Even before the recent tariffs, Montreal women’s wear designer saw U.S. sales fall over the past year and half.Florine Pella/Supplied
The headlines might focus on cars, steels and trucks, but that’s not where the impact of the recently enacted U.S. tariffs ends on Canadian goods. Other items, including some made-in-Canada garments and accessories – everything from cotton T-shirts to men’s wool suits to dresses made of synthetic fibres – are subject to the 50-per-cent tariffs.
The list of affected fashion goods is specific, targeting certain articles based on details such as material, intended use and gender. Still, for some Canadian companies that manufacture at home and sell to the U.S., it means their products are no longer shipping duty-free.
“It’s a very difficult tariff for industry to face, and it mainly impacts companies, brands, designers and manufacturers that produce domestically in Canada,” said Mathieu St-Arnaud, executive manager of Mmode, a non-profit that promotes and advocates for Quebec’s fashion industry.
He noted that the new tariffs are coming on the heels of last year’s reciprocal tariffs on some products produced overseas by Canadian companies as well as the elimination of the de minimis shipping exemption – which allowed goods below the value of $800 to enter the U.S. without duties, taxes or customs clearance. These changes already made things more challenging for Canadian brands shipping to U.S. customers.
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Even before the most recent changes came into effect, Montreal women’s wear designer Eliza Faulkner saw U.S. sales fall from 40 per cent to 20 per cent of her business over the past year and a half.
“Our prices went up for U.S. customers, and of course, our sales went down. We lost some large retailers I think due to that as well,” said Faulkner.
Her namesake line is produced in Montreal’s garment district, and Faulkner said that while the tariffs introduced last month only affect about a fifth of her collection, the situation has led to some uncertainty from retail buyers and confusion for customers. To avoid raising prices even more, the brand stopped offering the affected styles to U.S. customers.
“People will see things on our feed on Instagram and they can’t get it.”
To stay on top of shipping and customs changes, Faulkner relies on an in-house shipping and logistics manager who works with companies such as UPS and DHL. She also gets updates from Mmode, which has a web page dedicated to news about tariffs.
Designer Stephanie Ibbitson, who helms Toronto label Sonya Lee, regularly checks the U.S. government website for up-to-date tariff information.
Toronto bag and accessories brand Sonya Lee includes product information and certificates of origin with all cross-border shipments.Sonya Lee/Supplied
Her brand’s leather bags and small accessories, which are handmade in-house in Toronto from Argentinian leather, are not subject to the new tariffs but she has been monitoring the situation closely.
“It’s just more of being on top of the communication and trying to relay to clients that they can continue to shop duty-free,” said Ibbitson. “I’m sure there’s some people who are hesitant.”
The designer includes detailed product information and certificates of origin with all cross-border shipments. She also works with a shipping courier who is able to presubmit customs documents to streamline the process.
Wolf Circus, another independent Canadian fashion company, chose to minimize its shipping and tariff challenges by partnering with a U.S. warehouse last year. The demi-fine jewellery brand, which produces its wares in Canada and Thailand, now ships to U.S. customers directly from the Los Angeles facility (Canadian orders are shipped from the company’s headquarters in Vancouver).
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“We just knew that in order to keep a lot of our American customers – both our e-commerce customers and our wholesale customers – happy, shipping directly from the U.S. to them would make everything a smoother process,” said Fiona Morrison, the brand’s owner and designer. The move also allows the company to “manage and mitigate the tariffs as best as possible,” she added.
“Essentially if we’re shipping something to a U.S. customer, the declared value would be the declared value that the U.S. customer paid for it,” said Morrison. Shipping to the U.S. warehouse, on the other hand, means “we’re actually shipping it at the cost of the good instead. And so it also is helping us save money on those tariffs.”
Wolf Circus, a Vancouver-based demi-fine jewelry line, now ships to U.S. customers directly from the Los Angeles facility.Wolf Circus/Supplied
Paying for the warehouse is not an inexpensive solution, but Morrison is relieved to have the set-up in place. It alleviated the “need for us to just pivot again” with the new tariff announcements, she said.
Faulkner, who recently returned from a sales trip to New York, also has change on her mind. She may reconsider the use of some fabrics in her line because of the tariffs, and she’s thinking about growth opportunities in markets such as Europe, Australia and New Zealand.
“But it takes time to build those markets. You can’t just do it overnight.”
In the meantime, Faulkner is focusing on Canada. “There’s still loads of stores we could be in, there’s still people we could be selling to,” the designer said, adding that she would like to open a store in Toronto.
What is most meaningful to her business right now is support from Canadian retailers and customers: “Shop Canadian if you can. We want to stay around, we want to tough it out.”