Key Takeaways:
- This week, President Trump signed executive orders imposing tariffs on China, Mexico and Canada, offering temporary clarity for brands and retailers, which was then reversed in two of those cases just days later. While trade policy uncertainty reigns, US-headquartered brands should also anticipate indirect consequences, and brands from other countries are already considering alternative strategies for sidestepping nation-on-nation trade disputes.
- AI agents have, in theory, the potential to assist fashion’s solo entrepreneurs and small businesses by handling tasks like marketing, content creation, and sales. While production still lags behind, ongoing advancements in AI and robotics could soon bridge gaps. Is the AI-native brand era here? And is it even a good idea if it is?
- Judging from investments and high spending on major ad spots, Meta and OpenAI see 2025 as a critical year to determine if wearable devices can become the next big computing platform, or if the struggle to go mainstream will continue.
The latest on tariffs and trade barriers, and what brands and retailers need to know
It’s still a volatile, uncertain time in the global market when it comes to tariffs. While our analysis from last week still stands – with the ultimate message being that brands need to be on alert and ready to adapt – some more clarity was provided this week by US President Donald Trump, only to be rug-pulled away not too long after.
This week, Trump signed executive orders imposing tariffs on China, Mexico and Canada, the US’s largest trade partners, under the International Emergency Economic Powers Act (IEEPA). Effective from the 4th of February, the US will impose a 10% tariff on Chinese goods. Imports from Canada and Mexico were also supposed to be hit with a 25% tax, but the US agreed on Monday to delay tariffs on the countries by a month since their leaders agreed to concessions that, in reality, may just be a return to the status quo.
Whatever the current state of tariffs when you read this article, the trendline is clear: changing trade policies will be met with reciprocal action. Following Saturday’s executive orders, Canada imposed 25% tariffs on a wide range of US goods, Mexico vowed to introduce retaliatory measures, and China’s Ministry of Commerce announced plans to challenge the Trump administration’s actions.
The orders also contained a provision suspending the de minimis trade rule for shipments from China, Canada, or Mexico, which allows parcels up to $800 in value – per importer per day – to enter the US without being taxed. This has been framed as a measure to blunt the reach of SHEIN, Temu, and other Chinese companies shipping hauls of low-priced goods to US consumers, but also has broader implications for eCommerce as a whole.
(There was also panic as the US Postal Service (USPS) temporarily suspended packages from China and Hong Kong earlier in the week. However, by Wednesday, USPS announced that it would “continue accepting all international inbound mail and packages from China and Hong Kong Posts.”)
One opinion is that restrictions on de minimis will even the e-commerce playing field for US brands and retailers, as the aforementioned companies will need to rethink their business models. This may be so, but there are also brands based in the US that fulfill orders in China and ship them directly to customers. Manufacturing them in the US is going to mean selling them at a higher cost – a cost that is unlikely to be absorbed by the brand and will be seen by the consumer, especially if China applies levies to US imports.
To add to the competition, SHEIN and Temu are already moving fast to circumvent restrictions. ModernRetail reports both have added more US-based sellers to reduce their reliance on de minimis exemptions. They have also expanded warehouse and distribution operations outside of China. Temu has also entered the advertising space, creating another revenue stream to help offset the impact of tighter de minimis regulations and tariffs.
In addition to the direct, reciprocal tariffs, some of the response so far has been indirect targeting of US brands.
China’s Commerce Ministry said on Tuesday that it had put PVH Corp on its list of “unreliable entities” after the company took what it called “discriminatory measures against Chinese enterprises” and “damaged” legitimate rights and interests of Chinese companies. This is referring to the fact that PVH – like all US brands and retailers – prohibits direct or indirect sourcing from China’s far western Xinjiang province that has been linked to human rights abuses. Why they may have targeted PVH Corp in particular is anyone’s guess.
PVH said it was “surprised and deeply disappointed” to learn of the decision from the Chinese Ministry of Commerce. “PVH maintains strict compliance with all relevant laws and regulations and operates in line with established industry standards and practices,” they said.
While we’re talking mainly about the USA, this is likely to be emblematic of a wider shift in internal trade agreements towards domestic protectionism – so companies outside the US are also thinking about this, and finding creative ways to get around it.
India is the most recent example, as Reliance Retail (led by the billionaire Ambani family) relaunched Shein in India – nearly five years after the fast-fashion e-tailer’s app was banned in the country – under a licensing arrangement. The partnership comes with stringent conditions, including Reliance’s control over operations and data, with all customer information stored in India. Shein will also be required to undergo regular security audits by government-approved cybersecurity firms to ensure compliance with India’s strict data regulations.
