Tariff changes stand ‘to gut our entire business overnight,’ one small business owner says

Pashion Footwear, which sells flats that convert to high heels and vice versa, is known for its versatility, and founder and CEO Haley Pavone is used to navigating pivots beyond twist-off heels. As a first-time business owner, she’s faced everything from Covid supply-chain disruptions to threats of a ban on TikTok, which the brand leverages to reach new customers.

But because its products are manufactured in China and warehoused in Canada, tariffs present a new, considerable challenge for the brand. A loophole known as the de minimis exemption is set to be suspended for shipments of goods from China and Hong Kong on Friday, meaning imports worth up to $800 will no longer be exempted from taxes and duties—a change that is expected to have a considerable effect on items shipped to the US.

“We’ve really been able to just be scrappy and resourceful and pivot in order to meet every single obstacle that’s been thrown our way,” Pavone said. “This basically stands to gut our entire business overnight.”

The difficult reality inspired Pavone to speak out. A TikTok video she posted in April about the impact of tariffs on small businesses went viral, with 4.5 million views and more than half a million likes, and a repost from Shark Tank’s Mark Cuban that got an additional 3.4 million views on X. Pavone, who turned down a deal on Shark Tank in 2021, has continued to post alongside a growing vocal group of small-business owners, including Jing Gao, founder and CEO of Chinese-food company Fly by Jing; Chitra Agrawal, founder of Indian American food brand Brooklyn Delhi; and Emily Ley, founder of stationery brand Simplified. Some of these founders are taking additional action: Ley, for instance, is suing the Trump administration, alleging that the use of emergency powers to enact tariffs is illegal.

The stakes for Pashion, which employs a US-based team of 12, most of whom are women, are high.

“We run a global supply chain, as do most D2C businesses coming up in this generation,” Pavone said. “It’s what the world’s economy has been set up to do.”

Tread marks

Pavone, who started Pashion as a junior in college eight years ago, said she was inspired to speak out on social media because of misinformation about how tariffs work, including who bears the costs and why moving production to the US is not as simple as some might believe.

For Pashion, which last year saw a 19% EBITDA, skilled labor and specialty manufacturing needed to make the brand’s products means manufacturing in China is the only option, Pavone said. Pashion’s current suppliers, which Pavone has been working with for six years, took years to source and train because of the specific nature of the shoe, she told us. Beyond that, many of the people who manufacture the shoes have spent years in school learning to operate the necessary equipment, she said.

China, she noted, employs around 120 million people in manufacturing, and there were only 7 million unemployed people in the US in March, according to the Bureau of Labor Statistics, and only around 13 million people in the US work in the manufacturing industry, meaning there’d have to be a major shift in the American workforce—and that’s before considering the training programs and specialized equipment that would be required to operate at scale. “I’m going to make the educated assumption that the 7 million unemployed Americans are probably not trained on highly sophisticated injection-molding equipment,” she added.

Even if Pavone finds somewhere else to manufacture the shoes and is able to source and train workers at a new factory, the shift could take many months; Pashion’s fall collection, for instance, is already in production, she told us.

“I’m still stuck paying the tariffs from May 2 until then. Can I afford to…bleed money for the next nine months as a small business?” she said. “Maybe if I was Nike, but not me. I run based on cash flow.”

Pavone’s not alone in her vocal disapproval of the Trump administration’s trade policies. Both Gao and Agrawal have said that the ingredients used in Fly by Jing and Brooklyn Delhi products cannot be grown in the US. “The craftsmanship of our products are highly local to Sichuan and will continue to be,” Gao said in a video she posted on social media.

Short-term pain, long-term…pain

Pavone said that since there’s currently no way for Pashion to avoid the tariffs, the brand will need to raise prices to survive. Like some other businesses, it won’t do so without explaining why. The brand has sent emails to customers encouraging them to shop before the loophole is closed, and Pashion plans to slap a “Trump tariff” line item on its website’s shopping cart so customers understand the reason for the price bumps.

“Our hope is that being transparent and positioning it as such will encourage consumers to still shop with us even with the heightened pricing,” Pavone said.

About a quarter of Pashion’s business is international, and Pavone said the brand plans to market more to a global audience by translating the brand’s website and ad content into different languages and engaging more with brand ambassadors abroad.

“[We’re] really trying to pivot away from [being] an America-first business,” she said.

The brand’s virality on TikTok has helped its international recognition, but with that platform’s stability also in question, Pavone said it represents yet another “existential threat” to the brand’s future. Like other brands, she’s eyeing alternatives, and she is optimistic about Pashion’s Instagram following of 818,000, which is somewhat comparable to her personal and brand TikTok following of more than 1.2 million.

Creating a marketing budget is particularly hard, however, when the tariff rates change on what feels like a daily, sometimes hourly, basis. (The day before we spoke, the White House announced a tariff of up to 245% on Chinese goods, but later clarified that the rate only applies to electric vehicles and syringes; most Chinese goods are subject to a tariff of up to 145%, and though Trump said last week that the rate could come down “substantially,” China has denied negotiating with the US on the issue.)

“The problem is, I have no way of knowing right now how much money I’m even going to retain and profit on each shoe sale,” she said.

For now, TikTok is helping buoy the brand: Since posting her now-viral TikTok, Pavone said Pashion saw its biggest sales month ever and an increase in followers—even if some viewers, she said, aren’t getting it.

“There’s quite a few comments of people saying, ‘Short-term pain for long-term gain,’” she said. “Describing the mass gutting of small businesses as a short-term pain is a pretty cavalier way to put it.”