Pashion Footwear CEO on Tariffs: Small Businesses Face Price Hikes

Pashion Footwear's Innovative Product

• 💡 Pashion Footwear has developed a unique, fully convertible high heel technology that transforms into a comfortable flat.
• 👠 The shoe also allows for customization of heel shape, height, and style, making it the most complicated shoe on the market.

Manufacturing Reliance on China

• 🇨🇳 The company is 100% reliant on China for its manufacturing due to the need for specialized, large-scale injection molding.
• 🇺🇸 Establishing similar manufacturing capabilities in the US would require an estimated 3-5 years and over $40 million for a single facility.
• 🌏 Moving to other countries like Vietnam presents challenges, such as significantly higher minimum order quantities (3,000 pairs vs. 200 in China) and continued reliance on Chinese material imports.

Impact of Tariffs on Costs

• 📈 Tariffs are not a flat rate but are added on top of existing duties, leading to import rates as high as 64% for some products and 99% for textile shoes.
• 💸 With potential new tariffs, some shoes could face import rates of 149%.
• 🛍️ These increased costs will inevitably be passed on to the consumer due to the lack of alternative manufacturing options.

Business Resilience and Growth

• 🚀 Pashion Footwear is an upper-end small business that experienced 85% topline growth last year, achieving $9 million in gross revenue.
• 💰 The company is profitable with a 19% EBITDA, double the industry average, largely due to its customization business model and unique margins.
• ⚠️ While the business has some capacity to absorb tariffs, the overnight gutting of profits and reduction in working capital pose a significant challenge, especially for businesses not funded by large venture capital rounds.
• 😟 The situation creates considerable emotional toll and nervousness for the CEO and her 12 US-based employees.