{"id":305311,"date":"2025-11-25T06:04:10","date_gmt":"2025-11-25T06:04:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/305311\/"},"modified":"2025-11-25T06:04:10","modified_gmt":"2025-11-25T06:04:10","slug":"theres-only-so-much-you-can-absorb-from-the-tariffs-because-theyre-just-very-high-levis-ceo-states-the-plain-truth","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/305311\/","title":{"rendered":"‘There\u2019s only so much you can absorb from the tariffs, because they\u2019re just very high’: Levi\u2019s CEO states the plain truth"},"content":{"rendered":"

The global fashion industry is bracing for 2026, navigating a market defined by geopolitical instability, macroeconomic uncertainty, and, above all, unprecedented U.S. tariffs. As leaders pivot from focusing on \u201cuncertainty\u201d to acknowledging the environment is simply \u201cchallenging,\u201d tariffs have emerged as the number one hurdle facing executives.<\/p>\n

The severity of the trade landscape cannot be overstated, executives told McKinsey<\/a> and the Business of Fashion for the 2026 edition of The State of Fashion report<\/a>. U.S. tariffs on apparel and footwear imports, which had been around 13% earlier in 2025, dramatically spiked to 54% following initial government announcements in April. Although rates later eased, the weighted average tariff rate for apparel and footwear from the top 10 importers stood at 36% as of mid-October, well above historical norms. This sudden surge places the apparel and footwear industry among those most exposed<\/a> to the tariffs\u2019 profound impacts. Reflecting this critical situation, 76% of fashion executives surveyed believe responses to trade disruptions and tariffs will be the single most important factor shaping the industry in 2026.<\/p>\n

For the 10th anniversary of the report, which began in 2016, McKinsey and Business of Fashion charted the many changes for the industry since 2016, from a generalized \u201cage of volatility\u201d to Asia\u2019s undeniable rise to disruptions in how shoppers shop. For 2026, they chart major issues, including \u201ctariff turbulence\u201d and three emergent shopper appetites: a focus on resale, a sense of \u201cwell-being\u201d in their purchases, and a future marked by artificial intelligence (AI).<\/p>\n

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The report finds brands making price changes, shifting sourcing, and improving efficiency in a bid to counteract the impact of tariffs. Larger suppliers are responding by optimizing their footprints while chasing digitization and automation, and smaller players, meanwhile, are under mounting pressure. \u201cAgility will be the defining factor enabling brands and suppliers to maintain their competitive edge.\u201d Amid this economic disruption, Levi Strauss<\/a> CEO Michelle Gass spoke to Joan Kennedy of Business of Fashion about how she\u2019s adopted an aggressive and methodical tariff playbook, positioning the 170-year-old denim giant as a standout in managing the chaos.<\/p>\n

Levi\u2019s advantage, and painful truth<\/p>\n

Crucially, Levi\u2019s entered this period with a structural advantage: Approximately 60% of its business is international, reducing the tariff burden compared to many domestic competitors who are more heavily penetrated in the U.S. Yet, even with this advantage, the tariff increases demanded strategic action. Gass described the overall environment as \u201cvery complex,\u201d encompassing macroeconomic forces, geopolitical issues, and massive disruption in technology and AI, and she articulated the necessary, unavoidable reality of passing some costs on to the consumer, stating plainly: \u201cThere\u2019s only so much you can absorb from the tariffs, because they\u2019re just very high.\u201d<\/p>\n

Levi\u2019s approach to pricing is multifaceted: First, targeted and surgical pricing increases are being implemented, a measure also being taken by most apparel retailers (55% of executives expect further price increases in 2026 in response to tariffs). Second, the company is utilizing promotional levers, specifically pulling back on discounts such as \u201c20% off\u201d events, which helps elevate the brand and mitigate tariff impact by improving margins. Third, the company is pricing for innovation, leveraging new products where consumers are \u201clikely willing to pay more.\u201d<\/p>\n

Levi\u2019s did not respond to Fortune\u2019s request for comment on more specifics about pricing increases to come.<\/p>\n

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Beyond pricing, Levi\u2019s has prioritized internal operational prowess. Gass, who took over as CEO in 2024<\/a>, has been driving a course correction focused on transformation, streamlining the business and reducing unwieldy inventory. Tactical moves included cutting slower-selling SKUs. More significantly, the company is undergoing a fundamental \u201crewiring\u201d to reduce complexity across its network of 120 countries. By increasing the commonality of product across all global stores from less than 10% to about 40%, Levi\u2019s is generating efficiencies across design, sourcing, and merchandising. As Gass summarizes this strategy: \u201cWe\u2019re operating in a complex environment, but we ourselves are becoming less complex.\u201d<\/p>\n

This disciplined approach has delivered results. Levi\u2019s reported a 7% year-on-year increase in quarterly sales in October 2025, posting its fourth consecutive quarter of high-single-digit growth. The company also raised its full-year revenue outlook, even as it cautioned that tariffs would impact margins in the fourth quarter.<\/p>\n

The industry overall is adapting to the new trade map, with 35% of executives planning to shift sourcing to markets with more favorable trade agreements. However, Levi\u2019s emphasizes that in a volatile trade environment, agility depends heavily on strategic supplier partnerships built on collaboration. Gass noted that Levi\u2019s teams talk to vendors 24\/7, treating it as a \u201crelationship business\u201d where sourcing from multiple countries offers crucial flexibility against tariffs and supply-chain disruptions.<\/p>\n","protected":false},"excerpt":{"rendered":"The global fashion industry is bracing for 2026, navigating a market defined by geopolitical instability, macroeconomic uncertainty, and,…\n","protected":false},"author":2,"featured_media":305312,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46,136900,25178,6578,9614],"class_list":{"0":"post-305311","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-economy","12":"tag-levi-strauss","13":"tag-mckinsey","14":"tag-retail","15":"tag-tariffs-and-trade"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/305311","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=305311"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/305311\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/305312"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=305311"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=305311"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=305311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}