Make a morph. It can be added to already animated character.
Put it into T-pose (somewhere at the end or beginning of the timeline).
Send character to Morphs Creator and Character Creator.
In CC apply T-pose, hide all cloth and go to body Mesh Edit Mode
Enable Soft Selection and select chest area. Then move it by YZ gizmo forward and up to simulate inhale. Got to play a bit with settings (bias and radius).
Optionally select and move forward stomach vertices a bit. And you can also work out shoulders.
Un-hide cloth and save as iAvatar.
In Morphs Creator click "+" and choose modified iAvatar you saved from CC.
Delete unrelated sliders (sometimes it picks up hair, shoes... etc)
Set ALL remaining slider to 100% and click Bake button (icon with slices of bread).
Give a name to baked sliders and check "Remove Source Sliders"
Select your Avatar in iClone and from Morphs Creator click "Update Morph to iClone"
Animate breath morph on a timeline.
This is a fastest method and should work just fine, although I prefer to make breath morphs in Blender where I have more advanced control over the mesh when deforming it
Though making Blender morphs can become a pain if cloth mesh is not "clean" (has loose vertices, dissolved faces... etc).
This took a few minutes to make in CC and Morphs Creator.
