Trump's Tariffs Are Really, Really Bad
You can always count on Princess Awesome for some real talk, right?
Yesterday, President Trump announced a massive increase in tariffs on all countries across the world.This has massive implications for our little company (and the rest of the country and world, but we'll focus on us for now).
We want to take a moment and explain how tariffs work and what this means for us.
Let's start with a visual. Here's a customs bill we received in 2024.
Every time a shipment of our inventory arrives from overseas, we receive this form. It shows where the shipment comes from, method of transport, and who is responsible for it - which would be us.
It lists every type of product in the shipment and what they're made out of. Each type of clothing and type of fabric has a different custom code and customs fee. In green above, you can see that girls' dresses of knit cotton have an 11.5% customs fee. We pay this 11.5% fee on girls' dresses of knit cotton coming from anywhere in the world except for the countries with which the US has free trade agreements (which I guess are now moot). This is just one page of the customs bill showing one of the products in this shipment.
In yellow, you can see that there is an additional tariff on these goods because they came from China. In August of 2024, that tariff was 7.5%. Beginning on April 9, that tariff will be 54%.
To be clear, the customs fee and the tariff are applied to the cost of the goods that we pay to the factory. For example, if the cost to make one dress is $15, in 2024, the customs and tariff fees were 19%, so that $15 cost was actually $17.85. Now, with a 54% tariff and 11.5% customs fee beginning on April 9, that same dress will be $24.83.
We work with factories all over the world. Let's take Bangladesh. For the last 7 years that we have been producing with a wonderful factory there, there have been no additional tariffs on this country. A $15 dress only has the 11.5% customs fee applied. Trump's tariffs add a 37% tariff. That means that the products we budgeted for costing us $16.65 will now cost $22.20.
Let's say these tariffs only stay in effect for 1 week. If our products arrive that week, that's the rate we pay. We don't get a refund if the tariffs go back down. And, just in case it wasn't already clear, it is us, the importer, that pays these tariffs. Not the country of origin.
All of this is, well, really bad. It's bad for the world, for the country, for you, and for all companies, but particularly small ones. Big businesses will have an easier time absorbing the extra costs and passing them on to the consumer.
There are also a lot of ways that businesses get around even the standard customs fees. They add felt to the bottom of their shoes so they count as slippers which have a lower customs rate than shoes. They ask their factories to list a lower cost on the commercial invoices than what they actually pay so they will pay less. These are not tactics we plan on using. Integrity and honesty matter to us.
Eva and I will work on figuring how to handle this new world, and we will keep you posted. But we wanted to share this with you today. Congress does, in fact, have the power to stop all of the tariffs. You can call your Representatives and Senators and ask them to cancel these tariffs. This handy resource can direct you to your elected officials and provides call scripts on a range of important issues: 5calls.org.
Questions? Thoughts? Let us know. Thanks for being here with us, friends.
Rebecca
***
Earlier today, I put this blog post up on Facebook.
Two of the first comments on the Facebook post asked these questions:
- “Why not use a US based company for these pieces?”
-“The tariffs are supposed to encourage businesses to bring their manufacturing back to the US. Did you do any research or cost comparisons to make these in the US? Are there even any places here that do this kind of mass sewing?
Honestly, I think these are fair questions! I think they deserve a real answer. So here goes.
We started our Adventures in Manufacturing Apparel 10 years ago in the United States. For a number of years, we only manufactured in the United States. Over the years we have branched out and now work with factories all over the world.
For now, though, let’s ignore all the reasons why making clothes in other countries was the right choice for us. Let’s say that Trump’s tariffs did encourage us to move all of our manufacturing back to the United States. Could we do that by April 9 which is 6 days from now? Um, no.
Production timelines at apparel factories are typically 80-120 days. We are in production - meaning we’ve already paid half of the invoice - for our late spring, summer, and fall lines. The factories have purchased fabric and begun work. These are products we are locked into buying, and it will now cost us 10% - 37% more to get them to our warehouse to sell to our customers than what we had budgeted for.
Additionally, getting all of the products we make abroad ready to make in a US factory would take a long time. To find adequate replacement fabric in the US and sample all the patterns and sizes before starting actual production, I estimate would take, at a minimum, 9 - 12 months. And, let me just tell you, it would not be cheap.
Furthermore, we will be competing with every other apparel company to get set up for production in the United States. There are not nearly enough factories here to supply that many companies. We are small and order in small quantities - factories, like everyone else, want big orders so they can keep their workers employed. It's hard to find factories willing to take on small orders.
Modern, industrial apparel manufacturing as it is done overseas is vastly different from how it is done in the United States. Overseas, the factory sources fabrics, printing, labels, and packaging, in addition to handling cut & sew (and press and package). The quoted price from overseas manufacturers includes all of these additional apparel requirements. In the United States, factories handle only cut & sew. We have to handle sourcing everything else. That means that the price we pay our US factory is not only higher, it does not include all the other pieces that we need - costs that add up quickly and increase the final, total cost of goods. Even when we add shipping from overseas, overseas manufacturers are significantly less expensive, usually by $10 per piece or more.
The United States is not on the cutting edge of apparel manufacturing. We do have some small producers who can do the kind of work done at scale overseas, but these manufacturers are extremely expensive. State-of-the-art apparel manufacturing at scale employs robotic and automated sewing machines. Even if we were able to open our own factory here, we would have to import this equipment, which is made in the countries where it is used. And then we would have to find someone who knows how to operate it - this is highly skilled, technical labor. The parts of the dresses sewn by humans also require experienced tailors; America does not have this labor force at hand. When we started this company, we tried to manufacture in America. Early in our business we reached a point where the consumer was not willing to pay for American supply chains, and in which the American supply chain could not fulfill the technical requirements of our garment designs.
So I guess what I’m trying to say is that if we could withstand the additional literal tens of thousands of dollars in Trump tariffs for products we are already in production for and if we could withstand the cost of moving all of our products to the United States, we would be lucky to still be standing and to try to make a real go of it with an entirely Made in the USA line.
In short, the way Trump has enacted these tariffs does not actually create an environment that fosters small businesses moving back to the US for production and manufacturing. Most of us would go out of business before that could happen.
If you’re interested, we have information about all the factories we work with on our website. You can read about them here.
Would you like to hear more of our Adventures in Manufacturing Apparel journey and why branching out to other countries was the right move for us? I think I’ll probably write it up one way or another. Stay tuned. :)
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