This Week: Waiting on Tariffs, Saks and More

Welcome back to The Week Ahead, your guide to the coming week’s most important and interesting events.

The word of the hour is patience. The fashion industry is waiting for the Supreme Court to rule on tariffs (seriously, what’s keeping them?) as well as anticipating the reveal of Saks’ restructuring plan. And while the men’s shows in Paris will give us another taste of Jonathan Anderson’s Dior, and a last look at Véronique Nichanian’s Hermès, it’ll be the womenswear collections in a few weeks that truly kick off the year in luxury.

Tariffs on Trial

What’s happening: The US Supreme Court’s next opportunity to release its decision on whether the Trump administration’s tariffs are constitutional is on Jan. 20.

Justice delayed: Many court watchers assumed the ruling would land in December, after a majority of the nine justices in a November hearing appeared to reject the White House’s argument that it had the authority to issue tariffs without input from Congress. If that approach is deemed unconstitutional, the vast majority of the levies and trade deals issued since last April could be invalidated.

Where things stand: That leaves the fashion industry in a state of limbo. Tariffs could go to zero overnight, and numerous companies have already sued to recoup what they’ve already paid if the Supreme Court rules their way.

At the same time, President Donald Trump has sent clear signals he’ll continue to use trade as both carrot and stick, reaching a deal with Taiwan last week and threatening new duties on countries that don’t support a US takeover of Greenland.

Bracing for impact: Tariffs had gone from a five-alarm fire to background noise for many brands. Most countries that play a major role in fashion manufacturing have landed on tariffs somewhere between 10 and 20 percent, unwelcome but low enough to manage without shaking up supply chains or hiking prices repeatedly.

That last bit is key. Consumers are in a foul mood — the University of Michigan’s widely tracked sentiment reading came in at a near-record low in December (the next one comes out on Jan. 23). But people are shopping even as they grumble — holiday spending rose by more than the rate of inflation.

But Trump’s surprise 10 percent duty on eight European countries last week was a reminder that the situation is fluid, and is likely to remain so, whatever the court decides.

The Battle for Saks

What’s happening: Saks received approval from a Texas judge to receive $400 million in funds to continue operating in bankruptcy. An additional $1.35 billion is being teed up for release next month.

A necessary lifeline: Saks needs this cash to keep its stores opened and stocked with merchandise while it works through the bankruptcy process.

But not all of Saks’ creditors believe more money can solve the retailer’s problems. Amazon, a minority investor in the deal that saw Saks and Neiman Marcus merge at the end of 2024, objected to the $400 million payment, and appears keen to keep fighting. The e-commerce giant’s argument boils down to not throwing good money after bad, and that “immediate liquidation” of the 5th Avenue flagship would be the optimal way to see creditors paid.

Battle lines drawn: Amazon’s position is a lonely one. Senior secured bondholders ponied up most of the $1.75 billion, and thousands of unsecured creditors, including hundreds of luxury brands, are counting on the court keeping Saks open.

Anything’s possible: Bankruptcy court is not a democracy, however. Saks needs to provide a restructuring plan that is more financially appealing than liquidation. It’s an unsentimental process, and as Barneys’ demise showed, the unthinkable is possible.

Still, it’s a good sign that many brands are continuing to work with Saks, either because they believe there’s hope for American luxury department stores, or simply because they have nowhere else to go.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.