China Tariff Hikes: What Small Fashion Brands Need to Know

As the landscape of global trade continues to evolve, small and medium-sized apparel brands are facing new challenges, particularly with the recent increase in Chinese tariffs. The impact on manufacturing costs, supply chain strategies, and potential shifts in production locations can be daunting. However, these challenges also present opportunities for brands to re-evaluate and adapt their strategies to remain competitive and efficient in the ever-changing market.

We’ve gathered key insights and strategies to help apparel brands navigate the complexities of increased Chinese tariffs and maintain a steady course. Let’s dive into some thoughtful questions and answers that can guide brands through this challenging period.

IS CHINESE MANUFACTURING STILL A VIABLE OPTION FOR SMALL AND MEDIUM-SIZED APPAREL BRANDS?

Despite the rise in tariffs, Chinese manufacturing remains a viable and cost-effective option for many small and medium-sized apparel brands. Here’s why:

• Competitive Pricing: Even with the added tariffs, Chinese manufacturing still generally offers better pricing compared to US-based production.

• Flexible Order Quantities: Many Chinese factories are open to producing smaller minimum order quantities (MOQs) of 100-300 units, making it easier for small brands to manage production costs.

• Quality Manufacturing: Small, family-owned factories in China are known for producing high-quality goods at competitive prices, which continues to be a major draw for apparel brands looking to maintain their margins.

WHAT STRATEGIES SHOULD SMALL BRANDS USE TO ADAPT THEIR SUPPLY CHAINS IN RESPONSE TO TARIFFS?

Small brands need to adopt strategic approaches to adapt their supply chains. Here are some key tactics to consider:

• DDP/Landed Pricing: Negotiate with factories to split the costs of tariffs. With Delivered Duty Paid (DDP) pricing, the factory takes responsibility for the costs associated with tariffs, ensuring that the brand doesn’t have to shoulder the burden.

• Air vs. Sea Freight: Consider the trade-off between air and sea freight. Air shipping might be more expensive, but it can help brands stay agile and manage delays in production and shipping times.

• Annual Volume Negotiation: Negotiating with factories based on projected annual volumes can help secure the best prices, even amidst fluctuating tariffs.

IS US MANUFACTURING A VIABLE ALTERNATIVE FOR CLOTHING BRANDS?

While many brands may be considering a switch to US manufacturing, it’s important to weigh the pros and cons:

• Higher Production Costs: US manufacturing is generally more expensive than Chinese manufacturing, particularly because much of the necessary production infrastructure (such as YKK zippers) still relies on overseas suppliers.

• Quality vs. Cost: While US production offers lower minimum order quantities (MOQs), it doesn't necessarily guarantee better quality, and the higher per-unit costs may limit the profitability of smaller brands.

• Limited Vertical Integration: US manufacturing is often less vertically integrated than in other regions, meaning brands will have to source many materials and components from abroad, which can still incur tariffs and additional costs.

HOW CAN STATELESS HELP BRANDS NAVIGATE THESE CHALLENGES

Consulting agencies can play a crucial role in helping brands stay ahead of the game by offering:

• Expert Navigation of Manufacturing Options: Stateless can help brands explore a wide range of manufacturing options across multiple regions, offering insights into the best-fit locations for different products.

• Protecting Brands from Unfavorable Deals: Stateless can ensure brands don’t get taken advantage of by factories, helping to negotiate better deals based on their needs and leveraging the agency's industry expertise.

• Split Production Strategies: By diversifying production across different locations, Stateless can help brands find the right factory for specific product types. Certain styles might be better produced in certain geographic regions due to specialized expertise or access to materials.

• Direct Factory Relationships: Stateless has direct relationships with factories around the world, ensuring that they receive preferential pricing and the highest level of trust and reliability. This approach minimizes the risks of relying on a single manufacturing source and fosters flexibility in production.

If you’re a small or medium-sized apparel brand navigating the complexities of tariffs and seeking to optimize your manufacturing strategy, we’re here to help! At Stateless, we’ve fostered direct relationships with trusted factories globally, including our own factory in China. We help brands like yours remain agile, reduce costs, and scale successfully.

Want to learn more? Complete the inquiry form here and schedule a free consultation today! We’d love to discuss how we can support your brand's manufacturing needs and help you make the best decisions moving forward.