How New Tariffs Impact Fair Trade Brands & Small Businesses

What are these new tariffs?

The recent tariffs announced on April 2, 2025, are intended to protect American manufacturing and jobs. They place higher import taxes on goods coming from certain countries, including India, where Passion Lilie produces its clothing. This means that ethical brands committed to fair wages, sustainable materials, and small-batch productions will face increased costs to get their products to the US.

In a move that may benefit small businesses, the Trump administration closed the de minimis loophole, meaning that fast fashion giants like Shein and TEMU can no longer avoid tariffs by shipping individual orders under $800 directly to consumers. This change is a step toward leveling the playing field, but fair trade brands are still at a disadvantage due to rising costs.

The Negative Impacts on Small Businesses & Fair Trade Brands

•  Higher costs & price increases: Tariffs add a direct cost to making goods in other countries, which means fair trade brands will have to either absorb the cost (hurting profitably) or raise prices (making ethical fashion less accessible to consumers). At Passion Lilie, we strive to keep our prices as low as possible so that everyone can access ethical, sustainable clothing. We’re loathe to raise our prices and make it more difficult for our customers to afford Passion Lilie clothing, so we’ll work as hard as we can to keep our prices affordable.
• Challenges competing with fast fashion: Although fast fashion brands now face tariffs, they still have larger margins and more resources to absorb these costs. Meanwhile, small, ethical brands, which already operate on thin margins due to fair wages and sustainable materials, will struggle to keep prices competitive.
• Reduced access to ethical fashion:  If small fair trade businesses struggle to remain competitive, fewer ethical choices will be available. This means consumers looking for fair wages, sustainable materials, and slow fashion alternatives may have fewer options.
• Domestic production is not always ethical: We fully support efforts to strengthen American manufacturing, but producing goods in the U.S. does not automatically mean fair wages or ethical working conditions. Recent reports of labor abuses in U.S. garment factories – particularly in Los Angeles – show that exploitation can happen anywhere. Simply shifting production to the U.S. is not a guaranteed solution.

It's not all bad news!

• Fast fashion faces more scrutiny: Now that the de minimis loophole has been closed, fast fashion giants like TEMU and Shein will finally have to pay tariffs like everyone else. This could inhibit their ability to flood the market with ultra-cheap, disposable clothing and goods.
• Potential consumer awareness shift: We’re optimistic that shoppers may rethink their fast fashion purchases if prices increase. We hope they’ll consider investing in long-lasting, ethical clothing instead of disposable trends.
• A push for policy change: This situation highlights the need for more equitable trade policies. If enough consumers and businesses advocate for exemptions for fair trade brands, we may see positive changes in trade regulations. We’ll include some scripts you can use below if you’re interested in contacting your representatives.
• Encouraging smarter shopping habits: This could be a great opportunity to educate consumers on cost-per-wear – showing that while ethical fashion may have a higher upfront cost, it lasts longer and provides better value in the long run. In an economy where we must buy less, perhaps we can be the antidote that provides well made, long lasting clothing.

Why We Produce in India

We produce our clothing in India for many reasons. In India, the cotton our clothes are made from is grown within a few kilometers of the Fair Trade workshops where the fabric is woven, dyed, and sewn. We cherish the ancient traditional weaving and dyeing styles that have been passed down for generations. We love working with these highly skilled artisans, and we’re proud to pay them living wages and offer opportunities for personal and professional development.

We recognize the value of domestic production, but the U.S. currently lacks the infrastructure to support small-batch, artisanal manufacturing on a meaningful scale. More importantly, producing in America is not a guarantee of fair labor. Our commitment to India reflects not only tradition and craftsmanship, but a deep investment in a supply chain that we know is ethical, transparent, and empowering for all involved.

What can we do?

• Shop ethically: the more we support ethical brands, the more they can survive tariff increases and continue making a difference.
• Spread awareness: share this post and educate others on how these tariffs impact small businesses and fair trade brands. Talk about this with your friends, and support each other in finding and supporting fair trade brands.
• Contact your representatives: Let your lawmakers know that these tariffs are hurting small fair trade businesses. Urge them to consider exemptions or policies that support ethical brands. Here’s a sample script you can use:

Hello, my name is [Your Name], and I’m a constituent from [Your City, State]. I’m reaching out because I’m deeply concerned about how the new tariffs are impacting small businesses, especially fair trade and sustainable brands. These businesses are committed to ethical labor practices and environmental sustainability, yet they are being penalized with higher costs, making it harder for them to compete.

While I support efforts to strengthen domestic manufacturing, I also recognize that fair trade businesses provide vital opportunities for artisans and workers worldwide who rely on ethical wages. I urge you to consider policies that protect and support small fair trade businesses, whether through tariff exemptions or additional trade protections. Thank you for your time and for considering the impact on small businesses.

Fair trade fashion shouldn’t be penalized while exploitative fast fashion brands continue to dominate. By staying informed and taking action, we can push for a trade system that truly values workers, sustainability, and ethical business practices.