It’s a Thursday afternoon in New York and Pauline Rock has a problem.
She is at the apparel factory that runs West 36th Avenue, where she stores hundreds of crisp cotton button-down blouses (seasonal essentials).
Lock manages Instyle USA, the 35-year-old company that created clothing for iconic American brands, including Calvin Klein, Donna Karan, Halston and Eileen Fisher. Over the past decades, she has overcome structural changes in the domestic clothing making industry as globalization has led fashion retailers to offshore production in cheaper countries. But she’s never faced the crisis she’s in now as she’s trying to navigate Trump’s tariffs.
Locke says he praises the spirit of President Trump’s recent trade policy, which aimed to bring manufacturing back to the United States, even if it means Americans pay more for clothes. But the “mutual” tariffs introduced on imports earlier this month by President Donald Trump, have caused worse headaches than the pandemic lockdown, blackouts from Hurricane Sandy, or what Instyle endured after the 9/11 shock.
People think domestic factories must be bustling, she says luck. But instead of responding desperately to find a homemade manufacturer to the rush of orders from clothing labels, the latest trade policy changes forced her to cut her staff in half, creating the impact of a “tornado”. “In the 35 years we’ve been in business, we didn’t have to shrink like this,” she says.
“On a personal level, everyone is scary.”
Blizzards, tornadoes, roller coasters
Locke performs precisely the types of domestic manufacturing that tariffs are intended to enhance.
The company works with domestic designers to create prototypes and patterns for fabrics, finishes and final products from around the world. They also make private label clothing for retailers like Macy’s. Today, only 2% To 3% Of the clothes worn by Americans, they are made in the United States, and many of them are made for the military. Instyle is part of a small wreckage of former industry.
For Instyle, the crisis began on April 2nd, shortly after Trump’s so-called “liberation day.” The president announced tariffs on imports from dozens of countries and baseline tariffs on all in-stock products, claiming that his strategy would restructure American manufacturing and force his counterparts to improve the terms of trade for US exports. China was first hit by a 34% tariff. Vietnam, India and Cambodia were threatened with tariffs of 46%, 26% and 49%, respectively. A few days later, after Treasury yields and stock markets plummeted, Trump put a 90-day suspension of tariffs on almost every country except China. (China charges US imports as high as 125%.)
But the three-month suspension, subsequent negotiations between nations, and sculptures for exceptions like computers and electronics have already been operating at thin margins, doing little to support small American businesses that are deeply exposed to China and relying on a healthy consumer economy to survive. “A lot of things have come to a halt of screeching,” says Locke. “The problem is uncertainty. It’s like walking on ice. I don’t know if you’ll fall or not.”
Designers don’t know how to plan future projects as the costs are very unknown. The retailer stopped ordering because they were not sure that consumers would continue shopping. (In today’s environment, people say it’s less likely that they’re going to choose new shirts and pants over food or rent payments. “All of a sudden clothes in the closet,” she says. For example, according to Lock, stores usually ask for discounts when delivery is delayed. Now they might say: “Well, we don’t know if this will sell or not, so we’ll cancel all orders because you’ll be late.”
The new tariffs are also leading to bottlenecks at US customs. She discovered that customs staff were overwhelmed, tracking constantly changing rules and holding the necessary products (conventional materials such as denim and silk, trimming and decoration).
For clothing manufacturers, they may be shopping to source materials from countries with low tariffs. France and Italy are not facing the same sudden collection as China, but the prices of high quality European fabrics will be higher before customs duties apply.
On the other hand, since it is not produced in the US, it is difficult, if not impossible, to replace such a supply with domestic supplies. The conversion has been completed, though the fashion brand says it will move across supply chains and manufacturing plants, destroying the wide range of businesses that once made up the thriving US apparel industry. Instyle is currently working Niche Market We depend on overseas suppliers of materials.
To boost the production of American clothing, Locke says, “We need to make sure there is a solid foundation before we can block out other parts of the world.”
Similar crises are unfolding in small and medium-sized businesses across the United States, unlike multinationals. These companies do not have cash reserves to absorb the costs of new tariffs. And even if they did, the constant change in tariff policy and all the unknowns that could come next discouraged companies from settling down on one strategy or big investment that might carry them throughout this period. The US Chamber of Commerce estimates tariffs are already costing small businesses Extra $24 billion For the past month.
Lock says that if things don’t change, Instyle and other apparel production businesses of its size could go out of business within six months.
“Family” collapses
Locke cannot choose just one metaphor to explain the past few weeks. She says that the fallout from the tariffs is like a snowstorm or like a roller coaster ride. She had to cut the factory’s hourly workforce from 20 to 10 (Instyle hired more than 75 people before the pandemic). Those left behind agreed to share shifts to protect jobs and ride the storm.
“We’ve invested a lot. We’re like the family here and we don’t want to see our family fall apart,” she said.
She is exploring other options to bring jobs to the factory and is considering temporary pivots to make uniforms. Her competitors are having the same conversation, she says, asking herself how they can survive.
Rock says she is trying to stay positive and even gets good news on Friday afternoons. A few weeks late at customs, the buttons needed to finish the shirt she is suffering in near perfect condition arrive and are quickly sewn in. Orders will be wrapped in trucks by Monday, and at least this time, Instyle hasn’t been hit with Snafu.
“People understand,” Locke says. “And we’re grateful for that.”
This story was originally featured on Fortune.com.
