Yahoo Finance

PORTLAND, Ore. (KOIN) – American-based companies that do business overseas are tracking every tariff development closely. Among these companies is Showers Pass in Portland.

The outdoor gear company relies heavily on a specific factory in mainland China. CEO Kyle Ranson said around 80% of their products are made in China and then shipped to the U.S.

But since these new tariffs, they have paused those shipments. Ranson said the tariffs have made it too expensive to ship their product into the States.

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“So we’re in a crazy situation where we have finished product in our factory that our consumers and customers want and need, and we don’t dare move it because we don’t have the cash flow to pay the tariffs,” he said.

Ranson said something that is not being talked about as much is the tariffs that were already in place. When you add the latest ones on top, he said they are looking at closer to a 200% rate.

“A $100 jacket is now $300 just coming into the country,” Ranson said. “$1 million shipment, we would have to find $2 million of free cash flow just to pay the government for the privilege of bringing it into the country. It’s impossible.”

Making their gear in America would help them avoid the tariffs, but Ranson said they have a highly technical product and making it requires a skillset that does not exist in the U.S. Even if they wanted to change factories, Ranson said it is a process that could take years.

Showers Pass does have other factories in Vietnam, Taiwan, and South Korea — all countries that have also seen new tariffs.

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George Dolack with Showers Pass said at this rate, what you find in the store could start to change.

“We can really only invest in, you know, the surest buyer thing,” he said. “So we’re looking at a contraction of our product line over the next year so that we can ensure that we can keep those styles in stock. So that’s a big challenge to making it really hard for us to grow and expand our line.”

With tariffs this steep, Ranson said passing price hikes onto the customers would be unrealistic, but it does make it harder for the business to profit.

“If you’re a consumer and you have $100 or $150 to spend on a jacket, and now you’re told that same jacket is $450, you’re just like, ‘I’m not buying the jacket,’” he said. “It is no longer affordable for our target market, for our consumer.”

Ranson said with those halted shipments, business is basically stalled and they do not have many answers for what is next.