Sometimes it takes an external shock to break “business as usual” and force real change. Liberation Day tariffs did exactly that. In the 10 months since their rollout—through threats, hikes and reversals—one thing has remained constant: brands have doubled down on product differentiation while cutting waste and stripping costs out of the system in efforts to hold prices.
The companies that will struggle in 2026 are the ones still treating tariffs as a sourcing issue. The ones that will win are treating tariffs as a strategic design, pricing and governance issue across the entire value chain.
Here, apparel leaders share how the pressure has reshaped the way they design and manufacture, and how the final costs are ultimately absorbed—or passed on to the consumer.
Price
Pricing has become a high-wire act. Brands are trying to protect margins without spooking consumers, weighing modest price increases against tighter promotions, smarter tariff mitigation and selective absorption of costs. The result is a more surgical approach; one that treats tariffs not as a temporary disruption, but as a structural reality shaping how and where value can still be found.
Jawed (JB) Bhinder, CRM & Business Development for M5 Groupe on what retailers still get wrong about tariffs as we move into 2026: “Many still have a misconception about tariffs, thinking we’ve already ‘managed through.’ What I see across brands/retailers is a dangerous normalization—executives believe they’ve adapted, when in reality they’ve only absorbed short-term pain. Tariffs are no longer a shock event; they are a structural tax on inefficiency. What executives still get wrong is assuming they can offset tariffs indefinitely through supplier pressure or internal margin compression. That model is already breaking.”
Bjorn Bengtsson, chief product officer, Untuckit on how to manage price hikes and promotions: “I think everybody in the industry is shadow boxing a little bit here, looking at each other to see who goes first and who starts with what. My anticipation is that everybody is going to have to increase prices around 5 to 7%.
“Those raising prices first are those who work on slimmer margins, which is usually brands. They have no choice. Otherwise, they take it on the margin points, which I can’t imagine anyone really wants to do. The economy is going to be a little weak but people are still shopping a little bit. Do you want to scare them away with stronger prices? How do you want to approach it? There’s a couple of different ways of doing it. You can also increase prices and be a little bit more promotional instead.
“So if you want to do 30 off, maybe you want to raise the prices. It’s hard to not raise prices and be very promotional this year. So we might see from the promotional guys, we might see smaller discounts, like 20% or even 15% off instead of 30% off. And from the guys who have more of a full-price strategy, I expect to see them raising prices a little bit, especially smaller businesses.”
Bengtsson on if or how to message price increases to the consumer: “[Announcing a tariff-induced price increase] was a thought in the beginning, but we decided against that. We feel that customers are used to price increases right now—they’re paying more for their car, for everything—so I don’t think there’s going to be a backlash against the garment industry. It’s really tough to measure consumer sentiments right now, besides the fact that unemployment numbers are up and people probably are holding on to their wallets a little bit. The impact on business is going to be hard to see until we move into April and the weather starts to turn and we go to comp April sales.”
Paul Walsh, CEO of Newtimes Development Ltd., on pricing novelty vs core products: “When you look at the price increases that started to filter through from, say, Q3, Q4 of last year, pretty much everyone took a very thoughtful, targeted approach, mainly on the novelty side. Where you have differentiation, you can rely on the strength of the product itself to sell at that price. Some customers were surprised to find that when they push [novelty] price points up, it really hasn’t materially affected sales. So, when you have a really well-selling product line and you raise the price $5 or $10, I haven’t seen any major decline in demand. There was an elasticity there they may not have realized.
“With core programs, however, we’ve seen a lot more resistance to raise retail prices. These are typically repeat customers so it’s easy to compare prices with other similar product.”
Walsh on chase and repeat orders: “The other challenge is that if you only have a certain amount of open-to-buy, and your landed prices are going up, then typically you’ll need to buy less units. So we’ve seen some order quantities slightly reducing, based simply on cash flow constraints and purchasing power. As a consequence, we’re seeing a lot more chase and repeat orders on good-selling items than we would have in the past. Speed is also important, so there’s impact on the purchasing at the vendor and the pattern of placements.”
David Swartz, senior equity analyst, consumer equity research at financial services firm Morningstar, on competition and consumer demand: “Companies don’t know what to do. If others start raising prices, they may raise prices too. If other companies refuse to raise prices, they might not be able to either, which will hurt their margins. The ultimate issue is consumer demand. Will that fall off? Consumer confidence is very low, and the political and economic issues affecting the US right now are probably the number one concern.
