Fashion stocks rallied Wednesday as US president Donald Trump pulled back on the most severe tariffs in his global trade war — with one big exception: China.
With global markets in a tailspin, Trump said on his social-media platform, Truth Social, that he had authorised a 90-day pause on the country-specific tariffs he announced last week, excluding those on China.
Instead of the heftier duties he had originally revealed, many of which fell hardest on apparel manufacturing countries, the US will impose a universal 10 percent tariff on all trading partners, but it will increase levies on China from the previously announced level up to 125 percent. Earlier in the day China had struck back with its own retaliatory tariffs.
Markets surged following news of the pause, with fashion companies, many of which had seen their stock prices plummet over the past week, among those enjoying a rebound. Shares of Michael Kors owner Capri jumped over 30 percent, while Vans and Timberland owner VF Corp rose 28 percent. Levi’s climbed 20 percent. Ralph Lauren’s stock price rose 14 percent, and Nike’s was up 11 percent.
The White House tried to frame the reversal as part of a strategy to bring other nations to the bargaining table. Trump and his top trade advisor, Peter Navarro, have frequently decried what they deem to be the unfair barriers to US goods imposed by other countries. In recent days, a number of nations such as Vietnam, Indonesia, India and more have signaled their willingness to negotiate, though Trump and Navarro have also described the tariffs as permanent and a way to revive US manufacturing.
The turn of events is, at least temporarily, a relief for many fashion companies. The US is one of the top markets in the world for clothing and footwear, and virtually every item bought in the country is produced outside its borders. The country-specific tariffs Trump revealed on April 2 left many fashion businesses stunned as the highest duties targeted a number of key sourcing destinations, such as Vietnam and Cambodia.
The week since has been chaotic as many brands and retailers have scrambled to devise strategies to navigate the situation. Matt Priest, president and chief executive of Footwear Distributors and Retailers of America, a large US trade group, recently told The Business of Fashion that many of its members were likening the situation to the Covid crisis.
The extraordinary tariffs on China, the largest source of US clothing imports, will still create challenges for many businesses, but the pause on the other tariffs provides some breathing room — and hope that permanent deals might be possible.