The tariff on imported goods (including clothing) has soared to 125%. In simple terms, a 125% tariff means we pay an import tax equal to 125% of the cost of an item. For every $1.00 it costs to produce a garment overseas, we must now pay an additional $1.25 in tariffs when it enters the U.S. This is more than double the original cost of the product. For example, if it costs us $20 to manufacture a dress, the tariff alone is $25, bringing the total cost to $45 before we even add shipping, labor, or any other expense. This rate is dramatically higher than anything we’ve seen in the past and was recently increased from an already steep 104% to 125% .

Such a tariff rate is unprecedented for apparel. Previously, import duties on clothing were in the single digits or teens, percentage-wise. Now, at 125%, the tax on each item exceeds its production cost – an astonishing situation that underscores how severe the change is . In short, the government is now collecting more in taxes on our products than the products themselves cost to make. This huge increase has created a shockwave through businesses like ours.

In a word, devastatingly. As a small business, Eliza Cate & Co operates on careful margins and advance planning. A 125% tariff means our cost to bring in each product has more than doubled. This kind of increase has several serious impacts on us:

• Cost of Goods Skyrocketing: The tax now adds more to our costs than the product itself. Using the earlier example, a $20 manufacturing cost becomes $45 after tariff. That $25 tariff used to be money we could spend on design, income, marketing, and keeping prices reasonable for you. Now it goes straight to the government as a tax. This leaves us with no choice but to drastically re-evaluate our finances. In fact, such an over-100% tariff means we’re effectively paying two suppliers for every item – one supplier to make it, and another “supplier” (the government) to import it. This is an unsustainable model for any business.
• Immediate Cash Flow Crunch: Tariffs have to be paid when goods enter the country. Imagine expecting a shipment of dresses that normally costs $1,000 to produce – under the new tariff, we would need to pay an additional $1,250 at the border. That kind of sudden expense is extremely hard for a small business to absorb. Many small companies simply don’t have the cash on hand to cover a 125% surcharge on their inventory all at once. (Industry-wide, we’re hearing stories of shipments being held at ports because companies can’t afford to pay the duties up front.) For us, this means our funds for other critical areas (like paying our daily operations, marketing, or developing new designs) would be completely drained just by import taxes. It creates a dire cash flow situation.
• Slim to Negative Margins: We’ve always priced our products as fairly as possible, accounting for quality materials, production, and the modest profit needed to sustain our business. With the cost of each item now more than doubled, any margin for profit is erased unless we raise prices (more on that below). In many cases, selling our current products at their regular price would mean selling at a loss once the 125% tariff is factored in. No business can survive for long by selling products for less than they cost to make. This puts us in a position where continuing “business as usual” would literally run the company into the ground financially in a very short time.
• Operational Strain and Difficult Choices: Such a massive tariff increase doesn’t just hit our accounting books; it affects day-to-day decisions. We’ve had to halt placing new orders with our manufacturers because we simply can’t commit to pay these tariffs on incoming products. Planning new seasons or product lines has become nearly impossible when each item would incur this level of tax. As a result, our operations are grinding to a pause (more details on this below in the operations question). It’s a heartbreaking situation – we have demand from all of you, we have ideas for beautiful new clothes, but we’re blocked by a financial barrier that’s too high for a small business to overcome in the short term.
  

In summary, the 125% tariff has put us in a position where every product’s cost has exploded, cash flow is under strain, and normal operations are no longer sustainable. It’s an extraordinary challenge that we are doing our best to navigate with minimal harm, but it has already forced some painful decisions for our small business.

This is a very fair question. Trust us, we have explored every possible option to cope with the tariff without shutting down our business or alienating our customers. Unfortunately, each potential workaround has serious downsides. Here’s why the obvious solutions aren’t really feasible in our situation:

• Dramatically raising prices: Yes, we could try to pass the entire tariff cost to our customers by simply marking up our products significantly. But to cover a 125% tariff, we’d have to drastically increase our prices on every item. For example, a dress that we might normally sell for $40 would have to be priced around $60-80 (or even higher) to recoup the new tax and still cover our other expenses. Such a sharp increase would put our clothing out of reach for many families. Part of our mission is to offer high-quality, adorable outfits at an accessible price point for parents – increasing the price betrays that mission and isn’t fair to you. We believe very few customers would be able or willing to pay that much, especially given household budgets are already tight in today’s economy. Essentially, raising prices that high would mean pricing ourselves out of business, as demand would likely evaporate.
• Absorbing the costs ourselves: Another idea is for us to take the hit and not raise prices, essentially accepting a huge cut (or complete loss) in profit per item. The reality is we simply cannot absorb a 125% cost increase and stay solvent. Unlike big corporations, we don’t have large investors or cash reserves to subsidize our products. Our margins were never enormous to begin with (that’s the nature of a small-batch clothing business). If we tried to eat the cost of the tariff, we’d be operating at a loss on every sale – which is unsustainable and would lead to bankruptcy. Experts note that tariffs this steep inevitably force businesses to raise prices because there’s no other choice; they directly increase costs and squeeze margins. In other words, these tariffs function like a huge new expense that no small business can simply swallow without consequences.
• Shifting production domestically or to a different country: We have considered producing our clothes in the United States (or in a country not subject to the tariff) to sidestep the import tax. While this idea could help avoid the 125% tariff, it comes with its own challenges. Domestic manufacturing in the U.S. is significantly more expensive for apparel — American labor and material costs are much higher than our current manufacturing costs overseas. If we made our dresses locally, each item might cost several times more to produce than it used to, which could still force a big price increase (even if we save on tariffs). Additionally, transitioning production is not something that can happen overnight. We have spent years building relationships with our current manufacturers who understand our designs, quality standards, and schedule. Finding and ramping up a new production partner (domestically or elsewhere) would take time and investment, and it’s uncertain if the final cost would truly be lower once all factors (labor, materials, capacity) are considered. There’s also no guarantee other countries won’t face similar tariff issues, since the trade policies have been shifting rapidly. In short, while we’re looking into alternatives, there is no quick, cost-neutral switch to be made that would solve our problem in the immediate term.

