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Brands forced to absorb tariff cost or hike prices by 40%

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Businesses freeze salaries and hiring, cut sales forecasts

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Small businesses don't have time to wait for trade deal

By Helen Reid and Nicholas P. Brown

LONDON/NEW YORK, April 8 (Reuters) - Clothing and

accessories retailers across the United States are delaying

orders and freezing hiring ahead of tariff hikes that take

effect Wednesday on products imported from Vietnam and China.

These businesses, much like Nike ( NKE ) and Lululemon

, face an impossible choice: offset the cost of tariffs

by raising prices by some 40% - potentially cratering sales - or

absorb the cost increase and further strain already-thin profit

margins.

Unlike their bigger rivals, however, the smaller clothing

and shoemakers lack vast supply chains, making them highly

dependent on Vietnam and China.

Ian Rosenberger, CEO of Day Owl, a six-year-old New York

company that makes backpacks in Vietnam, has paused future

orders. Unless there's a deal to significantly lower Vietnamese

tariffs, Rosenberger estimates Day Owl has 30 days before it

folds.

But with a production cycle of about 100 days, waiting much

longer risks missing the crucial back-to-school shopping season.

"The damage is already significant enough to be an existential

threat," he said, adding that his seven employees have been

asking if they should prepare to be out of a job.

Rosenberger said tariffs would increase his duty to $22 from

from $5, prompting him to increase the price of his top-end bag

to $212 from from $155.

Footwear Distributors and Retailers of America - whose

members include Nike ( NKE ), Walmart, Skechers, and Deckers -

calculated that a $155 running shoe made in Vietnam would have

to be marked up to $220 in U.S. stores to offset the 46% tariff.

VIETNAM VITAL

Vietnam has developed specialised factories producing

everything from high-tech running shoes to track suits. It's the

second-biggest source of clothes and shoes imported to the U.S.

after China, and a key manufacturing hub for Nike ( NKE ), Adidas

and others.

Vietnam has asked for a 45-day delay in the imposition of

U.S. tariffs, and said it would buy more American goods, after

Trump and Vietnamese leader To Lam agreed on Friday to discuss a

deal to remove the levies.

Nike ( NKE ) shares have dropped 14% since markets closed on April

2, the day Trump announced tariffs, while Adidas shares lost

16%, Puma shares are down 18%, and North Face-owner VF Corp

shares fell 31%.

These big companies work with factories around the world,

providing them with some negotiating clout to split tariff costs

with suppliers. VF Corp ( VFC ) is "well diversified across our supply

chain to manage tariffs," a spokesman said.

Small businesses, such as Seattle, Washington-based women's

running brand Oiselle, have less capacity to absorb the cost,

and fewer resources to plan alternatives.

Arielle Knutson, CEO of Oiselle, has asked her 14 full-time

employees to work on two or three tariff contingency plans, on

top of their usual jobs.

Oiselle, which sources leggings, sports bras and running

tops from Vietnam, has delayed spring 2026 orders that would

ordinarily be going out now.

Ordering the right amount of product - and not being stuck

with too much cash tied up in inventory - is key. "It's an

almost impossible needle to thread," Knutson said.

Ketchum, Idaho-based outerwear brand Wild Rye sources ski

jackets and mountain biking pants from suppliers in China, which

will be subject to an additional 34% tariff starting Wednesday.

"This is going to create a huge amount of strain on the

business," said founder Cassie Abel. She has frozen hiring and

any raises for her 11 employees, and said the business would

have to absorb part of the tariff increase to avoid hiking

prices by 40%.

Day Owl, Oiselle, and Wild Rye said they had previously

tried to produce domestically but quality was poor, so moving

production to the U.S. isn't practical.