In 2024, Chris Pence was in talks with multiple Canadian distributors to bring his North Carolina company’s products to additional customers.

Haand, the Burlington-based ceramics company he co-founded with Mark Warren in 2012, had already been doing business with Canadian firms. The Canadian hospitality industry was growing, Pence said, and Haand saw an opportunity to expand its business in the country.

Months later, Haand finds itself in a new situation.

“We’ve lost out on a lot of business,” Pence told The News & Observer in a virtual interview. “And we’ve actually had to reduce workforce because of diminished demand.”

After President Donald Trump announced a 25% tariff on many Canadian exports coming into the United States, the distributors Pence was in discussions with pulled out, he said. Haand had to abandon months of planning and drop out of a trade show in Canada, the latter of which has resulted in Haand having to pay fines.

Effects of tariffs on the economy

The Trump administration has said that tariffs — taxes imposed on goods entering a country — which have been announced for almost every product that enters the United States, will “strengthen the international economic position of the United States and protect American workers.”

Some groups, such as the United Auto Workers, have welcomed specific tariffs. But many economists say that the tariffs could increase prices for consumers and lead to higher unemployment and slowed economic growth.

“Tariffs are immediate. Supply chains take time to build,” TS Designs CEO Eric Henry told The N&O in a phone interview.

Burlington-based TS Designs uses natural fibers to produce apparel, namely T-shirts, with a transparent supply chain. Each article of clothing can be traced back to the farmer who grew the cotton that eventually became the finished apparel product.

NC small businesses lose clients following tariffs

One of TS Designs’ clients is located in New York, near the Canada border. But after threatened tariffs, Canadian customers that client depended on stopped buying from him.

“Guess what? He’s not going to be buying much product from us,” Henry said.

Another TS Designs client is a European wine distributor who purchased T-shirts from Henry’s company for events. Facing the possibility of tariffs, the distributor was “in a dilemma,” Henry said.

Ordering wine before tariffs go into effect would be costly — and prevent other purchases, including from TS Designs. Wait to buy, and the distributor may have to pay higher prices, making his business uncompetitive with sellers who purchased wine earlier, at lower prices.

“He’s very nervous about how tariffs impact business, which is impacting his ability to move forward with product for us,” Henry said.

Haand, which recently won a Governor’s Export Award for its success in expanding international exports, has also been dealing with lost customers. But there’s a deeper issue at play than price changes, Pence said.

“Companies deal with (tariffs) on a regular basis,” Pence said. “I think that the difference here is in the hostility and the sentiment about American-made products and American companies in Canada now.”

Haand has reached out to its Canadian customers, expressing its desire and willingness to negotiate or make a deal. Pence sees himself as a “consensus-driving kind of guy,” but he hasn’t been faced with this situation since Haand was founded.

How businesses are responding to tariffs

Haand started in an old farmhouse in Durham. The first restaurant it supplied was Ashley Christensen’s Death & Taxes in downtown Raleigh.

Restaurants and hotels comprised the bulk of Haand’s customers for several years. When the COVID-19 pandemic emerged, Haand pivoted, taking its business online and relying on financial assistance from the government, through the Economic Injury Disaster Loan program and the Paycheck Protection Program.

Now, Haand is trying to grow its business within the U.S. and in countries besides Canada, though it has had to revise its revenue forecast to reflect the loss of Canadian business.

Unlike distributors in other countries, including Mexico, the Canadian distributors that work with Haand have made it clear that they will not work with the company until America’s position on tariffs changes.

“This has created an environment that I would say is toxic from a business perspective,” Pence said.

Losing Canadian business Haand was banking on led to layoffs of a couple of employees at the company, which employs around two dozen people.

TS Designs is in the same boat as some of its customers. There’s a piece of technology in Europe that will help make domestic apparel manufacturing viable in the U.S. Henry acquired funding to pay for the equipment, but it hasn’t shipped yet. Depending on the cost of the tariffs, plans could be delayed further, or even canceled.

And while TS Designs tries to manufacture apparel using materials from the U.S., the company has to import a few materials that aren’t made here anymore. Henry said he’s worried those items may become more expensive.

The frequent back-and-forth on tariffs doesn’t help the situation, either.

“You have to change your game plan every day,” Henry said. “It’s extremely tough when you’re a small business and you’re already spread thin.”

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