California Apparel News

United States tariff and supply-chain headaches were two of the hurdles apparel companies and their partners faced during 2025 as brands and other industry contributors sought to change their approaches to business in order to align with the Trump administration’s unpredictable tariff rates and shifts in regulations.

Navigating these challenges successfully, or—at the very least—unscathed, often led fashion companies to seek financial expertise from trusted advisers who supported them by developing and implementing plans that could weather the unpredictable, chaotic nature of the constantly changing rules that the industry saw during 2025. These solutions have yielded a variety of approaches, each supporting company missions while also safeguarding these businesses into 2026.

California Apparel News asked financial leaders in the apparel business: Amid continued economic uncertainty, which initiatives used in 2025 by your clients resulted in the greatest success and will continue for Q1 of 2026?

Darrin Beer

Western Regional Sales Manager

CIT Commercial Services—a subsidiary of First Citizens Bank

 Throughout 2025, many of our clients embarked on several initiatives to help them navigate economic uncertainty primarily driven by fluctuations and breadth of tariffs throughout Asia and other countries. The most impacted region was China as tariffs ranged from 30 percent plus to well over 100 percent during April and May.

The most effective strategies employed by our clients began prior to 2025 as plans were made to diversify and near-shore the supplier base to help minimize the impact of higher costs. Our apparel clients that proactively diversified their sourcing before the year experienced fewer disruptions as related to quality and consistency of product.

During 2025, some clients utilized bonded warehouses to help delay the timing and impact of tariffs since duties were not assessed until merchandise was pulled from the warehouse. In addition, many clients negotiated better pricing with suppliers and customers to help minimize the impact of their cost of goods.

While some clients faced headwinds during the year, those who continued to maintain strong relationships with their suppliers and customers successfully navigated those challenges. Many of our clients that supported a mix of retail channels including premium, value, discount and direct-to-consumer performed better in 2025.

We look forward to continuing to support our apparel clients by providing financial and business strategies to help them maximize opportunities in 2026.

    Mark Bienstock

    Managing Director

    Express Trade Capital

 Our clients that had a successful 2025 were directly attributable to them maintaining a flexible sourcing structure while keeping a disciplined expense matrix in place. The current presidential administration has demonstrated that they can change their political stance on any country at any time, which can cause a major interruption in the supply chain. Most of our clients have maintained multiple country diversification so they were able to pivot when the first tariff news was announced early in 2025.

Additionally, these clients have been proactive in keeping very lean operational staff while continuing to outsource many services to keep their fixed costs down and shifting more expenses to a variable cost as a function of sales generated. These will continue to be key drivers for success in 2026 and beyond.

Sydnee Breuer

Executive Vice President and Western Regional Manager

Rosenthal & Rosenthal

 The initiative that delivered the greatest success for many of our clients in 2025—and will likely continue through Q1 2026 and beyond—is the diversification of their sourcing. Starting in 2020 during the pandemic, well-documented supply-chain disruptions forced many clients to expand production to include other countries and even some domestic manufacturing. Just as businesses were settling into a new normal in late 2024 and early 2025, the U.S. government’s imposition of tariffs—applied unevenly to various countries—solidified sourcing diversification as a key strategy for 2025 and now 2026. Today, most of our clients that have domestic production in place have been especially grateful for that business strategy.

    Tae K. Chung

    Senior Vice President, Business Development

    Republic Business Credit

 Amid the economic uncertainty of 2025, the most successful private label, branded and direct-to-consumer apparel manufacturers emphasized disciplined execution over rapid growth. As we move into Q1 2026, these strategies remain pivotal for continued success.

One of the key drivers of performance has been streamlining inventory management. Companies achieved greater efficiency by reducing styles and colors, prioritizing best-selling items, and reordering based on real-time demand. Additionally, many diversified their suppliers or relocated production closer to home to better respond to market fluctuations.

Optimizing sales-channel strategies also played a crucial role. Discounters helped manage excess inventory without compromising core pricing structures while manufacturers became more selective with traditional retail partnerships, favoring those with strong sell-through rates. Concurrently, investments in direct-to-consumer and e-commerce platforms have grown, enhancing margins and improving customer engagement.

Effective cash-flow management has provided a distinct competitive advantage. By tightening credit terms, accelerating collections and leveraging flexible financing solutions, companies have been able to support budget-conscious retailers as well as premium partners, all while maintaining liquidity.

Martin F. Efron

Executive Vice President, Head of Factoring

White Oak Commercial Finance, LLC

 Amid continued economic uncertainty in 2025—particularly around shifting and unpredictable tariff policies—the companies that achieved the greatest success were those that proactively managed tariff exposure within their cost of product. These clients worked closely with overseas suppliers to negotiate pricing, adjust production timelines and identify tariff-mitigation strategies rather than reacting after costs increased.

Equally important was supplier diversification: Brands that developed viable sourcing options across multiple countries were better positioned to pivot production quickly as trade conditions evolved. This flexibility protected margins, reduced disruption and allowed companies to maintain pricing stability despite external volatility.

As we move into Q1 2026, these initiatives remain critical as tariff uncertainty continues to impact planning and forecasting. Companies are doubling down on strategic supplier relationships and diversified sourcing models to ensure resilience, cost control and operational agility in an increasingly complex global trade environment.

    Eric Fisch

    Senior Vice President of National Sector Head, Retail & Apparel

    HSBC Bank USA N.A.

 In 2025, most clients took a pessimistic view of consumer demand early on in the year, expecting negative impact from tariffs and inflation would curtail spending. As I speak to those clients now, they are recording better-than-expected demand and sell throughs, albeit in comparison to conservative forecasts. All of these companies took swift action to protect their business from volatility, and many of their strategies paid off.

