Levi’s CEO Highlights Impact of High Tariffs on Business

The global fashion industry is facing significant challenges as it approaches 2026. Geopolitical tensions, macroeconomic instability, and soaring U.S. tariffs are reshaping the landscape. According to executives from McKinsey and Business of Fashion, tariffs have become the foremost concern for leaders in this sector.

Surging U.S. Tariffs and Their Impacts

U.S. tariffs on apparel and footwear imports jumped dramatically. Early in 2025, the tariff rate was approximately 13%, but it surged to 54% after government announcements in April. While rates were later reduced, the average weighted tariff for these imports remained at 36% by mid-October. This rate far exceeds historical norms, heightening the pressure on the apparel and footwear sectors.

• 54% – Peak tariff rate on apparel and footwear imports.
• 36% – Weighted average tariff as of mid-October.
• 76% of fashion executives view tariffs as the primary issue for 2026.

Industry Adaptations for Sustainability

The “State of Fashion” report outlines how brands are reacting to tariff uncertainties. A notable 55% of executives anticipate future price hikes as a direct response. In addition, the report highlights key shopper trends, such as a preference for resale items and purchases that promote a sense of well-being.

Levi Strauss Strategies Amid Challenges

Levi Strauss & Co., under the leadership of CEO Michelle Gass, is navigating these turbulent waters with a strategic approach. Approximately 60% of Levi’s business is international, which helps mitigate the impact of tariffs compared to domestic-only firms.

Pricing Strategies and Operational Efficiency

Gass has implemented a comprehensive pricing strategy. This includes:

• Surgical pricing increases targeted at specific products.
• Reducing promotional discounts to enhance brand value.
• Exploiting new product innovations that allow for higher pricing.

Levi’s has also focused on internal operational improvements. Since Gass became CEO in 2024, the company has streamlined operations, reducing inventory complexity across its 120-country network.

Results and Future Outlook

This disciplined approach has paid off. In October 2025, Levi’s reported a 7% year-on-year increase in sales, marking its fourth consecutive quarter of growth. Despite this positive trend, the company remains cautious about tariff impacts on its profit margins.

As the fashion industry adjusts, 35% of executives are looking to reposition sourcing in regions with better trade agreements. Levi’s emphasizes that building strategic supplier partnerships is crucial for agility in a complex trade climate. By maintaining open communication with vendors, Levi’s aims to enhance its flexibility in response to tariffs and supply chain challenges.