(Original Caption) 06/08/1945. From 1919 to 1922, Harry S. Truman, shown in foreground, was … More
Call it like it is. Retail for apparel and footwear is in serious trouble. Tariffs are bad for business.
New moms will be struggling to clothe their children, teenagers can’t afford new fast-fashion, young adults might abandon department stores to head for off-price clothing, and lines are starting to form in front of Goodwill Industry stores. Hard to imagine, but did anyone think the trade policies of President Trump could disrobe America? After all, the real estate mogul Donald J. Trump once had his own fashion line, First Lady Melania Trump was a fashion model, and daughter Ivanka Trump had her own fashion line and also had a definitive flair for design.
President Trump is not the only president who dabbled in fashion. Former President Harry Truman once ran a clothing store that was called Truman & Jacobson in Kansas City, Missouri – but he encouraged people to buy clothes. Sadly, President Trump seems to be headed in a seriously different direction.
In our current tariff environment, retail orders are being cancelled and clothing racks could run dry. Clever shoppers are stocking up for winter and, at the same time, moving closer to the off-price retailers and the Salvation Army. Long before most America ever heard of the word tariff, clothing in the USA carried a steep tax burden. Now, with the latest round of tariffs – there are cases for retailers where it is cheaper to cancel new product up front – versus importing into America and selling it for a loss.
Clothing and footwear retailers generally survive the slower spring season, but they need to make their money in the fall. The mad rush to profits starts on (or about) Black Friday, which was given that name because retail financial red ink turns black around that time. This year, some retailers are will probably want to call it NAKED Friday, as that may be the time they run out of clothes.
Perhaps some New Yorkers will recall the street vendor in Times Square who used to sell ten (very thin) white “I Love NY” tee shirts for ten dollars.
I remember Manny, because I walked by him every day going to work in the fashion district. He repeatedly shouted: get your shirts now “Ten for Ten” – best deal in New York.”
As time passed and my responsibilities increased, Manny became my fashion market barometer. When market conditions softened, he would simply adjust his pricing downwards until one particularly bad year Manny arrived at five (very thin) white shirts for ten dollars. Eventually, Manny’s procurement conditions tanked. He changed his inventory to ten dollars per (very thin) white shirt. Tourists stopped buying the shirts because the price was too high and the value wasn’t there – and eventually Manny closed his shop. It seems ironic that the same market conditions are repeating today.
When Manny was folding up his table for the last time, I asked him what’s next? Without hesitation, he said: “I guess we all go naked.”
The painful truth about Trump’s tax trend is that the actual tariffs, the proposed tariffs, the reciprocal tariffs, and the paused tariffs have raised apparel and footwear prices far beyond what normal people can afford. Pity the sneaker-head who is now shopping for his footwear at flea markets. Naked is as naked does.
One thing the Trump Administration has been told, but doesn’t want to hear, is that apparel & footwear brands / retailers are probably the most tortured tariff group. The industry has been paying significant tariffs or duties for 95 years and enough is enough. Back in 2018, when the Trump tariffs first appeared, apparel and footwear were only 6% of all imports into the USA – but already paid about half of all tariffs collected.
Those 95-year-old Smoot-Hawley tariffs are still in existence today and President Trump has added more tax (on top of the tariffs he added the last time he was in office)…….which, given the high cost of product, is completely unsustainable. Take China for instance. President Trump has added 145% to America’s biggest supplier of these type of clothing products. Naked is as naked does.
None of this, of course, affects President Trump. He doesn’t regularly shop in stores or online. In fact, the President basically has only two wardrobes. In Washington, he generally wears a navy suit, white shirt, red or blue tie. In Florida (or on any golf course) he wears khaki or black pants, a white knit shirt, and his famous red hat.
Apparel and footwear tariffs are an enigma. Responsible brands, manufacturers, and retailers have worked hard to keep prices down, even when they already pay a steep tax. When the average duty rate in America was 1.4%……the fashion industry was hovering around 11%. What sounds like a domestic protected industry is the reverse. Only about 3% of apparel products are still made in America, the rest is imported and, frankly, it’s not coming back. All these tariffs do is make consumers pay more for what they already have – plus, the tariffs will generate retail bankruptcies and job losses. Consumers will only pay so much for an item – before they stop buying it – and that’s reality.
Fashion retail is currently in the last minute of a twostep shuffle. Panicked retailers have already delayed or cancelled fall purchases. Some have moved their purchases to different geographic locations and supply chains are in turmoil. Even if President Trump reverses his tariffs today, the damage already done – because the all-important fall retail market is already in play. There will either be less product on the shelves, or the prices will be so high that sales will slow and some jobs will be lost.
In 1837, according to Hans Christian Andersen’s folktale “The Emperor’s New Clothes”, two con men tried a similar gig like what we are witnessing today. They claimed to make clothes that could not be seen by people who were “incompetent or stupid.” The mighty Emperor loved clothes very much and hired the two men to make his wardrobe. Everyone pretended to see something that simply was not there – because they didn’t want to appear stupid. Eventually, the Emperor marched through town to show off his new garments and, finally, an honest boy called out that “the Emperor has no clothes.”
Liberation Day may not be exactly what the President Trump predicted. In fact, Americans may end up getting liberated from our clothes. Naked is as naked does.