As the trade war between the United States and China escalates, small businesses like RAQ, an Australian swimwear brand, are feeling the impact. The brand’s director, Sophia Argyropoulos, used to make 20 percent of her sales in the US. However, with the imposition of steep tariffs by US President Donald Trump, RAQ’s revenue took a significant hit.
Despite being an Australian-owned brand, RAQ’s bikinis are manufactured in China, making them subject to Trump’s tariffs on Chinese goods. Initially passing on the 10 percent tariff to US customers, Argyropoulos soon found it unsustainable as tariffs surged to 145 percent in April. This prompted her to shut down the US website and cease all sales to the country, resulting in a loss of 20 percent of RAQ’s revenue.
With the US market closed off, RAQ faces challenges ahead. The brand’s seasonal reliance on US orders during the Australian winter months for cash flow has been disrupted. Argyropoulos had to cancel US marketing efforts to save costs, but the impact of lost sales may have long-term consequences for the business.
Attempting to move manufacturing to Australia to bypass the tariffs is not feasible due to the technical skills required for the designs and the established relationship with the Chinese manufacturer. Argyropoulos fears that if the tariffs persist or increase, small businesses reliant on Chinese manufacturing for US sales may struggle to survive.
Despite the setbacks, Argyropoulos is redirecting her focus to breaking into the UK market. However, the challenges of establishing a new market and the uncertainty of success loom ahead. The brand’s sales have yet to recover since pulling out of the US market, emphasizing the ongoing impact of the trade war on small businesses like RAQ.
As the situation unfolds, the future remains uncertain for RAQ and similar businesses navigating the complexities of international trade amid escalating tariffs. The evolving landscape of global commerce poses significant challenges for small enterprises, highlighting the need for adaptability and strategic planning in turbulent economic times.