First, most are shifting resources to their direct channels rather than focusing on growing wholesale business. Many of the department stores and multi-brand retailers are having performance issues with diminishing revenue and shrinking store counts. Controlling your relationship and dialogue with the consumer is especially advantageous when most companies need to raise prices and want to retain as much gross margin as possible.

The second strategy is cost control, specifically around marketing. Most companies have been thoughtful in their approach, looking at which areas provide the most efficient return and reallocating resources. In general, I’ve seen brands return to some of the tried-and-true strategies like physical catalogs, local community activations, and limited editions or collaborations, which continue to attract buyers.

Lastly, one key characteristic we see that fosters stability is to diversify your sales across geographies. At any point in the economic cycle, different regions are experiencing growth and confidence while the U.S. is stalled. The global nature of social media also bolsters the argument to sell internationally as consumers see content from your brand and will look for ways to shop it.

Joshua Goodhart

Executive Vice President, National Sales Manager

Merchant Financial

 Many of our clients went into 2025 with a very conservative and focused strategy despite the uncertain environment. There were certainly a tremendous number of obstacles throughout the year. Challenges such as the much talked about tariff situation, financial issues with some high-profile retailers and lack of continued investment from outside equity partners impacted our client base and the consumer-product industry.

The clients that had the most success were those that focused on satisfying their core customers and growing organically with them. Clients who had omni-channel distribution where they sold both online and via wholesale seemed to benefit from this environment. Not having all their eggs in one basket and seeing the boost of margins selling direct to the consumer was a good strategy.

Many of our successful clients were able to pivot from China during the tariff standoff or had other suppliers outside of China to service their production needs. Those who stuck with China had strong relationships where the suppliers gave them favorable terms to ease the impact.

Our team saw our successful clients do their best to keep expenses in line and take a somewhat more conservative approach to purchasing extra inventory. It was extremely important that our clients had a flexible lender like Merchant that understood the big picture and was able to help them navigate through this rocky environment with continued support.

We believe these trends will continue throughout 2026 as many of our clients are already seeing growth in orders placed for early 2026.

    Richard H. Kwon

    Executive Vice President, Portfolio Manager

    Finance One, Inc.

 Amid continued economic uncertainty in 2025, our SME apparel importer clients faced intense pressure from escalating tariffs under the Trump administration’s reciprocal policies, pushing average duties well above historical levels.

In my experience working with our clients, key initiatives that delivered the greatest success started with front-loading inventory in early 2025 to secure pre-tariff pricing, mitigating cost increases on goods from major supplier hubs like China, Vietnam and Bangladesh. This move shielded them from sharp price hikes and helped maintain healthier margins.

Clients also targeted resilient segments such as higher-income consumers seeking premium quality or value-oriented buyers favoring core essentials while reducing assortments to best-selling items to preserve margins amid a cautious spending environment.

Additionally, clients who were early adopters of AI-driven demand forecasting tools minimized overstock risks, reducing inventory costs and detecting rapid trend shifts far more accurately than manual processes, providing a competitive edge.

These initiatives not only stabilized sales for some of our clients in 2025 but also positioned clients strongly for Q1 2026, with continued emphasis on diversified sourcing, lean operations and technology integration to navigate the ongoing uncertainty that lies ahead.

Tom Novembrino

Principal

Gateway Trade Funding

 The brands that thrived in 2025 were the ones willing to think ahead, act early and modernize fast—and those same initiatives are shaping a strong start as we look to 2026.

Tariff uncertainty motivated many clients to reimagine sourcing, shifting production from China to more-cost-stable regions and strengthening pricing consistency. Others took control of logistics with DDP [delivered duty paid] delivery, creating smoother operations and fewer surprises upon arrival.

At the same time, several apparel brands found meaningful wins by leaning into U.S. manufacturing. “Made in America” wasn’t just a theme—it became a growth engine, helping clients reduce lead times and tap into rising consumer demand for locally produced apparel.

The most forward-thinking clients also reinvented their marketing. AI-driven strategies—smarter audience targeting, automated creative testing and real-time trend insights—elevated performance and tightened return on ad spend.

What united these successes was a willingness to adapt before challenges turned into obstacles. Their proactive mindset, supported by flexible funding from Gateway Trade Funding, transformed uncertainty into opportunity. These initiatives continue to drive momentum as we enter Q1 2026.

    Kenneth L. Wengrod

    Managing Member

    Stealth Management Group, LLC

 In a year defined by unpredictable demand cycles and uneven consumer confidence, the most successful initiatives I saw in 2025 were the ones grounded in realism rather than wishful thinking. The companies that outperformed weren’t chasing shortcuts; they were quietly rebuilding their supply chains around proximity, transparency and unmistakable proof of origin. With USMCA now entering a formal review, many of my clients treated 2025 as the year to get ahead of where enforcement is going—not where it has been.

The biggest gains came from expanding true North American manufacturing footprints. Not paper compliance, not token finishing, but real cut-and-sew and measurable value-add in Mexico and Canada. When you eliminate the gray zones, you also eliminate a good amount of risk: shorter lead times, fewer surprises at the border and a more predictable cost structure. What caught some by surprise was that these moves didn’t just hedge uncertainty—they improved margins. Those programs are already being scaled further in Q1 2026.

The second major shift was a sharpened focus on integrity in Mexico sourcing. Clients became far more disciplined about identifying operations that looked “USMCA compliant” on paper but showed tell-tale inconsistencies—implausible capacity, mismatched documentation or export spikes that made no economic sense. That muscle memory is now embedded in 2026 onboarding.

One lesson stood out: In volatile markets, authenticity becomes a competitive advantage. The brands leaning into genuine regional production—not transshipment theatrics—are the ones positioning themselves for the next decade, not just the next quarter.

Responses have been edited for clarity and space..