04/07/2025
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 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 (determined by the US government). 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. The customs and tariffs are paid to the US federal government.
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
