In the escalating global trade war, much of the focus has centered on tariffs, reshoring and the effect on American jobs and prices. Amid the chaos of new trade policies, one insidious winner lurks in the shadows: counterfeiters.
As tariffs drive up prices on everyday goods, consumers with tighter budgets are more likely to seek cheaper alternatives, including fake versions of the products they want but can no longer afford. Counterfeiters benefit from this inflationary and taxing squeeze, exploiting economic pressure points while posing fraud and health and safety risks to consumers and violating the intellectual property protections of American businesses.
Counterfeit goods are no longer limited to knockoff scarves and wallets on urban street tables. The counterfeit economy has gone digital, and it’s thriving. Fraudulent websites, fraudulent ads across social media, and “dupe” influencers have created a sprawling ecosystem that feeds the Digital Devalue Chain of Counterfeits.
The Federal Trade Commission reports that online shopping was the second-most-reported source of fraud. Among young adults 20 to 39, it was the No. 1 category, often involving purchases made via social media.
In fact, according to the Center for Anti-Counterfeiting and Product Protection, two-thirds of consumers who buy counterfeit goods are lured in through social media platforms, with Facebook accounting for 68 percent of counterfeit purchases. Footwear and apparel are some of the most commonly counterfeited products, and they belong to an industry that has been disproportionately affected by tariffs, historically and amid this trade war.
The link is undeniable.
A recent Yale analysis underscores the problem. Shoe prices have increased 87 percent in the short run because of tariffs, while apparel prices are up 65 percent. This is at a moment when counterfeits are already costing consumers billions.
The FTC reported that Americans lost $12.5 billion to fraud in 2024, a staggering 25 percent year-over-year increase. As tariffs make apparel and footwear from American businesses less affordable, consumers will increasingly turn to online channels, purchasing counterfeit or pirated goods at a compelling discount.
Consumers aren’t the only victims of counterfeits. Brands, workers, the environment and the U.S. economy all suffer.
The National Association of Manufacturers estimated counterfeit goods subtracted nearly $131 billion from the U.S. economy in 2019. That means $22.3 billion in lost labor income and more than 325,000 eliminated jobs. Federal tax revenue lost $5.6 billion, and state and local tax collections lost nearly $4 billion.
American brands — the businesses policymakers say they want to protect — are being squeezed on both ends. They must absorb the cost of tariffs while continuing to invest in quality control and compliance (safety!) while competing against counterfeiters who cut corners. The result is a tilted and unsafe playing field, where bad actors win, and ethical businesses are penalized for doing the right thing.
Policymakers must address the channels and third-party marketplaces allowing counterfeiters to thrive. Additionally, policymakers should identify workable policies to prevent fraudulent websites and ads.
With outlandishly high tariffs on the footwear and apparel industries, the Trump administration is not just burdening American businesses and consumers, but it is also empowering counterfeiters. We don’t want illicit actors to celebrate World Trade Month as they have been gifted with new ways to fuel illegal trade. Bad actors are increasingly successful in deceiving people through growing and diverse social commerce channels with low-cost, low-value knockoffs.
The longer these economic pressure points persist, the more we inflate the risk of counterfeits undermining brand trust, public safety and financial stability. It might be a patient we are not able to resuscitate.
If we aim to support American innovation and integrity, we must stop giving counterfeiters the perfect environment to thrive.
