Tariff compliance extends far beyond the duty line on customs documentation. The complete landed cost structure now incorporates elevated freight expenses, insurance premiums, and brokerage fees. For fashion and apparel brands in particular, establishing 'wholly obtained' status presents significant hurdles: Italian fabrics might complement Chinese trims within garments assembled in yet another jurisdiction. This intricate supply chain reality creates exposure to classification errors, duty overpayments, and potential compliance penalties.
The impact reverberates throughout luxury and premium sectors. Tapestry, parent company of Coach and Kate Spade, has signaled a substantial $160 million reduction in FY2026 profits despite positive sales trajectories (Vogue Business). Meanwhile, heritage houses like Burberry and conglomerates such as LVMH are navigating the delicate equilibrium between margin protection and brand positioning, with selective price adjustments and operational efficiencies under consideration (The Times). Health and beauty brands face their own distinct challenges, where tariff rates can pivot on granular details like packaging dimensions or formulation specifics, FDA inspections and CPFC reviews introduce additional clearance delays. Even industry titan Estée Lauder projects a $100 million tariff-related reduction in FY2026 earnings (Vogue Business). For emerging beauty exporters, the stakes are even higher—not merely margin compression but potential viability questions for entire product lines in the U.S. market.
The end of the de minimis exemption on 29 August 2025 adds a further layer of strain. Until now, parcels under $800 could enter duty-free; soon, every shipment will require formal customs entry. This change directly threatens the DTC models that powered much of UK and EU growth into the U.S. Now, fashion and beauty brands built on high-volume small-parcel fulfilment face either absorbing additional costs or pivoting their logistics model.
Yet amid disruption, opportunities are emerging. Investing in smarter customs planning, from licensed brokers who ensure accurate HTS codes to Shopify ecosystem tools like Swap, Avalara, and ShipStation that automate duty and tax calculation. Global-e, widely used by UK and EU exporters, facilitates cross-border checkout and compliance, though it should be complemented with licensed brokerage for accurate classification.
Fulfilment strategies are also evolving. Many brands are moving inventory into U.S. 3PLs, paying duties once per bulk shipment rather than per order. This lowers per-unit freight costs, speeds up delivery, and enables “ships from USA” messaging. For high-value fashion, beauty, and homeware, the economics are often favourable. Others are refining product mixes, prioritising SKUs with stronger margins or lighter tariff exposure.
Some exporters are going further still by establishing a U.S. entity. In practice, this means bulk-shipping goods at declared manufacturing cost, paying duties once on that base value, and then selling domestically. While legitimate, it is not a loophole. U.S. Customs requires arm’s length pricing between related entities. When brands attempt to underdeclare values, they risk enforcement; Shein and Temu have both faced U.S. scrutiny for aggressively exploiting de minimis thresholds and undervaluing shipments (Bloomberg). The more common and safer route is to pair a U.S. subsidiary with a bonded warehouse or 3PL. This transforms unpredictable per-order duties into a consolidated, predictable cost structure and provides a stable operational base for scaling in the U.S.
The end of de minimis, while disruptive, levels the playing field for established exporters who previously competed with ultra-low-cost imports. Brands can differentiate more clearly on quality, service, and equity rather than being undercut by volume-driven rivals. Tariffs are also driving overdue investment in operational resilience, from diversified sourcing to scenario-led financial planning. Some UK and EU brands are even experimenting with consumer-facing transparency, using email or social updates to outline what is known, what is uncertain, and what steps are being taken. This honesty, handled carefully, can build trust at a time when confidence in global commerce is low.
Final Thoughts
At Domaine, we work with brands to navigate growth in complex markets. Our strategy function partners with you to create tailored roadmaps that align with your challenges and goals. Whether you’re exploring U.S. fulfilment through a 3PL, evaluating entity setup, or seeking clarity on landed costs, we build clear, actionable plans that balance resilience with growth.
If you’re rethinking how your brand sells into the U.S., we can help you turn disruption into an opportunity to scale.
Need help navigating the impact of U.S. tariffs on your business?
Get in touch with Domaine to see how we can architect a solution that fits your unique challenges and growth goals.