While this setup involves significant data trade-offs, it is ideal for fashion companies operating in jurisdictions with advanced manufacturing capabilities, who can benefit from Shein’s technology.
AI agents – a powerful partner for the solo fashion professional, but what does the future really hold?
Tariffs, trade policy, and export blocks don’t just apply to finished clothing (or the constituent parts of it). AI hardware is subject to the same tensions.
This week, Dario Amodei, the CEO of the AI company Anthropic, has stressed that the US needs export controls on chips to China in order to ensure China doesn’t “take a commanding lead on the global stage, not just for AI but for everything.”
Most of the conversation Amodei is alluding to applies to countries not wanting others to get ahead in AI at the state level for national security reasons, but there are implications for fashion and retail, too, as the momentum behind AI agents continues to grow. This is something we’ve previously discussed, and was a major focus at the NRF event in New York last month.
Case in point: this week’s investment into AI agents for e-commerce. Dubai-based startup qeen.ai has raised $10 million to scale its platform, which provides AI-powered marketing agents designed for e-commerce businesses. As per the company, their automated agents handle content creation, marketing, and conversational sales, allowing small and medium businesses to compete without relying on expensive agencies or deep advertising expertise.
And, for what it’s worth, the company’s founders are all Google and DeepMind alums – giving us a small insight into the far-reaching impact that big tech is planning to have on businesses across industries and sectors.
As Paul Sawers for TechCrunch notes, the barriers to solo entrepreneurship have been severely lowered thanks to advanced cloud computing and distributed digital infrastructure.
For fashion businesses, who are still operating more on the traditional side of things, this idea of AI agents end-to-end probably sounds fanciful. But on the other hand, it could be really exciting – especially for brands who are on a budget. It’s possible to use AI for design, for pattern development, for sourcing and risk, for e-commerce and marketing – and in theory it’s also feasible to stack all those things in order to build a mostly end-to-end AI stack.
At the moment, the only part of that stack missing would be production, and investments in robotics could be working towards bridging that. At the end of January, OpenAI recently filed a new application to trademark products with the US Patent and Trademark Office (USPTO) that mentions robots – specifically “user-programmable humanoid robots” and “humanoid robots having communication and learning functions for assisting and entertaining people.
Further along in its filing, OpenAI mentions custom AI chips and services designed to “leverage quantum computing resources to optimise AI model performance.” There has been speculation about OpenAI developing its own custom chips for running AI models.
The company even has a division dedicated to co-designing chip components, and reports indicate that OpenAI plans to launch a custom chip with semiconductor giants Broadcom and TSMC by 2026, as per TechCrunch.
It begs the question – could China be pursuing a similar path? A reasonable assumption would be, yes, absolutely.
Is 2025 the year AI wearables go mainstream? Meta and OpenAI hope so
It seems as though wearables could be getting their biggest society-wide push this year. In the same US trademark filing, OpenAI mentions hardware including headphones, goggles, glasses, remotes, laptop and phone cases, smartwatches, smart jewelry, and virtual and augmented reality headsets “for AI-assisted interaction, simulation, and training.”
And it’s now apparently a “make or break” year for Meta’s metaverse and mixed reality (MR) ambitions (comprising augmented and virtual reality). Meta’s Chief Technology Officer Andrew “Boz” Bosworth told staff this year is “most critical” to prove the metaverse is either a visionary feat or a “legendary misadventure,” according to an internal memo from November, reports Business Insider. A costly one too, as last week, Meta’s Reality Labs’ mixed reality-focused division recorded its biggest-ever quarterly operating loss of $4.97 billion. The division has racked up losses of about $60 billion since 2020.
But Meta is doing the modern-day equivalent of screaming its ambitions for wearable tech from the rooftops with not one but two Super Bowl advertisements, the first of which is already out. In addition, during Meta’s recent Q4 2024 investor call, CEO Mark Zuckerberg hinted at a possible “third-generation” of their smart glasses technology, saying 2025 will be a “defining year” for Meta where they “understand the trajectory for AI glasses as a category.”
“This will be a defining year that determines if we’re on a path towards many hundreds of millions and eventually billions of AI glasses – and glasses being the next computing platform like we’ve been talking about for some time – or if this is just going to be a longer grind,” says Zuckerberg. “But it’s great overall to see people recognising that these glasses are the perfect form factor for AI – as well as just great, stylish glasses.”
We could well be looking at a future where wearable tech, the chips inside it, and the models that run on it, are all regulated, taxed, and protected. All that’s left to say is that we’re living in an incredibly strange time.
