Here’s How ThredUp Thinks Tariffs and AI May Impact Resale This Year

Resale’s on a roll. 

In ThredUp’s annual Resale Report, it revealed that, in 2024, the secondhand apparel market grew by 14 percent, its greatest annual growth since 2021. And the momentum doesn’t appear to be letting up; the secondhand marketplace and resale-as-a-service provider projects that, between 2024 and 2029, secondhand will continue to grow at a 9 percent compound annual growth rate (CAGR). 

But like any other segment of retail, secondhand is subject to changing regulations, consumer sentiment, economic activity and emerging technology. 

Fifty-eight percent of consumers said they shopped secondhand for apparel in 2024, while 27 percent of consumers indicated they had resold apparel last year. But even with continued growth, Alon Rotem, chief strategy officer for ThredUp, said he isn’t worried about a supply-demand mismatch; he anticipates that, now that much of the stigma around shopping secondhand has dissipated, supply will grow as demand grows. 

“I think, in general, there is going to be more of a focus on the supply side, but the good news is, there is really so much supply out there. It’s in everyone’s closet; it’s being held by reverse logistics companies and returns companies. So it’s really a matter of reacting to this surge in demand and rewiring the way consumers behave to drive more supply into the system,” he said. 

And, if consumers buy items with the idea of reselling them later, it may begin to decrease some consumers’ reliance on fast fashion. 

Fast fashion and the tariff question

About one-quarter of consumers indicated they would be less likely to buy a clothing item if it doesn’t have a strong resale value, and just less than half of consumers said they have already decreased the amount of “cheap, lower-quality apparel” they purchase because they have difficulty reselling it. ThredUp’s data shows that brands like Vuori, Lululemon, Quince, Reformation, Sézane and Patagonia crack the leaderboard for branded resale. 

Rotem said another factor may soon squeeze consumers’ interest in fast fashion: tariffs. ThredUp’s data shows that 62 percent of consumers said they feel worried about tariffs will make apparel more expensive, and six in 10 consumers noted that, if that was the case, they would seek out more affordable options, including secondhand items. 

And while low prices are the No. 1 reason consumers shop on resale platforms like ThredUp and Poshmark and on low-cost marketplaces like Shein and Temu, the latter companies may soon have to work harder to keep prices down. That’s because of a potential disintegration of the de minimis provision, which currently allows parcels valued under $800 to enter the U.S. without duties.

For Rotem and ThredUp, tariffs could prove helpful in bringing resale to the fore in consumers’ minds. 

“We have empathy for the consumer. Tariffs, just like inflation, reduce the purchasing power of Americans; they ultimately end up paying the price,” he said. “From an economic standpoint, the consumer now has to make a decision: where should I be spending my dollars? If a resale item doesn’t have the tariff on it because it came from the closet of an American consumer and is comparatively cheaper, it does potentially help the resale industry as a whole and makes it more competitive.”

Tariffs are also likely to put retailers in a difficult spot, leaving them to evaluate how they might alter their supply chains. Eight in 10 retail executives said they anticipate tariffs will disrupt their supply chains globally, and 44 percent said they are looking at ways to decrease their dependence on imported goods. 

According to ThredUp, 76 percent of retailers not offering resale today are looking into the possibility of doing so in the future, and 94 percent of retail executives said they know their customers already shop secondhand. Rotem said he expects to see more maturity in the resale market in the coming years; ThredUp already has a branded resale program with partners like J. Crew, Gap, Reformation and Abercrombie & Fitch. 

Technology

As resale continues to grow, technology may help make the buying experience feel more natural to consumers, whether regular secondhand shoppers or first-time converts from buying new. 

According to ThredUp, four in 10 consumers feel overwhelmed by the sheer quantity of available items when shopping secondhand, and half of consumers said if they could find trending apparel secondhand as easily as they can locate it new, they would buy resale more often. 

ThredUp has already taken advantage of the opportunity to implement systems powered by artificial intelligence in an effort to help consumers do just that. Its Style Chat function allows consumers to use natural language queries like, “I need a dress for a fall wedding in New York,” to receive recommendations on items. It also has a tool that enables consumers to find similar items by uploading an image.

The company’s data shows that just less than half of consumers said personalization and stronger search functions put secondhand and buying new on a level playing field. Rotem said ThredUp will continue to focus on making discovery easier for consumers. 

“ThredUp has four or five million items for sale at any given moment. They’re all snowflakes, so helping our consumers find that thing that they want to find, helping them find it quickly and easily and making it fun, using AI to do that is super important,” he said.

Circularity and forward movement

As themes go, it’s difficult to overlook the climate-related benefits of shopping secondhand. And despite nearly eight in 10 retail executives stating that they feel “it’s important to explore innovative business models like resale that drive circularity,” Rotem said that sentiment may not be mirrored by President Donald Trump and the broader political climate in Washington, D.C.

“At the federal level, we have a new administration, and I think they are deprioritizing ESG and initiatives that really force companies to contend with the environmental ramifications of what their businesses do. But they are emphasizing trade, and trade policies can have a big impact in the circular economy,” he said, citing federal legislation like the Americas Act, introduced in 2024. 

Sixty-six percent of retail executives noted they have difficulty with managing their textile waste, and 44 percent of executives indicated that they believe the federal government should create a policy aimed at helping brands handle the waste. While outlook for federal legislation on circularity is in flux, state legislation has seen some movement, and more than half of retail executives said they are aware of such regulation. Rotem said these initiatives should be paired with a plan to improve infrastructure.

“At the state level, you are seeing progress on extended producer responsibility. We know that SB 707 passed in California, and we see other bills that are being proposed in states like Washington [and] Colorado,” Rotem said. “It’s all about not just making the producers and the clothing manufacturers more responsible for overproduction, but it’s also looking at boosting the recycling infrastructure state by state, because you can promote resale and secondhand as much as you want, but if there’s inadequate recycling infrastructure, it actually makes it really difficult to change the behavior of the average, everyday consumer.”