Fashion Brands Are Starting to Feel the Tariff Squeeze—Here’s How to Protect Profitability
Tara Johnson is a marketing strategist with 10+ years of experience in digital strategy, content creation, and advertising. At Power Digital, she leads content planning, creating high-impact resources that boost visibility and drive results. Tara believes in no magic wands—just smart content and a passion for sustainable, authentic growth.
Power Digital is a full-service growth marketing agency helping brands accelerate their revenue with data, strategy, and execution. Known for our award-winning teams and nova technology, we bring clarity to complexity and build marketing that scales.
When tariffs were first announced, many fashion brands had already purchased and allocated inventory months in advance. At the time, the full effect felt like a distant concern. Fast forward to today, and the reality is here: brands are now seeing tariff-related costs hit their bottom line, adjusting forecasts, raising prices, and communicating their concerns with us at Power Digital.
As Hanna Lane, Group Director, Fashion, at Power Digital, put it:
“Businesses don’t operate well in an environment of uncertainty. Tariffs are one of those ripple effects. Brands are cutting back in some areas, planning for leaner margins, and asking what happens if they reduce ad spend to protect costs this year.”
The tariff margin squeeze isn’t theoretical anymore—it’s something fashion executives are actively grappling with in their boardrooms and P&Ls.
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What We’re Hearing From Fashion Executives
Over the past month, fashion leaders have voiced similar concerns to our teams:
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Forecasting shifts: Brands are seeing their profit projections recalibrate downward as tariff costs flow into the books.
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Price increases: Several are communicating planned increases to consumers this fall and holiday season.
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Margin protection: Executives are asking: “What happens if we reduce ad spend by 20% to protect costs? Can we still hit growth targets?”
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Retail + DTC split pressure: Tariffs are forcing harder decisions around which channels to prioritize to protect profitability.
As Madison Sternberg, Account Director, Fashion, noted in a recent intake:
“A lot of clients are just now starting to feel the impact of tariffs. Inventory was bought months ago, but the bottom-line effects are showing up now. We’re getting emails from brands communicating price increases in October.”
Best Practices to Protect Profitability
While the impact is unavoidable, fashion brands do have levers they can pull right now.
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Audit and prioritize your most profitable SKUs
Focus paid media dollars on higher-margin products. As Lane noted, “leaning into high-margin categories and products with strong affinity” can offset some of the cost pressure.
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Reevaluate discounting strategy
Tariffs shrink margin headroom. Avoid aggressive promotions that compound profitability issues. Instead, lean on bundles, loyalty perks, or exclusivity to deliver value without heavy markdowns.
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Strengthen customer retention
Acquiring new customers gets more expensive when costs rise. Make sure existing customers stay loyal with CRM programs, personalized messaging, and VIP tiers.
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Align media efficiency to business goals
If you do reduce ad spend, don’t do it blindly. Apply incrementality testing to understand the true impact of cuts before pulling back. This ensures efficiency moves are surgical, not blunt-force.
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Communicate transparently with consumers
If price increases are necessary, communicate the why. Many brands are winning consumer trust by tying increases to quality, sourcing, and transparency rather than letting customers assume the worst.
Power Fashion provides scalable and tangible marketing solutions for brands maximizing ability to grow.
How Power Digital Helps
We’ve been advising fashion clients through tariff cycles for years, and the lesson is clear: a margin squeeze is survivable if you protect the right levers.
In our previous piece, How Tariffs Are Reshaping Fashion Pricing Strategy, we outlined tactical plays like SKU prioritization, margin modeling, and consumer messaging frameworks. Those still hold true—but now, as brands are actively feeling the squeeze, the need is even greater to implement them with urgency.
At Power Digital, we combine data-driven insights with category expertise to help brands:
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Identify margin-friendly acquisition strategies.
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Build retention systems to offset higher CAC.
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Navigate pricing and promotional trade-offs without eroding brand equity.
Now what?
The tariff impact is no longer “coming soon”—it’s here. Fashion brands are now recalibrating forecasts, raising prices, and feeling the squeeze on margins.
The good news: profitability doesn’t have to erode if you act decisively. By doubling down on high-margin SKUs, refining discount strategies, retaining more customers, and aligning spend to incrementality, brands can protect growth even in this environment.
Contact our fashion team today to build a margin-protection strategy that helps you not just weather tariffs—but emerge stronger on the other side.
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Tara Johnson is a marketing strategist with 10+ years of experience in digital strategy, content creation, and advertising. At Power Digital, she leads content planning, creating high-impact resources that boost visibility and drive results. Tara believes in no magic wands—just smart content and a passion for sustainable, authentic growth.
