By John Keilman

Forget squabbling over a restaurant check or cab fare -- try wrangling over who will cover tariffs on billions of dollars' worth of imports.

Apparel companies and their overseas suppliers for weeks have been going back and forth over whether and how to share the cost of President Trump's tariffs. In many cases, they still haven't agreed.

VF, parent of North Face, Dickies and other brands, has asked its vendors and suppliers for a 3.5% cost reduction, according to communications reviewed by The Wall Street Journal.

"These tariffs have a significant financial impact and we are asking for your partnership to share the financial burden," VF said in a late April message to vendors and suppliers. But VF warned that suppliers shouldn't cut corners: No lowering wages or weakening worker protections, for instance.

Welcome to the world of tariff haggling.

Trump announced his sweeping "Liberation Day" tariffs in early April, leaving CEOs to figure out how to manage the added costs. The Bipartisan Policy Center estimated that U.S. tariff-related charges have reached roughly $70 billion so far this year.

Apparel suppliers with factories in Asia said brands haven't backed off their requests after the Court of International Trade last week blocked many of Trump's tariffs -- a decision that was temporarily put on hold by an appellate court.

Factory owners and industry consultants say overseas fabric mills and garment makers often operate with profit margins of less than 3%. Tariff-related discounts, they say, could turn their enterprises into money losers.

"Some of the mills are saying, 'We can't afford this,'" said Chris Parkes, whose U.S.-based company Concept III is a matchmaker between clothing brands and overseas suppliers.

Paul Vogel, VF's chief financial officer, said during a May earnings call that the company is "leveraging our deep and longstanding relationships with our partners" and plans to fully offset the 10% tariffs through cost cutting, higher prices and relocation of some of its sourcing.

Most suppliers for the company's U.S.-bound goods operate outside of China, in countries such as Vietnam, Bangladesh and Cambodia, he said. VF declined to comment further.

One factory owner said splitting tariff expenses is unfair because his company is already absorbing higher costs from rising labor rates, unfavorable currency shifts and demands for sustainable manufacturing.

Other brands have made similar requests of suppliers. Outdoor outfitter REI has asked vendors to absorb half of the tariffs. 5.11 Tactical, which sells apparel and military-style gear, has requested a 5% discount from its vendors and suppliers, according to emails viewed by the Journal. Snowboard maker Burton, which also has a branded clothing line, has sought a 3% invoice discount from companies that make fabric and trim.

"Our success is deeply interconnected, and preserving it is in our interest, your interest, and our partner factories' businesses," Burton said in a letter viewed by the Journal.

The companies didn't respond to requests for comment.

On the retail side, Walmart Chief Executive Doug McMillon has said that treating suppliers well is a company priority as tariffs take hold. Macy's, meanwhile, has been explicit about driving a hard bargain.

"If something isn't priced fairly, we're not going to buy it," Macy's CEO Tony Spring told analysts during an earnings call in late May. "If a price point is important, we're going to hold it. We're going to negotiate fairly and aggressively with our partners as well as with our factories."

Dan Demsky, co-founder and CEO of Unbound Merino, a Canadian company that specializes in clothes for travelers, said his suppliers throughout Asia and Europe are helping shoulder some of the tariff burden.

"Everyone's scared, everyone's trying to figure it out and everyone wants to make sure that business can go on as usual," he said.

One of Demsky's suppliers is ABMT Textiles, which manufactures fabric and garments in Australia, Vietnam and Bangladesh. Julian Collins, the company's group commercial manager, said he is trying to work with brands, trimming expenses through measures such as standardized paperwork. He isn't offering blanket reductions.

"I jokingly said, 'Well, you guys voted him in, you pay the tariffs,'" he said, referring to Trump. "We've set our costs, and our costs are what they are."

Collins added that as brands and suppliers negotiate over tariffs, they aren't focusing on a primary concern of the apparel business -- what is coming next. He recently attended a trade show where new products are usually the center of attention, only to find discussions dominated by talk of tariffs and supply-chain moves.

"That will cause significant disruption to the industry -- this pause on development and this pause on innovation," he said.

Write to John Keilman at john.keilman@wsj.com

(END) Dow Jones Newswires

June 06, 2025 05:30 ET (09:30 GMT)

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