US small and medium-sized businesses with deep ties to China are screaming that they are floating by selling inventory and cutting jobs as the trade war escalates between the two biggest economies in the world.
The Trump administration raised tariffs on goods from China to 145% last week.
Large companies caught up in Crossfire have begun the process of moving parts of their manufacturing out of China, but according to several business leaders interviewed by Post, the fate of small US companies has become miserable as they are connected to the mainland.
“If there’s nothing changed in two months, I’ll probably shut it down and sell the inventory,” said Sariwias, owner of Illinois-based baby paper.
Her 11-year-old company will need to spit out another $20,000 to cover the remaining fees for the year, including the holiday season.
“That’s not impossible for us,” Wias said.
Katrina Marshall, president of artistic toys and promotions, said her company is on the same fast boat.
Marshall was forced to suspend future cargo in May. This is because companies that make promotional luxury toys and handles for other toy companies, including baby paper, are facing an eye-opening $403,000 tariff bill.
On Friday, she brought together 20 staff members to inform them of job openings scheduled to be announced on Monday.
“I don’t know where this will end,” Marshall said, referring to the Washington-Beijing trade war.
She added that moving production to other countries, an option she previously explored, would take about a year.
Overall, the US toy industry relies on China for 80% of its production.
“There’s migration from China, but I don’t know that other countries will replace China in terms of workers’ experience and its pricing,” Marshall said.
Even companies preparing for tariffs, including luxury furniture maker RH and iconic wedding gown maker David’s bridal, have admitted that shifts in production take time many companies don’t have.
“It’s not that we’re turning the switch over overnight,” Kelly Cook, chief executive of the largest wedding dress company in the United States, told the Post.
David’s Bridal has manufacturing facilities in at least five countries, including China, Myanmar, Vietnam, Sri Lanka and India.
The Consohocken, Pennsylvania-based company has a 50% stake in the joint venture that owns and operates the factory, Kelly said.
“Our strategy right now is that we are shifting outside of China and we need to pull production from our Chinese location,” Kelly said.
She refused to say where the company is investing more resources.
“We hedge and become extremely flexible and agile,” Kelly said. “There’s a very detailed and rigorous process that can train talented people in up to 60 days.”
The 75-year-old company, which filed twice for bankruptcy protection and recently twice in 2023, is one of a handful of apparel companies that can give up on China.
“Apparel is difficult,” said Craig Johnson, president of customer growth partners. “Most of the world’s great sewers are China, living in China. Most clothing companies have tried to pivot, but the question is who had a material pivot.”
The company was informed about the possibility of a trade war with China almost a decade ago. This was when President Trump’s first term began in office for Saberrats over tariffs.
China accounted for 44% of US apparel and accessories imports in 2018, but in 2022 it reduced to 35%. S&P Global Report.
Home furniture is another industry that relies heavily on China, with about 50% of furniture imported from the US coming from the country.
RH CEO Gary Friedman notoriously made “OH SH-T” in revenue calls with analysts as stocks plummeted 40% after Trump announced the “liberation date” on April 2nd.
In a statement last week, RH said “we have acquired resources in Vietnam for the majority of China’s production,” adding that a “meaning amount” of Chinese production has been moved to its North Carolina factory.
“The move is very surprising,” Friedman said last week. “We’re going to force everyone to play another game.”
Bloomberg reported Friday that five discount retailers below also joined the Chinese Exodus Record, asking vendors to stop shipping products heading to the US.
According to Oppenheimer analyst Brian Nagel, the tariff was expected to increase from 50% to 50% based on Trump’s first tariff in China on April 2.
