Donald Trump’s 25 per cent tariffs may be the last nail in the coffin for the American Economy

In 25 years of working with American companies in the fashion industry, Karen Giberson does not remember a more challenging time – and it is about to get worse.

“We have had tough times before. 2008 when the markets crashed – we saw a number of our companies go through consolidation, some went out of business. We had a lot of good friends and colleagues that were job eliminated. But I would say this last year, the pressure on our companies with tariffs [is worse],” said Giberson, president of the Accessories Council, a trade group.

US President Donald Trump sent shock waves through global markets on Sunday when he announced that from Friday, the 10 per cent that had been levied on US$200 billion of goods made in China would increase to 25 per cent.

Further reports confirmed that US trade representative Robert Lighthizer would issue a Federal Register notice on Wednesday in order for the tariffs to kick in on "the first minute" of Friday, after accusing China of reneging on some of its commitments in the last round of trade talks in Beijing.

“We are feeling the 10 per cent and we're all hoping that there's not another 15 per cent added. A synthetic handbag coming from China is the highest tariffed product I think, period. If it was 25 per cent added on, it would be over 45 per cent tariff,” Giberson added.

Sherrill Mosee, the founder of Philadelphia-based MinkeeBlue, a manufacturer of travel and work bags, is worried that she stands to lose her livelihood. She makes her bags in a factory in Guangzhou and has been struggling to deal with the 10 per cent duty that has been in place since last year.

“It is the difference between continuing my business and shutting it down, because I cannot afford the tariffs. There's been talk about increasing those tariffs even higher to 25 per cent. Well, I simply cannot do that. And so now it's this notion of me, of my dream being lost and not being able to continue my business which I have worked so hard over the last five years to build,” Mosee said.

While some companies have been able to shift manufacturing away from China to avoid the extra duty, it is not always possible. Mosee, for instance, is essentially a one-woman show as she subcontracts manufacturing to her partners in Guangzhou, but performs all the design and business functions herself. She cannot afford the time or financial resources required to search for a plant in Southeast Asia, nor can she afford to take her production back to the United States.