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Can a Savile Row Buffeted by Brexit Survive Trump Tariffs, Too?

Fashion brands around the globe are facing the unenviable task of trying to keep up with modern politics. The latest sector to feel the heat? British tailors, who have been left reeling in the wake of news that they will face additional tariffs of 25 percent on their U.S. exports from Oct. 18.

How profoundly this wool-centric tariff will impact the famous suiting street of Savile Row—which has dressed the world’s most impressive men, fictional and real—remains to be seen. Movie stars, politicians, royalty and even James Bond himself have all visited the manicured Mayfair road in search of a beautifully tailored piece of clothing.

But can it survive the Trump era?

In the midst of this unprecedented uncertainty, British luxury non-profit organization Walpole kicked off its third annual trade offensive in New York City Monday to showcase the “creativity and innovation that typifies luxury in the U.K.,” according to CEO Helen Brocklebank.

“British luxury exports over £9 billion [$11.7 billion] of goods annually to the U.S. and as the U.K. looks beyond its borders into its future global trading relationships, high-end British brands’ success at doing business overseas will be more important than ever,” she added, noting that the “huge growth opportunity for British luxury and the appetite of the U.S. customer for our brands and services grows every year.”

Brocklebank no doubt hopes that American appetites for British suitmaking hold up, because despite their illustrious history, many of Savile Row’s top tailors rely heavily on the stateside market for much of their turnover. For the majority of houses on Savile Row, U.S. clients equate to 70 percent of their business, and brands including Huntsman, Jasper Littman and Richard James maintain their only brick-and-mortar stores outside of London in Manhattan.

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The wolves of Wall Street in New York’s financial sector currently provide them with enough clients to stay afloat: each Savile Row suit is tailored for the buyer and costs up to $40,000, a price few can afford.

The Oct. 18 measures affect £35 million (about $46 million) in British exports, according to the UK Fashion and Textile Association. The move by the Trump administration is part of a dispute over aviation subsidies between the U.S. government and the EU, but British brands feel they have been unfairly targeted—Italian and French tailors and cashmere manufacturers will not face similar 25 percent duty increases.

Add to that the fact that the British fashion industry is bracing itself for the potential fallout of a no-deal Brexit—though Parliament seems to be inching toward an agreement—and you have a recipe for even more uncertainty.

“Any tariffs and barriers to trade are of course a worry—and highlight that we are dealing with a more isolationist White House,” Tamara Cincik, the director of British lobbying firm, Fashion Roundtable, said. “Once we Brexit, we will get out of any trade wars the U.S. has with the EU, but it signifies that Trump’s government will use trade and tariffs for poker-play negotiations on the world stage, which all feels like The Apprentice.”

But to what extent will a 25 percent hike in prices really affect the Savile Row business in the U.S.? Yes, it is a hefty amount, but their target market are the richest men in America—could the prestige of owning a suit from the world’s most famous tailors trump tariffs?

“This policy underestimates the Savile Row customer in the USA, and our longstanding partnership with them,” Bev Malik, a British fashion and retail consultant specializing in sourcing, said. “I don’t believe for a moment that a loyal customer will balk too much at the increased price tag.”

The tariff feels “symbolic,” Malik added, and like “a direct attack on that liberal creative elite—Hollywood or Manhattan—that Trump finds himself out of favour with.”

The U.S. has, however, been a very steady market for the British tailoring industry and this move will naturally squeeze Savile Row’s margins in the short term. Tailors will need to find creative ways to get around it—one of which will be to increase their marketing in Asia, specifically centers of wealth in China, Hong Kong and Singapore.

“We will of course try and stomach some of the costs from the customer to protect them,” James Sleater, the director Savile Row brand Cad the Dandy, said. “But fundamentally it means that we as a company and we as a street need to make our products even more alluring to the consumer to ensure that our products remain fair value for the price associated with them. However, we also have to accept that there will definitely be a price sensitivity, with a number of U.S. customers that may reduce their suit purchasing with British tailors.”

Sleater says that while Cad & the Dandy was caught unaware by the new taxes, Savile Row should use the opportunity to elevate its brand, which has historically always been about understatement. He says that while Italy’s suit makers—who are not facing U.S. tariffs—have actively promoted their industry, Savile Row has not. “Never before has branding been quite this important,” he said.

Those who want to continue buying British suits could change the way they shop. At present, a number of Savile Row tailors fill their books with suit orders placed during trunk shows in America, which are then made in London and shipped back to the States. In the future, American businessmen may choose to order their suits during trunk shows but complete the purchase during a trip to London.

The continued uncertainty of Brexit makes prices even harder to predict. On one hand, the decrease in the value of the pound has already made prices marginally cheaper—on the other, a no-deal exit would mean that zips, buttons and labels, which often come from the EU, will rise in price. If a free-trade deal isn’t negotiated with the EU, Savile Row tailors could source more of their materials from within the U.K. but given how much more that would cost, it seems more likely that they will simply absorb the costs.

“The uncertainty is the key here—for all businesses, it’s hard to plan,” Sleater said. “Whilst we have been able to expand overseas to stave off the threat of falling consumer spending, Brexit has impacted our U.K. business, especially in our shop in the City of London where redundancies and uncertainty have directly caused a drop in orders.

“The weakening of the pound, though, has seen the number of overseas customers coming to us in London increase,” Sleater added. “From any difficult situation, it’s key for us to continue to adapt and be ready for what the future holds to ensure that we remain a dynamic business and at the top of our game globally.”

It is this prestige and heritage that will allow Savile Row to most likely endure this latest storm, but the hike in tariffs will herald yet another blow for the British fashion industry, which has struggled to find its footing since the 2016 referendum.

“While a few pro-Brexit high street brands with supply chains outside the EU are welcoming all these tariffs, most people are very worried—and add to that the fact that the entire industry is facing increasing pressure to produce sustainably and review their product cycles,” Malik said.

“The majority of young independent and made-in-Europe brands have not assimilated the tariffs and are working out now what to do. I don’t think they have ever been able to plan for this most unusual of situations, and don’t want to lose their partnerships abroad so may look to arrange partner trade discounts,” she added. “Naturally, it’s going to mean new strategies and new ways of sourcing, I can’t say, however, that people here are not hoping against hope for a new set of agreements that will work better for the industry at large, with both the EU and the U.S.”

The American taste for British tailoring isn’t likely to fade anytime soon. “Savile Row of course is an iconic global brand and our international customers buy into the brand and therefore will in all likelihood absorb the hit,” Cincik said. “I believe this will affect the middle-market consumer who will buy Brooks Brothers over a Richard James suit more.

“But for all the uncertainty caused, it is highly unlikely that the British tailors of Mayfair and Manhattan will suddenly be decimated of shoppers,” Cincik concluded.