be demand to drive sales for the products that do end up in the U.S.

[Brian Baskin]

Although, Kat, you spoke with a real live brand founder yesterday, minutes after this announcement. I mean, what was their reaction? I mean, they actually did take immediate action right after they heard this news, right?

[Kathleen Chen]

Yes, absolutely. So I spoke with the founder of Bog Bags. It's a brand of plastic washable beach bags. They're doing really, really well, actually expanding into wholesale this year.

[Brian Baskin]

Sort of the crocks of beach bags.

[Kathleen Chen]

Right, exactly. So the CEO Kim, she was able to tell me that immediately she got on the PH with her factory in China and green lit the orders that she had suspended for fall and holiday. She said that she basically went ahead with 90% of these products that were on hold. And so she definitely was celebrating yesterday.

[Brian Baskin]

But then the other half is she had started to look for alternatives to China and she's not exactly ending that search. Right?

[Kathleen Chen]

Yes. Yeah. I think actually a lot of retailers are in this boat. I think diversification, regardless of tariffs, it's a safer bet for any kind of business. So when the tariffs were at 145% on Chinese made goods, it was a very urgent quest for her and her team to establish relationships with factories in Vietnam and Sri Lanka. And funny enough, she said that it's actually the same factory owners from China, but just setting up camp in these other countries. But now it's looking like that she'll be able to still keep 40% of production in her Chinese factory and then figure out the rest, dividing between the two future factories in Vietnam and Sri Lanka.

[Sheena Butler Young]

So funny, it's like a classic negotiation thing that you do. You tell people, oh, it's going to be 150% and then you're like, actually it's 30%. It feels like a relief but 30% to Mark's point, isn't nothing like it's still something. It's still a challenge. Challenge for brands. I wonder from where both of you sit there, there are these, you know, emerging production hubs or even larger than emerging, but like in Vietnam and Cambodia and India that were preparing for this windfall because China was going to face these really high tariffs. What's the impact on those production hubs now that they might not get this new business, if you will?

[Mark Bain]

I don't know how much preparation anyone could really do at this stage just because, you know, we have this 90 day pause on the country specific tariff and depending on what happens with those negotiations, the whole landscape could shift. Say you're Vietnam and you're banking on China having 145% tariff. And so everyone's going to come to you. The China tariff drops down, say negotiations don't go well, you still have a high tariff. People might go to China or to somewhere else entirely. I mean, that's, that's kind of the issue.

[Sheena Butler Young]

I didn't hear America anywhere in the equation, which is also funny. It's like people are thinking about everywhere but America, which is like the initial premise here is that you're going to bring production back. So that, am I correct that that's still not really a plausible result here?

[Mark Bain]

Yeah, I don't think so. I mean, and that's sort of one of the big confusing points over and over with the way the Trump administration has negotiated all of this is like, is the point to negotiate more favorable deals with these other countries or to bring manufacturing back to the US because depending on what the goal is, your tariff levels would be different. And they talk about both as if they're the same thing. And it just creates a lot of confusion for businesses that are trying to plan for the future.

[Sheena Butler Young]

We'll be back with more of the debrief right after this.

[Olivia Davies]

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[Sheena Butler Young]

So this deal lasts about 90 days. What do both of you think is likely to happen next? Any predictions?

[Kathleen Chen]

I think that a lot of brands right now are going to take advantage of this 90 day window and go ahead and make their orders for Holiday. I think what I've heard is that we're sort of at the end of the window for orders for Holiday and this sort of came just in time and I'm sure that was part of the decision making with negotiating this agreement. But it's just in time to make the necessary orders for holiday and I think in terms of imminent fashion is going to be in a pretty solid position through the rest of the year.

[Brian Baskin]

Tell us more, what do you mean by that?

[Kathleen Chen]

Well, I think there were a lot of very alarming headlines that have come out in the past couple of weeks about cargo imports dropping drastically, dropping by 50% or more. Looking at week over week data, which I think is pretty misleading, most of the retailers that I've been following and founders that I've spoken to have pulled ahead on inventory inventory for summer back to school and now they're making the holiday orders. But essentially we're in a really good inventory position. Looking at earnings reports from Aritzia Revolve Tapestry, their inventory levels are up, which means that they do have products on the shelves and they will have products on the shelves in the coming weeks. Where the situation differs from the previous seasons is that retailers are taking a lot more of a conservative approach when it comes to the assortment of items and seasonal items and really emphasizing evergreen pieces, core pieces that they can replenish and know that they can sell. So yeah, I think from a consumer standpoint, if you're looking to shop for your summer wardrobe, if you know, in some states starting back to school shopping soon, I'm pretty confident that stock outs won't be super prevalent. That said, there's still very much a wait and see mentality among retailers. There's just so much anxiety over how the rest of the negotiations will play out.

