American clothing and accessories retailers are hitting the brakes on new orders and staffing plans as looming tariff hikes on imports from Vietnam and China take effect this Wednesday.

Faced with the prospect of soaring costs, brands like Nike and Lululemon confront a stark dilemma: either pass on the 40% tariff burden to customers — risking a sharp decline in sales — or absorb the financial blow themselves, further squeezing already thin profit margins.

However, while global giants like Nike benefit from diversified supply chains, smaller retailers and manufacturers are feeling the pressure most acutely. Without vast networks to fall back on, they remain heavily reliant on Vietnamese and Chinese factories.

Ian Rosenberger, CEO of Day Owl, a New York-based backpack brand, has already halted future orders. “Without meaningful tariff relief, we could be out of business in 30 days,” Rosenberger warned. His company, which manufactures in Vietnam, faces a stark deadline, as its 100-day production cycle leaves little room for delay, especially with the critical back-to-school season looming.

“The damage is already significant enough to be an existential threat,” Rosenberger added, noting that his team of seven employees fears impending job losses. He estimates that tariffs will raise duties on his premium backpack from $5 to $22, forcing a retail price hike from $155 to $212.

The Footwear Distributors and Retailers of America (FDRA) — representing brands such as Nike, Skechers, Walmart, and Deckers — projects that a $155 pair of Vietnamese-made running shoes would need to sell for $220 in U.S. stores just to break even under the new 46% tariff.

Vietnam has emerged as a global manufacturing powerhouse, specializing in everything from high-tech athletic shoes to performance apparel. As the second-largest source of U.S. clothing and footwear imports after China, Vietnam plays a vital role in the supply chains of giants like Nike and Adidas.

In an effort to avoid further economic strain, Vietnam has requested a 45-day delay on U.S. tariffs and pledged to increase purchases of American goods. Last Friday, U.S. President Donald Trump and Vietnamese leader To Lam agreed to negotiate a potential deal to lift the levies.

Since Trump’s tariff announcement on April 2, shares of major sportswear brands have tumbled. Nike has dropped 14%, Adidas is down 16%, Puma has slipped 18%, and VF Corp — owner of brands like The North Face — has plunged 31%.

While larger corporations are leveraging their global supplier networks to offset the impact, smaller businesses are scrambling. VF Corp, for example, stated it is “well diversified across our supply chain to manage tariffs.”

For smaller brands like Seattle-based Oiselle, the picture is far bleaker. The women’s running apparel company, which sources its leggings, sports bras, and tops from Vietnam, has frozen orders for its spring 2026 collection.

CEO Arielle Knutson has tasked her 14 full-time employees with developing multiple contingency plans alongside their regular duties. “We’re doing everything we can to stay ahead,” Knutson said, as the company navigates uncertain times.