Do US apparel retailers absorb or pass through tariff costs? Evidence from US apparel import and retail prices, 2015–2025

Purpose This study aims to examine how changes in US apparel import tariff rates were transmitted through the apparel import-to-retail pricing chain, focusing on their effects on import prices, retail prices and the timing of these adjustments. Design/methodology/approach A reduced-form vector autoregression model was estimated using monthly US apparel data from January 2015 to December 2025. Findings Tariff shocks had only a limited influence on US apparel import prices, with import prices remaining largely driven by their own dynamics. Meanwhile, although US apparel retail prices exhibited a moderate positive response to tariff shocks after a lag of approximately two months, this effect was temporary and relatively small. Taken together, the findings suggest that US apparel retailers and their supply-chain partners absorbed a substantial share of additional tariff costs rather than fully passing them on to consumers in the short to medium term. Originality/value This study provides some of the first apparel-specific empirical evidence on how tariff shocks were transmitted through the US apparel import-to-retail pricing chain covering the latest wave of US tariff increases, extending existing research that has focused primarily on macroeconomic effects of tariffs.