Duty alert: fashion brings supply chains closer together

Between 2015 and 2023, trade barriers increased fivefold, with approximately three thousand restrictions imposed in 2023 alone. Production and logistics costs have also risen as a consequence of the geopolitical situation, with the war in Ukraine on the one hand and the war in Gaza on the other, and these increases have put companies and consumers at a disadvantage: between December 2023 and February 2024, logistics costs for shipments through the Middle East have increased fivefold, and, to give a 'long-haul' example, the cost of delivery between Asia and the United States has risen by 165 per cent. The election of Donald Trump to the White House for a second term will lead - according to what the tycoon announced several times during the election campaign - to a 10-20% price increase on all US imports and a 60% tariff on goods from China. A country, the latter, from which American and European fashion companies are already freeing themselves in terms of production. Also considering the fragility of supply chains experienced during the pandemic. The data come from the 2025 edition of The State of Fashion report produced by McKinsey and Business of Fashion, which offers an up-to-date snapshot of the state of world fashion. 2025 will be a turbulent year, ending with low single-digit revenue growth (within 5%) slightly better than in 2024 and, most importantly, for the first time in the last 14 years it will not see luxury contributing to the industry's profit growth, which will be driven by the non-luxury segment.

In this context, the topic of nearshoring is already among the industry's priorities and will be increasingly so. For commercial reasons and also for sustainability. Then there is the issue of reshoring, i.e. bringing production back home, albeit more complex both on the cost front and on the capacity front, some of which has been lost. "There will be an amplification of all these data," explained Gemma D'Auria, senior partner McKinsey, global head of Apparel, Fashion and Luxury. "In Europe and Italy it will be important to understand that textile-fashion is a sector in which we should distinguish ourselves worldwide not only in the high-end, but at several levels: in a world in which supply chains are very fragile and Italian-made products count, we can also work in the medium segment.

The process of nearshoring, in any case, is already underway: according to The State of Fashion 2025, between 2019 and 2023 the share of textiles and clothing products from China dropped by 6% in the US and 3% in Europe, and by 2030 it will be -10% in the US and -8% in Europe. The markets affected by these practices will grow in five years' time: Mexico (which became the US's largest trading partner in 2023), Canada and Latin America for the US; North African countries and Eastern/Western Europe for the EU. The share of foreign direct investment in the apparel manufacturing sector also increased: in the 2020-24 period it rose by 20% for the US - where a further increase could be driven by the $14 billion in funds from the Americas Act - and by 8% in Europe. The US is sourcing more and more in Latin America (65% of companies against 40% in 2020) from Mexico to Guatemala, where companies such as Columbia have invested, while in Europe the big producer is Turkey, where Shein is also supplied.

According to the research, which also polls executives on the future of fashion, there are two risk factors for the industry: lack of consumer confidence (70%), and therefore unwillingness to shop, and geopolitical instability (67%), which also continues to play an important role in its impact on consumer confidence. Overall, 80% of the managers surveyed by McKinsey and Bof do not see any possible improvement during the year. "At a time when the industry is struggling to grow, many brands are trying to figure out what to do," Gemma D'Auria explains, "we need to win in market share, but also in mind share by increasing the focus on differentiation, in experience and product, but also in innovation.