The threat of tariffs from the US — seemingly dropped as quickly as they are proposed — is now par for the course for global fashion and luxury brands, who will need to adjust to the fact that trade terms are now wielded as blunt negotiation force.

Over the weekend, US President Donald Trump threatened sweeping tariffs on eight European countries — Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland — tying trade penalties to an extraordinary demand for the “complete and total purchase of Greenland”. In a Truth Social post, Trump said imports from the named countries would face a 10% tariff starting 1 February, rising to 25% on June 1, unless a deal is reached.

However, on Wednesday, after a critical speech at the World Economic Forum in Davos, Trump once again took to Truth Social to announce that the tariff threat had been dropped, thanks to a meeting with Mark Rutte, secretary general of NATO. “We have formed the framework of a future deal with respect to Greenland,” Trump wrote. “Based upon this understanding, I will not be imposing the tariffs that were scheduled to go into effect on February 1.”

US stocks rallied on Wednesday after the announcement, following a plunge earlier this week as the renewed threat of more tariffs set in. For an industry already navigating prolonged tariff volatility, the announcement has landed less as a shock than as confirmation that uncertainty is becoming a permanent operating condition.

“Our immediate reaction was concern, but not surprise,” says Helen Brocklebank, CEO of Walpole, which represents the UK luxury sector, of the threatened 10% tariff on the UK. Luxury brands, she notes, are operating in an increasingly politicized trade environment, where announcements can be made quickly and with limited consultation.

The US remains a critical market for European fashion and luxury exports, and even speculative tariff threats introduce friction into pricing, sourcing, and investment decisions. Yet, after a year of near-constant trade disruption, brands appear less inclined to panic — and more focused on preparedness.

A familiar rollercoaster

For many executives and advisors, the Greenland-linked threat felt like an escalation of a trend that began in earnest last year.

“The initial reaction was despair as this represents an escalation of the trade disruption that started in 2025,” says Neil Saunders, managing director of retail at GlobalData. “While no one expected tariffs to disappear, there was a hope that this year would be more of a settled state that would be about adjusting to the tariff changes rather than having to react to new ones. That is clearly not the case as tariffs are now being used for political purposes, which means the uncertainty continues.”

That uncertainty is compounded by the informal nature of the announcements. Angela Santos, partner at ArentFox Schiff, notes that the threat emerged and was then called off via social media rather than official trade channels.

“My first thought was, here we go again,” she says.

Still, brands have learned the hard way that dismissing early signals can be risky. What last year demonstrated, Santos says, is that Truth Social posts can become actionable developments — or fade into political rhetoric. Either way, even speculative announcements create real uncertainty for businesses that depend on predictable duty rates and cannot quickly shift production.

Operational fatigue and legal uncertainty

Most luxury businesses, Brocklebank says, are resisting knee-jerk decisions to tariff threats. Acting too early can be as damaging as acting too late, particularly in a sector where pricing, perception, and long-term brand equity matter. What is changing is not speed, but preparedness.

Operationally, prolonged uncertainty can be paralyzing. Companies delay long-term sourcing decisions as conditions remain in flux, weighing whether to invest in relocating production or hold back in case threats fade. The result is frozen capital spending, strained supplier relationships and blurred cost visibility.

Tariff fatigue is real, Santos warns — and it can be dangerous. When businesses are inundated with shifting threats, compliance risk increases as decision-making stalls. Santos says ArentFox Schiff is guiding clients through contingency planning — including supply chain diversification, accelerated imports, and delaying non-essential production — while being urged to avoid overcorrection. “We are also cautioning clients not to take immediate and irreversible action,” she says, noting the risk that the threats may not materialize.

Still, the accumulation of costs matters — and the legal backdrop is becoming harder to ignore. The Supreme Court is expected to rule next month on whether Trump exceeded his authority in imposing tariffs under the International Emergency Economic Powers Act (IEEPA), a decision that would have wide-ranging implications for how easily tariffs can be deployed going forward.

Against that backdrop, brands are being urged to prepare rather than wait. Ali Furman, PWC’s consumer markets industry leader, says companies should already be stress-testing exposure. “Fashion and beauty leaders should act now to quantify potential exposure, assess margin risk, and be refund-ready before the Supreme Court’s ruling,” she says.

Beyond operational questions lies a deeper concern: how to distinguish short-term political shocks from long-term structural change.

Executives are becoming more inwardly focused, says Rita McGrath, professor of management at Columbia Business School, concentrating on variables they can still control while closely monitoring those they cannot. At the same time, questions around enforceability are shaping decision-making. Without confidence in binding, durable agreements, companies are far less willing to commit capital or put long-term assets at risk, she adds.

For now, most brands are opting for flexibility over dramatic change.

“I would say not to make hasty decisions as a lot can change on tariff policy,” Saunders says. “Keep channels of conversation open with buyers in the USA, and have contingency plans such as exporting from alternative manufacturing sites (if available) or exporting as much as possible in advance of tariffs.”

What has changed is not the playbook, but the expectation that it will need to be deployed again — and again.

“It is already baked in,” Saunders says of tariff volatility. “Most brands and retailers have models that look at different scenarios for tariffs and they have contingency plans. The past year has taught most companies that they need to be nimble.”

For McGrath, the deeper issue is not any single tariff threat, but the erosion of a model the industry long took for granted. The era of global labour cost and tariff arbitrage — where brands could optimize production across borders with relative predictability — is being fundamentally disrupted, she argues. In a world where costs can no longer be reliably forecast, companies must reassess whether complex cross-border production still delivers the advantages it once did.

That does not necessarily mean reshoring, McGrath cautions, but it does require a shift in mindset. Brands should be building supplier relationships across multiple countries that can be activated quickly, investing in flexibility rather than narrow optimization. Scenario planning, once treated as an annual exercise, now needs to happen far more frequently.

“It’s worth making investments in adaptability and mutual response capability,” she says, rather than continuing to prioritize efficiency alone.

Episodes like the Greenland tariff threat — announced, escalated and then withdrawn in a matter of days — only reinforce how fragile old assumptions have become. For fashion and beauty, the challenge is no longer predicting the next trade move, but designing supply chains resilient enough to absorb whatever comes next.

“Just because they reached an agreement today doesn’t mean Trump wouldn’t impose tariffs later,” says Santos.