Clothing and accessories retailers across the United States are delaying orders and freezing hiring ahead of tariff hikes that take effect Wednesday on products imported from Vietnam and China.
These businesses, much like Nike (NKE.N) and Lululemon (LULU.O), face an impossible choice: offset the cost of tariffs by raising prices by some 40% - potentially cratering sales - or absorb the cost increase and further strain already-thin profit margins.
Unlike their bigger rivals, however, the smaller clothing and shoemakers lack vast supply chains, making them highly dependent on Vietnam and China.
Ian Rosenberger, CEO of Day Owl, a six-year-old New York company that makes backpacks in Vietnam, has paused future orders. Unless there's a deal to significantly lower Vietnamese tariffs, Rosenberger estimates Day Owl has 30 days before it folds.
But with a production cycle of about 100 days, waiting much longer risks missing the crucial back-to-school shopping season. "The damage is already significant enough to be an existential threat," he said, adding that his seven employees have been asking if they should prepare to be out of a job.
Rosenberger said tariffs would increase his duty to $22 from from $5, prompting him to increase the price of his top-end bag to $212 from from $155.
Footwear Distributors and Retailers of America - whose members include Nike, Walmart, Skechers, and Deckers - calculated that a $155 running shoe made in Vietnam would have to be marked up to $220 in U.S. stores to offset the 46% tariff.
VIETNAM VITAL
Vietnam has developed specialised factories producing everything from high-tech running shoes to track suits. It's the second-biggest source of clothes and shoes imported to the U.S. after China, and a key manufacturing hub for Nike, Adidas (ADSGn.DE) and others.
Vietnam has asked for a 45-day delay in the imposition of U.S. tariffs, and said it would buy more American goods, after Trump and Vietnamese leader To Lam agreed on Friday to discuss a deal to remove the levies.
Nike shares have dropped 14% since markets closed on April 2, the day Trump announced tariffs, while Adidas shares lost 16%, Puma shares are down 18%, and North Face-owner VF Corp (VFC.N) shares fell 31%.
These big companies work with factories around the world, providing them with some negotiating clout to split tariff costs with suppliers. VF Corp is "well diversified across our supply chain to manage tariffs," a spokesman said.
Small businesses, such as Seattle, Washington-based women's running brand Oiselle, have less capacity to absorb the cost, and fewer resources to plan alternatives.
Arielle Knutson, CEO of Oiselle, has asked her 14 full-time employees to work on two or three tariff contingency plans, on top of their usual jobs.
Oiselle, which sources leggings, sports bras and running tops from Vietnam, has delayed spring 2026 orders that would ordinarily be going out now.
Ordering the right amount of product - and not being stuck with too much cash tied up in inventory - is key. "It's an almost impossible needle to thread," Knutson said.
Ketchum, Idaho-based outerwear brand Wild Rye sources ski jackets and mountain biking pants from suppliers in China, which will be subject to an additional 34% tariff starting Wednesday.
"This is going to create a huge amount of strain on the business," said founder Cassie Abel. She has frozen hiring and any raises for her 11 employees, and said the business would have to absorb part of the tariff increase to avoid hiking prices by 40%.
Day Owl, Oiselle, and Wild Rye said they had previously tried to produce domestically but quality was poor, so moving production to the U.S. isn't practical.
