Count Gildan Activewear Inc.’s cash and stock deal to buy HanesBrands Inc. as a $2.2 billion ripple in the fashion industry hinting at waters that are roiling just under the surface. 

Even though the fashion industry’s bigwigs have gone to great pains to project calm in the midst of President Donald Trump’s trade war — the reality of 35 percent tariffs from many markets can only be “mitigated” away for so long.

And even though Chinese and American trade negotiators have given themselves another three months to cut a deal, there has already been more than enough disruption to push big pieces of the apparel world — including Gildan and HanesBrands — into action. 

Glenn Chamandy, president and chief executive officer of Gildan, told analysts on a conference call on Wednesday that the deal will let the company “achieve a scale that distinctly sets us apart.”

“The acquisition effectively doubles our revenues to about $6.9 billion on a last-12-month pro forma basis and builds on industry-leading margins,” Chamandy crowed. “Our expanded scale will enhance Gildan’s position in basic apparel as one of the largest global apparel players by number of units sold with strong innovation from yarn spinning to end product and great supply chain capabilities to support customers.”

Gildan already makes the bulk of its goods in Central America and the Caribbean and is doubling down with HanesBrands, which has two large facilities in the region that Chamandy said could be “modernized.” 

The trade war might even be kind of good for Gildan.

“Tariffs are creating an opportunity,” said Jay Sole, an equity analyst at UBS, pointing to the potential for nearshoring.

While tariff rates are still up in the air, and given Trump’s negotiating style could remain in flux, Gildan would benefit if Central America ultimately faces lower costs at the border than shipments from Southeast Asia. 

The company is also building a bigger, theoretically more stable base for a world in flux. 

“Gildan might be looking to scale the business in order to just build the kind of capabilities they need to really absorb a lot more business and add capacity, which allows them to take share in this new world with all these new tariffs,” Sole said. 

“This is not them playing defense,” he said. “I think this is them playing offense. The combined company is definitely a stronger company than it was as they were separately.”

Investors certainly saw the potential and traded shares of Gildan up 11.8 percent to $54.93 on Wednesday, leaving the company with a market capitalization of $8.2 million as it is set up to add branded staples Hanes, Bali, Maidenform, Wonderbra and more. 

Gildan is ponying up just 13 percent, or $290 million, of the deal price in cash, with the rest of the company being bought for stock. 

That cash purchase price will be covered quickly as the deal is expected to be “immediately accretive” to Gildan’s adjusted earnings and produce $200 million in annual cost synergies within three years.

Gildan is leaning forward and, except for the people impacted by those $200 million in cost savings, HanesBrands is in a much more protected position. 

More brands might well be looking for a port in the storm. 

“There is a massive amount of disruption that’s coming,” said Michael Prendergast, managing director in Alvarez & Marsal’s Consumer and Retail Group. 

“Everyone is saying, ‘We’ve got it, we’ve adjusted our pricing, we’ve got concessions from our vendors and we have already optimized our supply chain,’ and then it kind of stops,” Prendergast said. “If you kind of get beneath the surface of what they’re really doing, the response is not strong enough to offset the tariffs that are actually coming.”

The tariff pauses have helped and a lot of retailers can live off of inventories they already own and use them to cushion the blow of higher prices, but Prendergast said the tone in the industry is starting to change. 

“People sort of punted and got through second-quarter earnings calls, got through kind of the beginning of third quarter, but it’s going to be disruptive as we go forward,” he said.

The fashion world has been too optimistic that consumers are going to be OK with higher costs and that companies can figure out how to manage, he said.  

“That is a very flawed approach because everything is pointing towards consumers are struggling with elevated prices and even a 5 to 10 percent increase in price from where we are today,” he said. “Consumers are going to react to that. If you really step back and look at it, there is an incremental 25 to 35 percent tariff coming.

“People are kind of missing the plot,” he said. “It’s sort of this waiting to actually address the problem reactively versus proactively getting in front of it.” 

Gildan, for one, is stepping up.

“It’s an accretive move to strip expenses out of a business and then keep the revenue base,” Prendergast said. “I actually love this move.”

It’s a move that more CEOs might start looking at and wondering, is it my turn next?

The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000. It appears periodically.