68 Fashion Brands Push U.S., EU, and Canada to Drop Sales Tax on Secondhand Clothing

Quick Facts

Nearly 70 fashion companies signed a joint statement in May 2026 calling for sales tax elimination on resale and repair in the U.S., EU, and Canada.
The global secondhand apparel market hit $257 billion in 2025 and is projected to reach $393 billion by 2030.
Targeted tax policy changes could push gross profit margins to 55% for resale and 41% for repair, according to the Ellen MacArthur Foundation.

A coalition of 68 fashion and textile companies is demanding that governments in the U.S., European Union, and Canada eliminate sales taxes on secondhand clothing and repair services. The group, which includes Arc’teryx, Etsy, H&M Group, Lacoste, Primark, Reformation, ThredUp, Vinted, and Zalando, released a joint statement in May 2026 coordinated through the Ellen MacArthur Foundation’s Fashion ReModel project.

The statement outlines three specific demands: eliminate sales tax in North America and reduce VAT in the EU on resold products and repair services; lower labor taxes and create tax credits for resale and repair jobs; and establish extended producer responsibility for textiles to fund collection and sorting infrastructure.

ThredUp Chief Strategy Officer Alon Rotem called current tax treatment of used clothing “double taxation.” Rotem also framed the issue as a domestic jobs argument, saying the resale industry is “onshoring jobs in North America” across distribution centers in Georgia, Pennsylvania, Arizona, and Texas.

H&M Group Chief Sustainability Officer Leyla Ertur said resale is “economically penalised” under current tax structures. “If governments are serious about circularity, they need to act by removing double taxation, reducing labour costs, and removing other barriers that hold resale back,” Ertur said.

The economic case behind the campaign is substantial. The ThredUp 2026 Resale Report, conducted by GlobalData, projects the U.S. secondhand apparel market will reach $78.8 billion by 2030, growing at roughly 7.3% annually. That rate is four times faster than overall retail growth. Globally, the secondhand apparel market grew 13% year over year in 2025 and now accounts for about 10% of all apparel spend.

The coalition’s argument centers on a structural cost problem. Reselling a garment can cost more than manufacturing a new one because traditional production benefits from economies of scale. Resale businesses carry high labor costs for sorting, inspection, and repair, then face taxes on each transaction rather than only at the original point of sale.

Mark Buckley, Fashion and Textiles Lead at the Ellen MacArthur Foundation, said the current system is built against circular models. “Businesses are incentivised to use new resources rather than invest in keeping clothes in use for longer,” Buckley said.

Macroeconomic forces are already pushing consumers toward secondhand goods. A December 2025 Wells Fargo report found an 8.5% year-over-year sales jump among miscellaneous store retailers, a category that includes secondhand shops. Wells Fargo economists attributed part of that jump to consumers buying used goods to offset tariff-driven price increases on new products.

Gen Z and millennials are expected to drive more than 70% of secondhand market growth through 2030. During the 2025 holiday season, shoppers planned to spend roughly 40% of their gift budgets on used items, according to a GlobalData and ThredUp survey.

Early data from the Fashion ReModel initiative shows participating brands growing revenue from resale, rental, repair, and remaking four times faster than their broader business. However, the Ellen MacArthur Foundation acknowledged that circular revenue still represents a small share of overall sales for all 13 participants.

ThredUp CEO James Reinhart said the market has crossed a threshold. “Resale is no longer just growing, it’s taking direct market share,” Reinhart said.

The coalition’s push comes as policymakers in multiple markets consider how to treat circular business models under existing tax codes. No legislation has been introduced yet in the U.S. Congress tied directly to this campaign.