China Tariffs are Stifling this New Jersey-based Small Business

Kelly Rosenblatt
Former Senior Manager, Small Business Policy, U.S. Chamber of Commerce

Published

September 19, 2019

Premise Martin’s company traces back to the moment she destroyed a new pedicure before hopping on a plane home to visit family in South Carolina. After spending $80 at the nail salon, only to ruin her pedicure with the paper-thin sandals in airport security, Martin started brainstorming a solution. She leaned on her experience working at Nautica, Marc Jacobs, and Versace to create an innovative product called the Pedi-Flop Sandal.

Since officially launching her company, PediLicious Footwear, in 2017, she has added a 12-color nail polish line and a full range of body and foot spa products to her inventory. Multiple Macy’s locations have featured her products through The Market at Macy's entrepreneur program, she has plans to appear on HSN in the coming year, and her company is featured in cosmetic and spa magazines distributed nationwide.

But there’s a new barrier that could threaten the continued growth of her company.

The growing tariffs on Chinese imports are posing a challenge to her profitability. Because Martin’s flip-flops, and many of her other products, are manufactured in China, the steadily increasing tariffs are requiring her to raise prices – meaning the cost of her products will rise for her customers, threatening her U.S. sales.

Martin’s Morganville, New Jersey-based company is one of many American businesses of all sizes that are paying the price for the ongoing trade war between the U.S. and China. With more tariffs on Chinese imports on the horizon, and more retaliatory tariffs on U.S. exports from China also announced, we continue to hear from small business owners who say the tariffs are negatively affecting their day-to-day operations.

We sat down with Martin to better understand how the China tariffs are impacting her business, her outlook, and her customers. Here is what she had to say (what follows has been lightly edited for length and clarity):

Q: Tell us a bit about your business.

A: Our feet are the foundation of our body, similar to the foundation of a building. If the building foundation is not stable, it will crumble and fall. Hence, wearing the proper footwear is imperative to our body and soles.

Our patent-issued Pedi Sandal is a four-pronged, toe-separating flip-flop with semi-arch support. Our soles are created wider to prevent any pinky toe slippage and our front sole is designed a tad bit thicker than other flip-flops to avoid big toe breakage. Additionally, our straps are patented wider than the average flip-flop to assist with a better fit and to help soften that “plop plop” sound often made when wearing flip-flops.

All of the aforementioned were included in the health-consciously designed Pedi-Flop Sandal, to encourage wellness for your feet. Keeping our goal in mind, encouraging others to “Treasure Your Soles,” we designed the Pedi-Flop Sandal to fit heel-to-toe, giving the appearance of a smaller foot.

Q: How have the recent China tariffs impacted your business?

The China tariffs have impacted not only my manufacturing costs, but my current and prospective customers. My current customers have noticed an increase in price for my products and my new potential clients question the cost and become hesitant to order.

Q: How will this latest round increase that impact?

A: I recently spoke with my manufacturer and they have informed me of a 10% increase in cost of production.

Q: What are you doing to adjust to these tariffs?

A: At the moment, I am increasing prices. I am also seeking other manufacturers, with the hopes of obtaining a lower cost so that I will not have to continue to increase prices.

Q. Can you estimate how much in sales or revenue you will lose due to these tariffs?

A: I am a relatively new business and the tariffs are causing profitability issues for my company. My expected revenue would drop by 10% to 20%. When customers see higher prices without knowing the value or health benefits of a new product, they tend to revert back to old or familiar products, regardless of whether that product is best suited to their needs. Customers see numbers and consider what they have in their pocket to spare. Often they will choose cheaper products they are familiar with, which hurts sales for up-and-coming brands or semi-developed brands on the rise like mine.

Q: Any last thoughts?

A: I am an American and I live in America… I have built my business on my own, without investment or help, other than a very supportive husband, but again, the tariffs are going to affect me now.

To learn more about the trade war with China and for a breakdown of the current tariffs, visit here.