The headlines this past February suggested a collective sigh of relief was in order. When the Supreme Court struck down the use of the International Emergency Economic Powers Act for broad-scale tariffs, many retail executives exhaled, assuming the “tariff era” had finally reached its chaotic conclusion.
They shouldn’t have.
The absence of a specific tax is not the same as the return of a stable bottom line. Refunds are legally uncertain and operationally a nightmare. Perhaps most precariously, suppliers who inflated costs during the peak tariff years haven’t brought them back down. Now, a new wave of oil-driven commodity inflation is building right behind the first one. For fashion apparel and retail leaders, the window to act is measured in weeks, not months.
THREE MOVES FASHION LEADERS MUST MAKE
For brands and retailers to navigate these challenges, they need to adopt a structured three-part framework to reclaim their edge.
First, they must quantify before they negotiate, and that quantification is more complex than it sounds. Many fashion brands absorbed tariff costs directly, while also working with vendors to share some of the financial burden through pricing concessions. That cost-sharing arrangement is creating new friction, as some suppliers look to revisit those agreements or use the shifting tariff environment to justify future price increases.
Before supplier conversations begin, brands need a clear understanding of where costs increased, which tariff-related costs may be recoverable, and how those increases are still affecting margins today.
Next is to tier the vendor strategy. Don’t treat the supply chain as a monolith. For strategic partners, have direct, relationship-forward conversations that acknowledge a long-term future. For mid-tier vendors, use data-backed, category-level outreach. For tail vendors, use scaled, automated communication.
Third, the goal is not only to recover historical overcharges. It is to ensure that tariff-inflated pricing does not become the permanent new normal heading into fall planning.
This is where the vendor dynamic gets complicated. Suppliers facing rising energy and commodity costs may resist lowering prices, even as tariff conditions evolve. That’s why brands should move now to create more transparency around pricing structures and separate temporary tariff-related costs from long-term base pricing before new inflationary pressures further complicate negotiations.
COSTS DIDN’T COME DOWN WHEN TARIFFS DID
While the February 20 ruling was monumental, the aftermath is what Justice Kavanaugh himself described as a likely “mess.” The cost of tariff collections is about $166 billion. The complexity of getting that money back cannot be overstated. And the single biggest mistake importers can make right now is treating the refund process as open-ended. It isn’t. The clock is ticking.
The dirty secret of the current retail landscape is that costs didn’t decrease after the ruling, and it’s where the real margin recovery sits for fashion brands. During the tariff rollout, vendors naturally raised prices to offset their own costs. But as those tariffs fell or were struck down, those prices stayed put. That temporary increase has now been permanently baked into retailers’ cost of goods sold.
HIGHER OIL PRICES
There is also a timing risk that many retailers aren’t pricing in: the resurgence of oil. Rising energy prices are creating a new wave of pressure that will hit supplier economics (specifically, raw materials, logistics, and packaging) within the next few weeks. This creates a “perfect storm” of resistance.
Suppliers that are sitting on potential tariff refunds are also facing these incoming commodity pressures. They will use the rising cost of oil as a shield to resist resetting prices downward. Once oil costs are fully embedded in the conversation, their tariff recovery argument becomes muddied.
The mandate is clear. Retailers need to reset their cost base now, before the commodity argument becomes the dominant narrative. The industry must ensure that tariff-inflated prices are not carried forward as the new baseline. Every week companies delay narrows this window.
THE CONSUMER EQUATION: LOYALTY OR LIABILITY?
Finally, there’s the brand impact to consider. The question retailers aren’t asking enough is: If they recover these costs, are they passing the savings to the consumer?
A wave of class-action litigation is already sweeping the industry, targeting retailers who passed tariff costs to consumers and are now quietly pursuing refunds for themselves. Because only the importers of record have legal standing to seek a refund (even if they passed 100% of that cost to the customer) there is a massive ethical and legal asymmetry.
Proactive brands have a choice. Selectively reducing prices in key categories signals value leadership at a moment when consumers are exhausted by inflation. In fashion, price is a brand signal. Deciding where to lower prices is a merchandising and marketing call, not just a finance one.
The tariff era isn’t a one-time event we can put behind us. It is a new operating condition where policy can shift in weeks, and cost structures must be managed actively. The brands that treat this moment as a mere “recovery exercise” will miss the reset opportunity. This is about supplier transparency, consumer trust, and competitive positioning for a very uncertain fall.
The window is open, but it won’t stay that way for long.
Sonia Lapinsky is partner and managing director, head of fashion retail at AlixPartners.
