Fashion’s global supply chain is being upended in real time.
President Donald Trump authorized a joint U.S.-Israel military strike on Iran that killed the country’s supreme leader, Ayatollah Ali Khamenei, and caused widespread damage to civilian infrastructure and nuclear sites. Beyond the immediate human and political toll, the attack has triggered significant disruption across global trade routes.
Much of that disruption is centered on the Strait of Hormuz, a key maritime chokepoint through which roughly 20 percent of the world’s oil and liquefied natural gas supply flows, according to the Center for Strategic and International Studies.
Trump on Tuesday evening declared a ceasefire, highlighting the importance of the waterway. “Based on conversations with Prime Minister Shehbaz Sharif and Field Marshal Asim Munir, of Pakistan, and wherein they requested that I hold off the destructive force being sent tonight to Iran, and subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz, I agree to suspend the bombing and attack of Iran for a period of two weeks,” the president wrote on Truth Social.
Uncertainty remains, however, when it comes to the flow of global trade. Prior to the escalation, between 100 and 130 vessels, including oil tankers, were transiting the strait daily. In the immediate aftermath of the strike, traffic dropped sharply, with maritime visibility platform Windward reporting an 81 percent decline from its seven-day average. Adding insult to injury, major carriers including Maersk and Hapag-Lloyd have even paused transit through the corridor, raising concerns about delays, rerouting and rising freight costs for goods moving in and out of the Persian Gulf.
Iran has been imposing transit fees on select commercial vessels moving through the strait, with some estimates reaching as high as $2 million per passage.
While the broader consequences of this upheaval extend beyond any single sector, fashion is among the industries expected to feel the impact most acutely. The denim market, in particular, has spent the past year grappling with mounting cost and compliance pressures tied to Trump’s broader trade agenda, forcing the industry to rethink where and how products are made.
Derek Lemke, senior vice president at Exiger, an AI-driven supply chain risk management firm that works with several denim brands like OshKosh, told SJ Denim that the global rebalancing of denim sourcing has been complicated by escalating geopolitical tension across key trade corridors including the Strait of Hormuz, adding another layer of volatility to an already fragile supply chain environment.
“With total costs on China-origin denim often exceeding 30 to 40 percent, brands are redirecting new orders to Vietnam, Bangladesh, Pakistan and Mexico, but they’re not walking away from existing production overnight,” he said. “Fit, fabric and wash consistency keep a lot of volume anchored. In the meantime, they’re absorbing 5 to 10 percent cost increases through pricing adjustments and vendor negotiations. The reality is denim doesn’t move overnight, and right now [the industry is] managing both the shift and the cost simultaneously.”
“Tension in the South China Sea and around the Taiwan Strait creates real exposure for brands sourcing fabric and finished goods from Asia, where disruption to those lanes affects transit times and insurance costs almost immediately,” Lemke said. “Add Iran-related risk in the Strait of Hormuz, which drives oil prices and hits freight costs across South Asian sourcing lanes, and you have multiple pressure points operating simultaneously. For denim brands, that means carrying more inventory and building in longer lead times just to stay on schedule. The real issue isn’t just cost; it’s that the unpredictability is structural now, not episodic.”
Global tensions drive denim onshore
That tension between long-term diversification and short-term dependency is shaping sourcing decisions more broadly, according to John Lash, group vice president of product strategy at E2open.
“When it comes to decisions like nearshoring or shifting sourcing to countries with more favorable duties, the challenge is that rewiring the supply chain requires long-term certainty. Otherwise, a good decision this week could easily become a bad decision next week. That’s simply too much risk to justify major structural changes,” Lash told SJ Denim. “That said, there is a clear shift, particularly in the U.S., toward nearshoring. Companies are moving production closer to home, especially to Mexico, with some targeting over 80 percent North American content to avoid tariffs altogether.”
One mill already making this shift is Artistic Milliners.
Based in Pakistan, where most of its production takes place, the mill has expanded its global footprint by acquiring VF Corporation’s Dickies de Parras facility in Parras, Mexico. Following the acquisition, the company moved quickly to upgrade the 10-acre complex and reaffirmed its commitment to scaling operations in the region, signaling confidence in the long-term viability of its Mexico strategy despite ongoing tariff uncertainty.
“We are continuing business as normal. We strongly believe in the add value benefit of being in [Mexico] and investing in it,” Sergio Turbay, executive vice president of global strategy and sales at Artistic Milliners, previously told SJ Denim. “The great thing is that our brands and partners believe in this as well. So, we are continuing our investment, and we look forward to expanding our manufacturing in the region [even further].”
The company has also continued to expand its global platform by acquiring a majority stake in Cone Denim, the U.S.-based mill with operations in Mexico and China, further positioning itself to offer brands greater flexibility across regions.
“Cone Denim’s distinctive position as the iconic American manufacturer joins Artistic Milliners’ global portfolio, creating an international organization that leverages our collective infrastructure and expertise to offer customers unparalleled service and flexibility,” said Murtaza Ahmed and Omer Ahmed of Artistic Milliners in a joint statement at the time of the acquisition. “Our multinational manufacturing locations will offer speed, scale and surety of supply.”
While global mills like Artistic Milliners are investing in diversification and nearshoring to manage mounting volatility, others are navigating the shifting landscape in a fundamentally different way.
Ali Grace, founder and CEO of her namesake denim label, for example, said her business has been largely insulated, thanks in part to a model that sidesteps many of the pressures facing traditional supply chains.
Because the brand works primarily with existing vintage garments sourced in the U.S. and produces everything made-to-order, it is less exposed to tariffs, shipping delays and large minimum production requirements tied to overseas manufacturing.
“What’s been working for us is that our model was built differently from the start,” Grace told SJ Denim. “We’re not dependent on overseas fabric production or long development cycles. We work with existing vintage garments and produce everything in-house—from sourcing the raw denim to altering, washing and fulfillment—which gives us a level of control that’s very different from traditional brands.”
That structure has helped the company avoid many of the disruptions currently impacting the broader denim market. In fact, Grace said the brand has seen only minimal increases in raw material costs, with most sourcing remaining domestic and largely unaffected by tariffs or import-related delays.
“Because everything happens in-house, we’re able to adjust quickly, produce in smaller batches and actually stand behind our lead times,” she added.
