By Suzanne Kapner and Jon Emont

When President Trump imposed tariffs on Chinese imports during his first term, apparel brands turned to Plan B -- moving production to other parts of Asia, including Vietnam, Cambodia and Bangladesh.

Now they need a Plan C.

Trump on Wednesday announced new tariffs of more than 25% on goods from each of the top six apparel-exporting countries to the U.S. China still comes out the highest, with a total tariff rate estimated by economists at around 65% to 70%. The blitz included new tariffs of 49% on products from Cambodia, 46% for Vietnam and 37% for Bangladesh.

American companies are scouring the world for other options. But if the levies remain in place, apparel and shoe makers -- and their American consumers -- likely won't be able to escape the impacts of the tariffs.

Outside of Asia, few countries have the factories and trained workforces to churn out the vast quantities of shirts and shoes demanded by American shoppers. To the extent that other options exist -- in places like Turkey, which got off light with the minimum 10% tariff -- a stampede of new buyers is expected to quickly drive up factory prices.

Chris Riccobono, the founder and executive chairman of apparel company Untuckit, said he is considering moving production out of Vietnam, where about 40% of his shirts, pants and jackets are made. On his list of possibilities are Peru and Mauritius, where he already makes some goods and tariffs are lower. The new tariff on Peru is 10%.

Mauritius, population 1.3 million, won't cut it for giant brands like Nike and H&M, which are highly dependent on East Asian supply chains. Nike makes 95% of its shoes in three heavily tariffed, populous Asian countries -- Vietnam, China and Indonesia -- and will struggle to find new factories elsewhere in a pinch, analysts say.

Nike shares fell 13% Thursday. Shares of Gap, Skechers and Crocs also tumbled on the tariff news in a broad market selloff.

Searching the map

Vietnam, where the U.S. waged a 20-year war, was largely off limits to American businesses until the 1990s, when the U.S. lifted economic restrictions. Vietnam blossomed more recently as a lower-cost alternative to Chinese production.

Saitex, which makes denim at its factories in Vietnam for brands including Ralph Lauren, Madewell and Everlane, is considering shifting production to Los Angeles, where it operates a factory staffed by 250 employees, said Chief Executive Sanjeev Bahl.

It would be a pricey proposition because of higher U.S. labor costs. Making jeans in Los Angeles is twice as expensive as it is in Vietnam, Bahl said. He is thinking about adopting a hybrid model where he cuts and sews the jeans in Vietnam and washes them in the U.S. -- a move he hopes would lower his tariff bill. He is also hoping that his U.S. factory will win him points with the Trump administration.

Despite the higher costs of producing in the U.S., some smaller brands see no other viable option.

"We are done with this game of whack-a-mole," said Aaron Luo, the founder and CEO of handbag maker Caraa. He said that it no longer made sense to shift production to lower-tariff countries as he did after Trump imposed tariffs on Chinese imports during his first term.

Instead, Luo said he was looking to move some manufacturing from Asia to Los Angeles or New York. "As a small brand, we have agility," he said.

William Wong, a consultant with the Hong Kong Footwear Association, an industry group, has been fielding panicked inquiries from American retailers looking for new countries where they can source shoes. But he said factory owners were reluctant to move to new locations such as the Philippines or African countries that were subjected to 10% tariff rates, given the years it takes to build up a new manufacturing base, and Trump's penchant for changing his mind.

"These manufacturing businesses are not like switching on or off the lights," Wong said.

Steve Madden for years has been shifting production out of China. Though it still produces more than half of its products there, it also manufactures in countries like Cambodia, Vietnam, Mexico and Brazil.

"We've worked hard over a multiyear period to develop our factory base and our sourcing capability in alternative countries," Edward Rosenfeld, the company's CEO, told analysts in November. Its shares fell 17% Thursday.

Also among the stock selloffs Thursday were Coach parent Tapestry, which mainly produces in Vietnam, Cambodia, the Philippines and India; and Lululemon Athletica, which a decade ago made a fifth of its products in China but now makes 86% of its products in Vietnam, Cambodia, Sri Lanka, Indonesia and Bangladesh.

The tariffs, if they stick, also will have ramifications for the countries that produce much of the world's clothing.

Rubana Huq, a garment-factory owner in Bangladesh, said the new levies would heap pressure on the country's exporters, who count the U.S. as their largest market.

"We will definitely encounter a huge squeeze from U.S. buyers," she said.

Huq and other clothing makers are trying to calculate the amount of imported U.S. cotton in their products, hoping that showing their use of American raw materials could reduce the tariff burden.

She said she isn't certain if it will work.

Write to Suzanne Kapner at suzanne.kapner@wsj.com and Jon Emont at jonathan.emont@wsj.com

(END) Dow Jones Newswires

April 04, 2025 10:00 ET (14:00 GMT)

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