[Brian Baskin]

What's the logic behind selling these evergreen products, you know, not, not stocking the Christmas sweaters, stocking the basic sweaters instead.

[Kathleen Chen]

There'S just less risk on that inventory. There's season after season worth of data that the, these are the sellable items. Right. If you're a brand and you know that your gray jersey T shirt, which is pretty seasonless, it's not really a trendy item. If you know that's something that has sold again and again, it's a safer bet to continue selling that item. And it's interesting actually. I've talked to a lot of, a lot of brands, smaller brands that are saying that they are willing to just shoulder maybe some of the costs that might go up. One of the trickiest parts is that no one really knows how big of a margin hit that they are going to take. And I think the right approach is if you can, if you have the cash strength to just continue doing business, that's where there will be opportunities to win because the truth of the matter is the American consumer is still shopping like as of April, the American consumer is still buying stuff.

[Sheena Butler Young]

A lot of the solutions that brands had initially come up with feel like they don't stick because of how quickly things change. I remember it was you, Mark, talking about brands slowing down their goods on like ships that were coming, like take the slowest route possible so that by the time your merchandise arrives or your inventory arrives, the trade war is over. Are those brands calling now and speeding up the ships? Like, what does that mean? Like, how does some of these previous solutions shake out now?

[Mark Bain]

Yeah, I mean that worked great. Yeah. I was going to say if you were one of those brands that like your stuff is now arriving in two weeks instead of two weeks ago, that worked out really well for you. But now the point that Kat made, now you have this 90 day window. Well, with China specifically we have less time than that with the other countries. But if you're importing from China, you have 90 days of certainty. After that, we have no idea what the case is going to be. The tariffs could remain just as they are. They could go back up, who knows. So I think we are going to see a lot of brands rushing to get product in. And one of the things that I heard from the trade groups that I talked to is that they're already keeping an eye on. As everyone rushes to get their products in, freight costs are going to go up because everyone is competing for that same space. So that's going to be an issue too. And then you still do have that 30% tariff. So everyone is kind of expecting some inflationary pressure just on a few different fronts there that are likely to raise prices.

[Brian Baskin]

The other big news out of this trade deal was a change to the de minimis loophole, my favorite loophole, which affects companies like Shein, Temu, Quints and others who ship directly from Chinese factories to American consumers. Mark, tell us what happened there. And again, whether we're resetting to a pre April 2nd world or if this is something that.

[Mark Bain]

So we are not resetting entirely. So the Trump administration closed this loophole that used to allow packages valued at up to $800 to enter the US duty free. That loophole closed on May 2, which caused all sorts of chaos for Shein and Temu. And these companies that you just mentioned as part of the deal yesterday, they didn't get rid of that exemption, but they cut the tariff rate down. So small parcel sent from main China and Hong Kong will not be tariffed at 120%, which is what they were previously. It'll now be 54%. And this news was a little bit confusing. It seemed to come some hours after the main announcement of the 90 day pause and there was even a Reuters story that was talking about how the de minimis loophole just remained in place. So, yeah, we are not back to pre Trump tariffs. We're in a new territory and we will see exactly how much a 54% tariff means on packages from Shein, Temu and those others.

[Brian Baskin]

Well, it's funny, it feels like almost an afterthought. Even though in our world it's such a big deal. What happens to Sheen and temu? I mean, I think I found out about this because Bloomberg or Reuters had written a story and the White House literally sent an email saying, actually we did lower de minimis tariffs.

[Kathleen Chen]

I think for a lot of consumers, it's not even like they're gonna shop and then they're expecting to see extra taxes. I think all the news about Shein and Temu has been enough to just keep that customer away. I feel like there might be this attitude of like, all right, well, we had a good run of really, really cheap stuff for a couple of years.

