Clothing and accessories retailers in the U.S. are making strategic decisions in response to impending tariff increases on imports from Vietnam and China. These retailers, including notable brands like Nike and Lululemon, are facing a dilemma of either passing on the increased costs to consumers - risking reduced sales - or absorbing the costs themselves, which could further impact their profit margins.

Smaller clothing and shoe companies are particularly vulnerable as they do not have extensive supply chains like their larger counterparts, relying heavily on products from Vietnam and China. For example, Day Owl, a New York company that manufactures backpacks in Vietnam, has halted future orders due to the tariff situation, with the CEO estimating that the business may struggle to survive within 30 days unless there is a significant reduction in Vietnamese tariffs.

The delayed production cycle is also a concern, as companies risk missing crucial retail seasons like back-to-school shopping. Tariffs are already putting significant pressure on businesses, with potential price increases cited as a means to offset the additional costs. Footwear Distributors and Retailers of America have calculated that a running shoe priced at $155 and manufactured in Vietnam could potentially need to be sold for $220 to cover the 46% tariff.

Vietnam plays a vital role in the apparel and footwear industry, housing factories that cater to major brands like Nike and Adidas. The country has requested a 45-day delay in the U.S. tariff implementation and has shown willingness to increase purchases of American goods.

Large companies like Nike and Walmart have more flexibility in managing tariff impacts due to their diversified supply chains across different regions. In contrast, smaller businesses like Seattle-based Oiselle, a women's running brand, may struggle to absorb these additional costs and lack the resources to explore alternative solutions.