Fashion Remains Cautious on President-elect Trump While Wall Street Celebrates

Story was updated at 5:38 p.m. EST

Wall Street welcomed back Donald Trump as president-elect — but fashion was feeling more reticent. 

The Dow Jones Industrial Average shot up 3.6 percent, or 1,508.05 points to 43,729.93 after Trump beat out his Democratic challenger Vice President Kamala Harris early Wednesday morning. He will return the White House to Republican hands in January, when the Senate will also flip to the GOP. The race to control the House — the last chance for divided government in Washington — remained up in the air as of press time.

Fashion stocks joined in some of the rally. The gainers included Capri Holdings up 7.2 percent to $22; Signet Jewelers, 6.1 percent to $97.30; Macy’s Inc., 5.2 percent to $16.09 and Amazon.com Inc., 3.8 percent to $207.09. 

But the wider industry was more muted. Designers often have more liberal social leanings and were very much on Team Kamala, donating to her campaign and rallying in New York with First Lady Jill Biden to get out the vote.  

Harris conceded the election and addressed supporters at her alma mater, Howard University, on Wednesday afternoon, saying that she had congratulated Trump on his win and underscoring the importance of a peaceful transfer of power. 

“While I conceded this election, I don’t concede the fight that fueled this campaign,” she said. “The fight for freedom, for opportunity, fairness and the dignity of all people.”

The fashion industry remained cautious of Trump 2.0 with lobbying groups both reaching out to cooperate with the incoming administration and stressing the need to avoid any more costly and chaotic trade wars. 

While avoiding any new tariffs is at the top of the import-heavy fashion industry’s agenda, broader forces are at work and Trump’s second election moves America into a new and uncertain time. 

The campaign was bitter, filled with dark rhetoric and an assisination attempt with Trump altogether promising a much more comprehensive reordering of the federal government than he accomplished in his first term.  

That will ripple across geo-political and business landscape — from how antitrust watchdogs regulate corporate takeovers to whether the U.S. continues to support Ukraine in the face of a Russian assault. 

While Trump’s supporters rejoiced at the change, many others braced for what comes next. 

“Most of the world with very few exceptions are more or less in shock at the moment,” said Martin Lindstrom, a consultant who specializes in business transformation and branding. 

As global players look at Washington, D.C., anew and try to understand the change about the sweep through, Americans experienced a range of emotions. 

“You have the red belt, which is putting on a pair of rosy glasses now — they will choose to see the world in a more positive light because of their savior, so to speak,” Lindstrom said of Trump supporters. “They have won their voices, which haven’t been heard for a long time.”

On the other side of the political aisle, he said: “I do think we will see a generation on the blue side, which will be much more cautious, much more on alert, much more feeling they have lost a sense of belonging and a purpose. And that will translate itself into spending.”

Beyond Trump’s love of tariffs as a kind of catch-all tool for managing international relations, the president-elect is seen as more business friendly, supporting lower taxes and fewer regulations. But his “America First” agenda and chaotic governing style were causing some indigestion overseas, where investors were trying to gauge what comes next from the norm-shattering Trump. 

The DAX in Frankfort fell 1.1 percent to 19,039.31 while the FTSE in Milan slipped 1.5 percent to 33,940.72 and the FTSE 100 in London declined 0.1 percent to 8,166.68. In Hong Kong, the Hang Seng dropped 2.2 percent to 20,538.38. 

The full social, economic and political ramifications of a second Trump presidency won’t be known for some time. But the players are getting ready now. 

“This morning everyone across our union tied their laces just as we do every day and we’ll continue our work fighting for and protecting and defending the rights of working people,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, which has approximately 100,000 members.

“No matter who the president may be, our job is the same — to represent the members of our union and to protect their rights and advance their interests,” Appelbaum said. “The way to improve working conditions is by organizing, and we will continue to do that.” 

Trump has also espoused a Drill Baby, Drill attitude toward the environment that could complicate fashion’s move toward more sustainable operations.  

“The industry’s climate goals could be challenged with less attention to the environment,” said Steven Kolb, chief executive officer of the Council of Fashion Designers of America. “We must remain adaptable and committed to creativity, diversity and resilience while supporting designers in this changing landscape.”

