Trump’s new tariffs spark layoffs at Sheertex’s parent company
Some companies are already slashing their workforces as the threat of expensive tariffs on foreign imports to the U.S. casts a long shadow across the retail industry.
Katherine Homouth, the founder and CEO of the Montreal, Canada-based manufacturer SRTX, announced in a LinkedIn post on Wednesday that the company had placed 40% of its nearly 350 workforce on temporary layoff. SRTX is best known for Sheertex, the top-selling tights in the U.S., according to the company’s LinkedIn profile.
The decision was not made lightly, she wrote, but President Donald Trump’s new tariffs necessitated the decision. “With 85% of our sales in the U.S., and tens of millions invested in our Canadian factory, the impending U.S. tariff changes and delays in closing the final portion of our fundraise have led to tremendous financial uncertainty,” she wrote. “To our impacted team members: Thank you and I’m sorry I have let you down. Your dedication has been the foundation of everything we’ve built.”
The brand’s temporary layoffs underscores the challenges many companies are up against after Trump signed three executive orders on Saturday imposing 25% tariffs on Canada and Mexico, as well as a 10% tax on imports from China. Although the tariffs on Canada and Mexico have been delayed by 30 days, Homouth wrote that the 30-day grace period isn’t enough time for the company to shift its inventory to the U.S. to avoid the tariffs. SRTX’s experience also highlights the challenges companies face in shifting their production to mitigate the impact of tariffs, especially smaller operators.
If the new tariffs go into effect, SRTX will be slapped with a 41% tax across all U.S. shipments, up from zero duties on direct-to-consumer shipments thanks to the de minimis exemption, which allows exporters to ship packages worth less than $800 into the U.S. tax-free. Homuth wrote that while SRTX had been preparing for the 25% increase on shipments to U.S. retailers, the company hadn’t expected the tariff to be added on top of the existing 16% duty. The company also didn’t expect the tariff to apply to consumer shipments.
“The 16% duty we face, additive to the 25%, is because our products are not considered ‘Made in Canada’ under USMCA,” Homouth wrote. “While counterintuitive as every stage of production happens under our roof in Canada, with more than 9% of our raw materials sourced outside the U.S. and Canada, we don’t meet the ‘Made in Canada’ threshold.”
Homouth wrote that these changes would not impact the company’s ability to service its customers, both consumers and retailers, and SRTX remains committed to its 2025 plans.
SRTX ships millions of units annually, according to the company’s LinkedIn profile. The company also operates two factories in Montreal. SRTX has also raised over $200 million in venture capital from institutional investors that include H&M Group.
Homouth did not immediately respond to a request for comment. The Globe and Mail first reported the news.
Neil Saunders, managing director of GlobalData Retail, told Modern Retail that tariffs invariably push up costs. And as the cost of business goes up, companies will either need to accept lower profits or increase the prices consumers pay. As a result, more industry layoffs may be on the horizon.
As Saunders put it, “Quite how this balances out remains to be seen, but in some cases job losses will be a function of the adaptation.”