Alenka Turnsek, tax sustainability leader for Europe, the Middle East, India and Africa with EY, lays out the challenges that fashion supply chains face in coping with overlapping regulations and tax policies in global markets.

“The key word is ‘overlapping,’” Turnsek says, noting that regulations are typically implemented by various governments in a highly fragmented and disconnected manner. That makes it tough for fashion supply chains to keep pace with changing policies that affect manufacturers and their suppliers, all the way back to producers of raw materials.

Even the European Union, which theoretically devises one set of export and import regulations for its member states, isn’t completely harmonious in that regard. New measures set to take effect in 2027 and 2028 should help to eliminate that disparity, Turnsek says, but in the meantime, the approaches of 27 European governments remain slightly different. And, of course, global supply chains must deal with completely separate regulatory environments promulgated in North America and other parts of the world.

Fashion brands today must address a slew of issues relating to environmental responsibility, including waste reduction and water use. New regulations promise to have an impact on sourcing strategies — not just where a manufacturer obtains product, but what goes into the actual design of a garment.

Recently, governments looking to formulate trade policy have begun to shift away from tax incentives to encouraging fashion brands to reduce pollution by embracing circularity in their supply chains. Merchandisers in major markets are banned from discarding, destroying or exporting excess product, leaving repairability as the best option for compliance with environmental regulations. In 2026 and beyond, Turnsek says, brands should also be preparing for higher carbon taxes, with a particular focus on raw materials, dyes, water usage and transportation of goods.