Kolb also pointed to trade, tariffs and manufacturing and labor regulations, adding: “A new administration and its policies can significantly impact the trajectory of American fashion.”

That is borne out by the range of issues fashion is now zeroing in on as the second Trump administration fast approaches. 

The Cost of Duties 

During his first term as president, Trump took an often confrontational stance on the international stage and was quick to threaten big tariff hikes on goods from other countries, which importers say ultimately increase costs for consumers.

Just before the election, the National Retail Federation said Trump’s tariff proposals could cause American consumers to lose between $46 billion and $78 billion in spending power annually. Among the president-elect’s proposals are a universal 10 percent to 20 percent tariff on all imports and an additional 60 percent to 100 percent tariff on goods from China.

For fashion specifically, the NRF estimated that under Trump’s proposed tariffs, consumers would pay $13.9 billion to $24 billion more for apparel.

On Wednesday morning, Matt Shay, NRF chairman and CEO, tried to drive the point home. 

“Effective trade policies will increase America’s competitive advantages in research, development and innovation and will protect strategically critical infrastructure while increasing the standard of living and quality of life for all Americans,” Shay said. “However, the adoption of across-the-board tariffs on consumer goods and other nonstrategic imports amounts to a tax on American families. It will drive inflation and price increases and will result in job losses.” 

Trump has heard that argument before and during his first term did not seem to be overly swayed by it. 

But at the same time, Shay reached out to the incoming president.

“The retail industry stands ready to work with President-elect Trump and Congress to enact tax, trade and regulatory policies that make America more competitive, increase domestic investment and create jobs,” he said. 

The New Tariff Sheriff 

“There’s going to be a new sheriff in town, and this sheriff loves tariffs,” said Steve Lamar, president and CEO of the American Apparel and Footwear Association. “It’s what a lot of people in the industry have been modeling for, bracing for or planning around for some time now.”

But the question moving forward, in Lamar’s estimation, is whether the president-elect plans to use tariffs “as an outcome, or as a point of negotiation.”

During his first term, Trump levied tariffs on $380 billion in China-made goods. Following the aggressive taxation measures, the U.S. and China worked out a Phase One trade agreement in early 2020, with the goal of rebalancing the trade relationship and protecting American intellectual property and technology. It was largely viewed as a failure, and the enmity between the superpowers deepened and settled into a yearslong trade war.

Now, Trump has proposed moving duties even higher. 

“If tariffs are going to be for negotiating leverage, then it’s a little bit of a white-knuckle ride until we get to an outcome that’s good — a trade agreement, or something else that that improves the market access opportunities brought about by trade,” Lamar said.

By contrast, “If he’s using tariffs as an outcome — ‘I’m going to put tariffs on, and then be done’ — then we have to figure out, ‘How do we not break the economy?’” he added. “We’re a consumer-driven economy, and tariffs are inflationary, there is no question about that.”

The View From the Beauty C-suite

Coty Inc. and E.l.f. Beauty Inc. both happened to report quarterly earnings on Wednesday, putting the companies in the position of reacting in real time to the prospect of tariff and manufacturing changes tied to a new administration. 

“We’ve been subject to 25 percent tariffs since 2019 so we know how to deal with tariffs,” said Tarang Amin, CEO of E.l.f., during an interview with WWD. “Last time, we had a very balanced plan between pricing, [foreign currency exchange], supplier concessions, cost savings so we’d use a similar playbook this time. The other thing we have this time is that, in 2019, 100 percent of our manufacturing was done in China, but now we have less than maybe 80 percent and we’ve been diversifying in other parts of Asia, the U.S. and Europe, and so you’ll continue to see us do that combination, that balance plan, plus additional diversification. We’ll have to see what they are. But I’ve got a lot of confidence in the team and our ability to navigate that.”

And Sue Nabi, CEO of Coty, said: “We closely monitor the markets we are operating in, not only to ensure that they’re able to capture all the opportunities, but also to enhance any developing elements. I can tell you that for Coty, the supplier base and manufacturing footprint is really balanced between the U.S. and Europe, and this can help us mitigate any kind of potential risk across our business, wherever it happens.”

