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This article originally appeared on Vogue Business.
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Executives expected Trumps latest round of tariffs, announced on 2 April, to be bad.
They were far, far worse than imagined.
Stock prices tumbled, with the S&P 500 losing $2.4 trillion in one day.
Theyre talking to officials and expressing concerns.
Will they be able to stay in business with these cost increases?
This is an existential threat.
Sourcing teams are looking at other options; people are crunching numbers.
Nobody has yet approached a formula of what if.
That will start once we know the final numbers and if there are negotiations.
But that response can only last so long before inventory is jeopardised.
A blanket tariff policy, with high rates on those same countries, leaves brands with few options.
But those countries are subject to higher tariffs now.
Theyre scratching their heads now to see where they can go.
Its unclear what countries can do to get out from under the tariffs.
They will have an immediate impact, and companies are planning for the holiday season as we speak.
Trumps motives for starting a global trade war are questionable.
My jaw would drop if that ever became a real option.
On the floor, one brand executive said ahead of the announcement.
Is US manufacturing really an option?
Could some manufacturing come back to the US?
But its not going to happen overnight.
Capacity is not there; materials are not there.
Youre not going to make up for international sourcing its just not going to happen.
The scale is not there, says Gold.
But he acknowledges that thats a long shot.
We should get preferential treatment.
Thanks to tariffs, manufacturing in the US will also become more expensive as the cost of materials increases.
These American companies depend on foreign inputs which have no, or very few, American substitutes.
Already, some countries have enacted or threatened reciprocal tariffs in response to Trumps policy.
Were reviewing our sourcing strategy.
She says shes determined not to increase prices, but acknowledges her margins will take a blow.
We want to keep our business.
Its a survival test, and it feels like we just did this during Covid.
Covid is frequently referenced as a comparison to whats happening now.
But that was a natural event.
This feels self-inflicted, says one executive.
Theres nowhere for anyone to hide.
Were in a full-blowntrade war.
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