After examining all these options, we came to a painful realization: no workaround can maintain a healthy business under a 125% tariff. Any path we take would either break the bank for our customers, break the bank for us, or break the promise of quality and affordability that defines Eliza Cate and Co. We know this is frustrating – it is for us too. We’ve truly tried to find a solution that lets us keep going normally, but nothing seems to be the right answer. It’s an unprecedented challenge. Rather than destroy our business by forcing an inadequate solution, we’ve had to make the tough call to pause our operations (detailed below) and hope that the tariff situation changes. We’re a small team, doing our very best to navigate this storm with our values and community intact.

The 125% tariff has forced us to make significant operational changes in order to survive the end of our chapter. Here’s what’s happening with Eliza Cate & Co right now:

• Pausing New Product Launches: We have made the difficult decision to pause all new collections and product releases. This means you won’t see the usual seasonal launches or new arrivals. We simply cannot manufacture new inventory overseas and pay the 125% tariff on it – the cost situation is unworkable (as discussed above). So, rather than proceed and incur massive losses, we’re taking a break. This was an incredibly hard call to make (designing new outfits for your little ones is the heart of our business and our passion), but it is a necessary one for our overall well-being.
• Selling Through Existing Inventory: Our current plan is to focus on any remaining inventory we have in stock that was produced before the tariff increase. Those items were imported under the previous cost structure, so they are not all affected by the full 125% hike. We will continue to fulfill orders on in-stock items as long as we have them. Once those are sold out, you may notice some categories or sizes becoming unavailable on our website. We won’t be able to restock those items, so what’s left in our shop might be the last of our inventory.
• Fulfilling Existing Commitments: If you’ve already placed an order or pre-order with us, rest assured that we plan to fulfill it. We are working through our remaining orders and making sure every customer gets what they purchased. Our pause affects future products; we are not canceling orders that were made in good faith by our customers. That said, if any unforeseen issue arises (for example, a pre-order item stuck in customs due to tariff issues), we will contact affected customers directly and make it right, either through a refund or an alternative solution. Customer service remains a top priority even as we scale back other operations.
• Maintaining Communication and Transparency: Operationally, one thing we won’t cut is communication with you – our customers and supporters. We’ll continue to provide updates via our social media, email newsletter, and this FAQ page if things change. Transparency has always been important to us (that’s why we’re sharing all these details with you). You deserve to know what’s going on and why things are changing. So, part of our operations plan is to keep the lines of communication open. Whether it’s good news or bad news, we’ll let you know where we stand.

First of all, let us say that your support and empathy mean the world to us. The kind messages and understanding we’ve received from so many of you have been a ray of hope in an otherwise difficult time. Many of you have asked, “What can we do to help?” Here are a few ways you can support Eliza Cate & Co – and other small businesses impacted by these tariffs – as we navigate this challenge:

• Continue to spread the word: One of the most helpful things you can do is tell others about what’s going on. Share your love for ECC on social media, or bring it up in your parenting groups and communities. Many people don’t realize how severely these behind-the-scenes policy changes can hurt small businesses. By raising awareness, you help others understand that when they see a favorite shop close or prices jump, there might be bigger forces at play.
• Reach out to your representatives: If you feel strongly about this issue, consider contacting your local congresspeople or senators to voice your concern. Small business owners can make some noise, but voters and customers speaking up can be even more powerful. Let officials know that a 125% tariff on goods like children’s clothing is hurting businesses you care about (and by extension, hurting your community). It doesn’t have to be a long letter – even a quick email or phone call registers your viewpoint. If enough constituents speak up, there’s a chance lawmakers could re-examine the policy or support relief measures for small businesses. It’s a long shot, but every voice counts.
• Support small businesses (if you’re able): This is a tough ask because we know everyone’s budget is limited, but if you have the means and need something a small business offers, consider purchasing from them sooner rather than later. This isn’t just about Eliza Cate and Co (though of course we welcome your patronage for any in-stock items we still have) – it’s about the many small brands struggling with similar issues. Whether it’s a boutique clothing brand, a specialty toy maker, or any local shop facing high costs, your purchase could help them stay afloat. With ECC, if we do end up doing any clearance sales or special fundraisers to help with our remaining stock/costs, participating in those is a direct way to help. Even a single purchase or referral to a friend helps more than you might think in aggregate.
• Stay engaged and patient: Simply remaining part of our community is a big support. Keep following our social media for updates, drop a comment or a heart once in a while – it boosts our morale to know you’re still there. Patience is also key; we know it’s disappointing not to see new ECC releases, but hanging in there with us will help ensure we have a community to serve on the other side of this. If you’re on our email list, open our emails and stay in the loop. We promise not to spam – we’ll only send meaningful updates or news. Your continued interest signals to us that our work matters and is missed, which motivates us to find a path forward.
• Send encouragement and ideas: Honestly, one of the best things has been the moral support from all of you. Knowing that we have an understanding, caring customer base gives us strength. Feel free to reach out with words of encouragement, or even constructive ideas if you have any. Perhaps you know of resources or have contacts that could help, or you’ve seen other businesses handle this in creative ways – we’re open to hearing it. Even if there’s no easy solution, hearing “We believe in you” or “We’ll be here when you’re back” truly lifts our spirits. It reminds us why we started this business in the first place: to bring joy to you and your little ones. That purpose hasn’t gone away; it’s just on pause.