That Uncertain Feeling

Matt Priest, president and CEO of the Footwear Distributors and Retailers of America, said the election, “tapped into the American people’s views on where they stand on the economy…in the sense that the president-elect committed to tamping down inflation.”

Now, the group views its job as working “in a collaborative spirit to educate the incoming administration on the impacts, and seeing where we can land” on the issue of tariffs — the impact of which could be significant for U.S. footwear firms sourcing from China and beyond.

“Our members like certainty. There’s a lot of uncertainty,” he said. “There’s going to be uncertainty on the cadence, the timing and the veracity of which tariffs will be implemented, along with when, how, by what mechanism. That all remains to be seen.”

Priest described Trump as “a person who is difficult to box in, and if he finds utility in doing something that he thinks that will accomplish his goals, he will do it. I think we just have to be convincing and find the right people to engage with him on it,” he said.

The Textile Industry’s Tariff Support

Trump will also have his tariff cheerleaders when it gets back to the Oval Office, particularly in the U.S. textile industry.  

“Our industry has lost 21 manufacturing facilities over the last 18 months, and we have strongly supported additional penalty tariffs to hold trade predators accountable for unfair trade practices and forced labor issues,” said Kim Glas, president and CEO of the National Council of Textile Organizations. “Our priority issues have not changed and will not change regardless of the administration. I think the urgency is even more so as we continue to lose textile operations.”

While NCTO has long supported tariffs on China-made finished consumer goods, the group supports exclusions on products like machinery that the American textile sector needs to support its operations. Glas is also cognizant about the impact global tariffs could have on the growth of the industry’s regional supply chain.

“Our industry has a strong working relationship with our Western Hemisphere trade partners; we have a coproduction chain” through the U.S., Mexico, Canada Agreement (USMCA) and the Dominican Republic — Central America Free Trade Agreement (CAFTA-DR), she said. “We hope that there’s a prioritization on countries that are chief violators of the trade environment, namely China and those who are using Chinese inputs to subsidize [their output].”

The Political Price of Inflation

“Inflation was clearly a motivating factor in yesterday’s election results, with many middle-class voters expressing deep concern about the impact inflation has had on family budgets,” said Brian Dodge,  president of the Retail Industry Leaders Association. “Policymakers should hear their concerns loud and clear as debates on taxes and tariffs take center stage.”

Dodge said the group’s membership, which includes more than 200 U.S. retailers, is hopeful that the incoming administration and Congress “take a strategic approach to international trade, with policies that shield families from higher prices on consumer goods.”

“The retail industry is the largest private employer in the United States. Decisions made over the next four years will dictate how leading retailers operate, invest in their workforce and local communities and drive billions in supply chain investments and economic development,” he added.

A ‘Mixed Bag’ With Some Upsides 

Neil Saunders, managing director of GlobalData, said Trump’s “victory brings a mixed bag of positives and negatives, with a large dose of uncertainty.”

While tariffs are the “huge downside” to Trump’s win for retail, Saunders pointed to other policies the industry could welcome. 

“The main positive for retail is that President Trump will almost certainly renew the tax-cut package he introduced during his first term in 2017, which was due to expire at the end of 2025,” Saunders said. “This will be broadly helpful to consumer incomes, although retailers should not expect to see a surge in spending as it is about rolling over an existing policy that is already baked into consumer behavior.”

Additionally, Trump has said that the corporate tax rate should be lowered, a move that would help retailers invest more in their businesses, Saunders noted. 

Trump is also expected to be more favorable to corporate takeovers than has been the case under President Joe Biden, whose administration stepped in to block Tapestry Inc.’s $8.5 billion deal to buy Capri Holdings.  

But Saunders said that all of Trump’s changes won’t come all at once. 

“Despite the shock change, it should be noted that changes happen at the margins and occur over time,” he said. “A second Trump administration will not collapse retail, nor will it propel it to dizzy heights. It will simply change the gradient of the trajectory and the tonality of the policies retailers need to deal with.”