By Hilary Douwes | July 31, 2025
Faculty research shows impact of tariffs and economic uncertainty on industry
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 University of Delaware faculty member 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.
UDaily spoke with Lu about his insights into the findings.
Q: What surprised you about the survey results?
Lu: 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.
Q: 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?
Lu: 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.