If you're wondering how your favorite jeans brand plans to handle the tariff chaos, Levi Strauss & Co. (LEVI) CEO Michelle Gass has some answers. And spoiler alert: prices are going up.

The Game Plan: Raise Prices, Cut Deals, Work the Margins

Speaking with McKinsey and Business of Fashion for the 10th anniversary edition of the State of Fashion report, Gass laid out Levi's multi-pronged approach to dealing with what she describes as "very high" tariffs. Her bottom line? "There's only so much you can absorb from the tariffs, because they're just very high."

Levi's strategy includes targeted price increases on select products and pulling back on promotional events to protect margins. The company is also getting creative with pricing on new products, banking on consumers' willingness to pay more for innovation. Translation: if you want the latest thing, expect to pay a premium.

But it's not all about passing costs to customers. Levi's is working closely with vendors to identify cost efficiencies and opportunities to mitigate tariff impact. The company is also leveraging a structural advantage that many U.S.-focused competitors don't have: roughly 60% of Levi's business is international, which softens the blow from domestic tariff pressures.

Gass expressed confidence in the brand's value proposition and ability to adapt as consumer behavior shifts. She emphasized the importance of maintaining strong supplier relationships and supply chain flexibility, pointing to collaborations like the one with Nike Inc. (NKE) launched in July as examples of how partnerships can help navigate disruptions.

The Bigger Picture: Fashion Industry Braces for Impact

Levi's isn't operating in a vacuum. The entire fashion industry is grappling with President Donald Trump's sweeping tariff hikes on clothing and other goods. Earlier this year, Budget Lab at Yale predicted apparel prices would surge 64% in the short run and remain 27% higher over the long term. That's not a typo.

Other industry leaders are sounding alarms too. Uniqlo CEO Tadashi Yanai warned that the U.S. could face severe economic costs from these tariffs. The consensus seems clear: this isn't a minor speed bump, it's a major restructuring of how fashion companies operate and price their products.

How's Levi's Actually Doing?

Despite the tariff turbulence, Levi's financials suggest the company is managing reasonably well. The brand reported a solid earnings beat in the third quarter of 2025, posting 34 cents per share versus the consensus estimate of 31 cents. That performance indicates Levi's strategies for managing tariff impact are having some success.

Market data shows the stock has surged 19.12% year-to-date. On Monday, Levi shares eased 0.05% to close at $20.75.

The company ranks in the 66th percentile for quality and 65th percentile for value, reflecting average performance in both categories. Not spectacular, but solid enough given the challenging environment.

Bottom line: Levi's is doing what it needs to survive in a tariff-heavy world. That means higher prices for consumers, tighter margins management, and a lot of supply chain gymnastics. If you've been waiting for jeans to go on sale, you might be waiting a while.