[Sheena Butler Young]

And maybe we had enough of it. I was going to ask and reminded me of, I was thinking about how do you communicate to your customers, if at all, about all of the de minimis sounds like such a legal government kind of thing. And then tariffs, like, sure, they're in the mainstream conversation, but should brands be marketing or talking to their customers about all of this and how do you do it? Like, I know there are some companies that have talked about putting the actual tariff, this is mostly an automobile, but like putting it on the price tag so consumers know you're paying this extra 30% and this is what it is. And then the cost of the vehicle is. Is this other cost. What have you heard? What do you make of how brands could or should communicate around tariffs? Maybe not de minimis. I don't see Shein and Timu having a conversation about de minimis, but maybe the tariffs.

[Brian Baskin]

I saw an email from a baby brand. I'm not sure what baby products they sell, but they are having a live AMA with their customers about tariffs, which seems quite extreme to me.

[Sheena Butler Young]

I got one too. I got an email not from a baby brand but from like a big retail conference that are slashing the prices of their tickets because the tariffs went down. I don't know if anyone else got this, but people are definitely promoting or like marketing around Tariffs in a way that I think people is quite funny. I don't know what tar, what would have been tariffed at this retail conference ticket, but they definitely used it to have a conversation and promote.

[Mark Bain]

Yeah, I've gotten emails, too. Just I think you kind of have to explain to your customer at some point, like, if you're going to raise your prices significantly, you got to tell them why, ideally, and you kind of want to pin it on somebody else and not just be like, hey, we're just raising prices. You kind of want to say, like, there's a reason for this. So I've definitely gotten some emails from companies saying that, like, this is the situation.

[Kathleen Chen]

Our colleague Haley actually wrote a really great piece about this that published toward the end of April about how brands are being very transparent about price increases to consumers. And that has been the conventional wisdom that, you know, if you're going to raise your prices, say something on the website, send an email. Although the truth of the matter is that a lot of brands have been raising prices just silently, right? Like, without acknowledging prices have gone up. And there have been a lot of brands who were able to observe their elasticity, their ability to continue raising these prices and continuing to drive sales. And so I think it really depends on the brand and sort of its value proposition.

[Brian Baskin]

I also think Monday kind of changed the thinking at a lot of brands because you look pretty smart now if you didn't make a big deal about tariffs and the price increases that were coming, because now they're not necessarily coming. And as you said, lots of brands are raising prices, and Trump is doing plenty of talking about tariffs himself. So consumers are generally aware of that this is going on, and it's actually maybe a good time to just sneak in a price increase whether you manufacture in China or not, because people just assume it's Trump's fault.

[Sheena Butler Young]

Is that advice is not actionable advice.

[Brian Baskin]

And do not hold me accountable if your business subsequently tanks.

[Sheena Butler Young]

At this juncture, we've talked about sort of navigating frenetic or unrelenting uncertainty. Are there any best practices that have emerged just to kind of tie this all together that brands should abide by right now or that they are abiding by right now? We've seen a mix of, you know, you, maybe you don't do anything, but then that doesn't seem smart either, like not being agile, having a plan in place. But then if you have a plan in place, be prepared to pivot the plan. We also saw brands actually already close their doors. We mentioned this in the earlier episode of the debrief, like there were brands on Instagram posting that they just know they won't survive the tariffs and they're done. You can't really reverse that anymore. Any thoughts on emerging best practices that you've heard from brands or industry experts?

[Mark Bain]

I mean, for me and Kat made this point earlier, like, diversify your supply chain. Don't count on any one place. And another thing I've heard is also like specifically have some redundancy built in, so if one location becomes untenable for some reason, you can shift to another spot. You know, if you're making your single most valuable product in one factory in China and something goes wrong there, you might have a real issue. That's a big one that I've heard over and over. And that's something we learned like aside from the tariffs, just from COVID from supply chain disruptions over the past several years, like everyone has been trying to diversify and build in some layer of redundancy.

[Kathleen Chen]

Totally, totally. Well, another thing that I've heard is this idea of partnership. Now is a really great time to forge stronger ties to your suppliers, to your vendors, to even to your retail partners. I think before price increases, a lot of what brands are assessing is how they can work together with all of their partners through distribution and supply chain so that everyone takes a little bit of a hit to minimize what is ultimately passed on to the customer. And you know, I think Sheena, when you mention brands are going on Instagram saying that this is it for them, these are brands, and not to disparage them, but my guess would be that they don't have extremely strong ties to their factories. They are brands that their factories probably are not prioritizing. Because if I'm a manufacturer and I work with, let's say half a dozen brands, whoever is bringing in the most volume, I'm going to be most inclined to take a margin hit alongside. And so yeah, I think partnership is the name of the game. But Mark and I also had a really fun conversation with a customs lawyer last Friday. Mark, you're maybe doing a story on this, right? If you want to walk through some of the more legal oriented solutions.

