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Fast-fashion companies churn out affordable, trendy tops and trousers to meet the tastes of the day, targeting fashion-savvy Gen Zers and young adults on a budget. For years, the Spanish fast-fashion retailer Zara has stood out for delivering wardrobe staples and bold new styles to its stores with remarkable speed.

But recently, two companies have managed to "out-Zara Zara," says Hau Lee, professor emeritus of operations, information, and technology at Stanford Graduate School of Business: Shein, the Chinese fast-fashion e-commerce giant, and Temu, the U.S.-headquartered Chinese-backed global marketplace. "They appeared to be faster than Zara, and it intrigued me," says Lee, who studies global supply chains and how companies innovate to deliver products and services more effectively. "How could they be so fast? How could they be so successful?"

In two recent papers, Lee—together with Li Chen, Ph.D. ’05, of Cornell University and Shiqing Yao of Monash University—breaks down the unique business model of what he calls "ultra-fresh" fashion.

Lee, a self-confessed "not a fashion person," says he aspires to become an ultra-fresh fashion expert. "It’s a fascinating area of study because it has so many implications." His new research offers insights into the unintended consequences of U.S. tariffs as well as the environmental impact of cheap, disposable clothing.

Bombing the market

Lee and his colleagues first created a sophisticated game-theoretic model that teases apart how ultra-fresh fashion companies operate. "We discovered something that people have overlooked," he says. When his team examined the businesses’ manufacturing processes, production cycles, and other data, they found companies like Shein and Temu are not, in fact, significantly faster than Zara at producing and shipping products. Rather, the ultra-fast-fashion companies excel at designing their products at an especially rapid clip.

They harness low-cost technologies such as big data and machine learning to mine information on trends from social media and the web—including what popular actors are wearing and what’s hot at trade shows—and then deploy artificial intelligence to generate thousands of designs. "As a result, they can launch a lot of products fast," Lee says. "They just bomb the market, and hopefully some land."

"Every day, it’s something new, something you haven’t seen before," Lee says. "This is a distinction. When they design fast and cheap, they have product variety, they’re able to launch very frequently, and they can sell their products cheaply."

One risk of this approach is the potential for copyright infringement and lawsuits from artists and brands that believe their ideas have been copied without permission. The ultra-fast-fashion model also has a heavy environmental footprint, since many garments are discarded after just a single wear.

Tariffs’ unexpected impacts

However, the researchers found a factor that has inadvertently tempered the environmental toll: tariffs. Last spring, Chen visited several small factories in China’s Guangdong province that produce garments for Shein. He toured production lines and spoke with factory owners and industry experts. He was surprised to hear the sentiment that President Donald Trump’s tariffs weren’t an existential threat to Shein, since the company has larger markets to sell to.

To understand the tariffs’ impact more deeply, the team ran its model to see how ultra-fast-fashion giants have fared since the U.S. ended its de minimis exemption—the rule that let small, inexpensive shipments bypass duties and most customs processing. They found that the double blow of ending de minimis plus raising tariffs prompted the companies to pass on the costs to consumers. In turn, this dampened sales and product launches, as well as the freshness factor. Consumers have less choice, but fewer products are being thrown away.

In response to tariffs, ultra-fresh fashion companies have pivoted to secondary markets, a strategy the researchers call "United States Plus One." The researchers compare this to the China Plus One strategy many non-Chinese companies have taken to diversify their manufacturing and supply chains outside of China. "Policymakers have to understand that tariffs are not necessarily punishing," Lee says. "You think you’re punishing the other country, but you’re really not."

Latin America may be a major piece of the fast-fashion companies’ growth strategy. After the U.S., the biggest share of Shein app downloads last summer were in Brazil, Mexico, and Argentina. "Downloads are a good indicator, and they show these companies are pushing very hard to diversify their market," Lee says.

In upcoming work, Lee and his colleagues will study the policy tools governments can use to mitigate fast fashion’s social impact. "When we talk about implications, we have to look at all stakeholders, which are manufacturers, consumers, the government, and Mother Earth," Lee says. "There are multiple instruments policymakers can use, and often it’s a combination that works the best. It’s the idea that one plus one is bigger than two."

Citation: How AI and tariffs are transforming fast fashion (2026, January 21) retrieved 21 January 2026 from https://phys.org/news/2026-01-ai-tariffs-fast-fashion.html

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