Growing tensions from the ongoing conflict between the United States, Israel, and Iran are beginning to raise concerns across the global fashion and retail industries, particularly around inflation, fuel prices, and supply chain disruptions.
The war, which escalated with military operations beginning on February 28, has already pushed fuel prices higher, sparking fears that inflation could worsen if the conflict continues. According to UBS chief economist Paul Donovan, rising oil and gas prices are not yet a major economic threat, but they could become one if they remain elevated for a long period.
In the United States, gasoline prices were reported to be 23 percent higher than this year’s lowest levels. While this increase is still below the highs seen in 2024 and may not immediately slow economic growth, Donovan noted that it can significantly influence how consumers perceive inflation and affordability.
He explained that consumers tend to remember price increases in everyday purchases. Since January 2025, the cost of several commonly purchased items has risen sharply, including beef, up 15 per cent, and coffee, up 18 per cent. These increases, combined with higher fuel costs, contribute to what economists call an “affordability crisis.”
Another major concern for the fashion sector is the closure of the Strait of Hormuz, a strategic shipping route along Iran’s southern coast that carries about one-fifth of the world’s oil exports. The waterway has been shut due to the joint U.S.–Israeli military offensive, forcing many shipping companies to reroute cargo through longer and more expensive routes.
While fashion brands may not ship directly through the strait, the closure is still expected to affect the industry by driving up fuel and insurance costs, which ultimately raise transportation expenses.
Air freight costs have already surged by up to 50 percent in the past week. This is particularly challenging for fast-fashion companies in countries such as Bangladesh, which often rely on air shipping to quickly deliver new clothing collections to global markets.
John Gagliardi, CEO of Kane Footwear, explained that shipping by air can cost about four times more than sea freight. However, some brands still have to rely on air transport when launching new collections on tight schedules. If a launch date is delayed, companies may fly the first shipments while waiting for the rest of the goods to arrive by sea.
Sea freight could also become more expensive if fuel prices continue to climb. Footwear manufacturers are especially concerned about the supply of textiles and raw materials needed to produce upcoming summer collections.
The National Retail Federation said imports arriving at major U.S. ports are expected to remain below last year’s levels during the first half of 2026, largely due to tariff uncertainty and ongoing global tensions.
According to Jonathan Gold, the organization’s vice president for supply chain and customs policy, the retail industry is closely monitoring the conflict in Iran to understand how it might affect global supply chains.
Financial markets have also reacted to the uncertainty. The Dow Jones Industrial Average initially dropped in early trading before recovering and closing 0.5 percent higher at 47,740.80. Meanwhile, the S&P 500 rose 0.8 percent to 6,795.99 after oil prices eased to around $95 per barrel, down from a spike of $119 earlier.
Some fashion-related stocks posted gains, including Oxford Industries, Stitch Fix, Wolverine Worldwide, Five Below, Capri Holdings, Ralph Lauren and JD Sports.
However, several other companies saw their shares fall, including Revolve Group, Kontoor Brands, Levi Strauss & Co., The RealReal, Under Armour and Kohl’s.
Luxury brands in Europe also experienced declines, including Brunello Cucinelli, Burberry, Salvatore Ferragamo, Moncler, Kering and LVMH.
Analysts warn that luxury fashion companies are particularly vulnerable during periods of geopolitical tension because their success often depends on strong consumer confidence and a positive economic outlook. If the conflict continues and inflation rises further, shoppers may cut back on discretionary spending such as luxury fashion and accessories.