[Mark Bain]

Yeah, I mean there are like little things you can do also to like bring down your, like the fees you're paying. There's something called like the, the first sale declaration, basically. Like if you're a brand in Europe and you buy something from China, import it into Europe and then send it on to the U.S. if the U.S. sees that it's coming from Europe, it's going to. To put tariffs on you at one rate. This is. This is not the best example because, you know, the eu, you would actually have a lower tariff than from China. But what you can actually do is wherever you initially bought the product, you can declare that as the country of origin and, you know, use that as the. The country that the tariff rate would apply to. There are other things brands are doing, like, you know, I'm sure you've heard of, like, tariff engineering. There's the famous Converse example, adding the, like, fabric flocking on the bottom of the shoe. Apparently they. I think the Biden admin sort of closed the loophole in that, so they switched to doing some, like, leather flocking. If I remember right.

[Sheena Butler Young]

You have to tell us what that is. I don't know. The famous Converse workaround, putting like, material at the bottom of the shoe that gets you out of a certain tariff or tax.

[Mark Bain]

So I. I think this goes back a long way to the US Trying to protect the rubber industry here. And so there were high tariffs on, like, rub athletic shoes with rubber soles. And so what they figured out was if you put these, like, little microfibers of fabric on the bottom of the sole, you could claim that it's a fabric sole, not a rubber sole, and be taxed at a different rate. And there are all sorts of weird little things like this. Like Columbia Sportswear has talked about how, like, if you put pockets in, I think the lower half of a woman's blouse, you can claim it as, like, a different product category and get the rates lowered. And there are other things you can do if you, like, raise the level of natural fibers over synthetics, that sort of stuff. None of these things on its own is gonna completely dodge every bullet out there, but together they can add up to a pretty significant amount, like 30% savings, potentially.

[Kathleen Chen]

One of the most interesting things that I thought that the customs lawyer said was he said that they're dusting off a lot of, like, old workarounds because, well, this was my impression. Correct me if I misunderstood, Mark, is that in the past 15, 20 years, trade has opened up in such a way that these little tricks were no longer necessary. But now with, you know, all these tariffs on the horizon, that they're dusting off this old playbook of tricks.

[Sheena Butler Young]

That's awesome. I love a good loophole. I feel like we should invoice people for this, like, legal advice. These are really nifty loopholes.

[Brian Baskin]

No matter what happens with China, there are still major potential tariffs looming over a lot of other countries where the fashion industry does its manufacturing. And none of that's been resolved yet.

[Olivia Davies]

Right.

[Brian Baskin]

I mean, does any of anything that happened on Monday affect what happens in Vietnam? Let's say.

[Mark Bain]

Well, as I understand it, you know, people are at least hopeful that this deal cause you know, China was sort of maybe the most intractable sort of situation that US Trade was facing. It creates hope that we could get deals with other countries soonish. One possible scenario that would kind of prevent that is if the China deal takes up all the administration's attention and they push these other deals to the side. But they've said that they're working on these other deals. The other thing, Matt Priest, the the president and CEO of the Footwear Distributors and Retailers of America told me that in his opinion, this China deal sort of sets the bar for what these other trade deals could look like too. So if China came down from 145% to 30%, there's no reason to expect that a 46% tariff on Vietnam would stay in place. Most likely it would come down as well, potentially 230% or below that. So the expectation is we will see some other deals and that they'll probably lower the tariff rates from what we saw on April 2nd.

[Sheena Butler Young]

Mark Kat, thanks so much for joining us today.

[Kathleen Chen]

Of course, it was my pleasure.

[Mark Bain]

Thanks so much.

[Sheena Butler Young]

Please be sure to check out Mark and Kat's article. With the trade war on pause, here's what's next for fashion. And look out for another article from Katie Cap coming in the next few days. These and other stories are available to BOF Professional subscribers only and you can find the links in the episode notes. You've been listening to the Debrief, produced and edited by Olivia Davies and Eric Brea. I'm Sheena Butler Young.

[Brian Baskin]

And I'm Brian Baskin. We'll be back next week with a new episode. Thanks so much for joining us and be sure to follow us wherever you get your podcasts.

[Olivia Davies]

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[Brian Baskin]

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