“So far, it seems like they’ve been able to get through it pretty well, but that could change. It’s a bigger concern for companies that have been struggling, like Nike. Their turnaround is already taking longer than expected, partly because China’s economy is not in great shape, but if the US were to have a bigger issue, then that would hurt them.”
Bengtsson of Untuckit on first sale and other tariff mitigation strategies: “Let’s say that a shirt for Untuckit costs $20 but it costs the manufacturer $17.50 to make it. Typically, we will bring it in at $20 and pay the tariff on $20. Now, we’re asking the suppliers to bring it in, pay the tariff on $17.50, and save us some money. Under First sale, they have the right to bring in the goods at their cost, not the price we sell it for. That’s totally legal, as long as it’s set up as per Custom borders instructions with the brokers and the lawyers. So we are doing things of that nature.”
Eric Fisch, managing director of HSBC on how retailers are keeping price increases manageable. “Companies are looking to change the product to improve the competitiveness and the pricing. They’re putting in place different what I call corporate or supply chain structures, like first cost or buying LDP [landed duty paid] or other structures that essentially allow them to mitigate some of the tariff impact. When you look at all these things as a whole, if I were to generalize, I would say we will continue to see apparel prices increase, because people will look to return to historical margin levels. But I don’t think it’s going to have a dollar-for-dollar impact because of all these different factors on moving production and finding ways to cut costs.”
Product
Product is where tariffs become tangible. Rather than cutting corners, brands and retailers are redesigning with intention—simplifying construction, rethinking materials and engineering garments to reduce duty exposure without sacrificing perceived quality. What’s emerging is a more disciplined approach to product development, where every detail is scrutinized for both cost and classification impact.
Vivek Bhatnagar, founder and visionary leader of Fusion Group, on how products have evolved. “Dropping quality is not the essence, because that is impossible to pass under the radar at a retail level, so that is not going to be compromised. But people are getting smarter with changes to the product. Shortening of length, remove a zipper, deconstruct the garment. That’s what we do. We have gone back to our customers, and the same dress we were shipping earlier with zippers, we have changed the patterns, made it simpler with buttons, bringing the cost down 40 cents, 50 cents and so on. Everything adds up. That’s what’s happening.”
Jon Langman, partner, AlixPartners, on merchandise architecture: “The practice of design-to-value or design-to-cost has become even more important and it is entering a new phase that we call ‘design-to-tariff.’ The basic concept is companies can make small changes to the product design or to the fabric choice to reduce the duty load. For example, Columbia Sportswear famously added pockets below the waist to reclassify a ‘blouse’ (27% duty) as an ‘other garment’ (16% duty).
“SKU rationalization has likewise accelerated. We see companies cutting low-volume SKUs with a high tariff load or where shifting sourcing country is difficult. Cutting the tail also helps negotiate better pricing and terms on remaining SKUs, which helps offset at least some of the added tariff load.
“Underpinning these two trends is a heavier emphasis on merchandising analytics, price elasticity modeling and customer segmentation, all of which help retailers decide where they can take price and where they need to take action to reduce cost or completely eliminate a SKU. As an example, we’re currently helping a private equity portfolio company with multiple fashion brands update their merchandise architecture through customer and price point architecture modeling and assortment productivity analysis.”
Walsh on why retailers are more open to different options: “Generally, the customers have been a lot more interested to see a wider variety of options in fabrics. In the past, you might give three or four options, and now they want a wider spread of options, which have different fiber content. [For instance] does it qualify synthetic under higher duty rate versus cotton?
“They’re also more open to look at different blends of fabric together, which comes with some cost benefit. What hasn’t gone away at the end of the day, is customers still have to make sure that fabric is fit for purpose, in terms of the right hand feel, appearance and the drape. I think those things are typically not compromised, but they’re more willing to look at things like weights of fabrics and contents of fabrics, if there is a price saving with not much material difference on that look and feel and drape.”
Swartz on overproduction and inventory control: “The problem of this whole situation is that the industry massively overproduces every single year. By some estimates, like 40%, which is why you see stories about the beaches in Ghana being flooded with garbage clothes dumped off some ship. The factories to some degree benefit from this overproduction, but it would be good for the industry as a whole to cut back on production. That’s probably more of what we’re seeing.
“The effort is going to be inventory control. If they can do a better job of meeting demand rather than constantly overproducing, that would help their margins and also their supply chain situation. It’s just wasted money.
“This is one area where AI is going to be important to forecast demand better than ever before. There was a funny story where a CEO said on a call that when he came to the company, they were having such problems with their supply chain that they were trying to sell winter coats in Puerto Rico. AI could potentially help manage inventory better, which could help margins, and help the overproduction issue for the whole industry.
