Pre-Booked Orders, Sudden Tariffs—And a Small Business on the Brink

For a Texas-based sustainable fashion company with just four employees, tariffs didn’t just raise costs—they are pushing the business toward closure. As they explain:

“After 12 years in business, our company is now nearing insolvency due to the impact of the IEEPA tariffs implemented in 2025. As a sustainable fashion brand, approximately 75% of our orders are pre-booked up to a year in advance, and our pricing was not structured to absorb the sudden 50% increase in costs on goods manufactured in India.

As a result, many prebooked orders were ultimately fulfilled at a loss. The financial strain from these losses forced us to make significant reductions across the business, including eliminating paid media spend—which led to a 43% decline in sales—downsizing our team, and forgoing my own salary.

Despite these measures, we have since defaulted on our SBA loan and, within the next month, will be required to shut down our direct-to-consumer online division. The combination of sharply increased costs, previously profitable orders turning into losses, and the need to reduce critical growth investments due to cash flow constraints has had a profound impact on the business. Without the ability to recover these losses, we anticipate being forced to fully close operations in the coming months.”

This is what happens when tariffs collide with real-world business models. Like many small companies in the apparel space, this business relies on long lead times and pre-booked orders. Pricing is set months in advance—sometimes up to a year—based on known costs and tight margins.

But when tariffs increased costs by 50% overnight, those assumptions collapsed. Orders that were once profitable became losses. Contracts couldn’t be renegotiated. Customers couldn’t absorb higher prices after the fact. So the business absorbed the cost.

In total, they have paid over $80,000 in additional tariffs—a devastating hit for a four-person company.

And the consequences have been severe: layoffs, lost revenue, personal financial sacrifice, and now the potential closure of the business entirely.

This story underscores a critical reality: tariffs don’t just affect large corporations or abstract supply chains—they can destabilize small businesses operating on thin margins and long planning cycles. When costs rise suddenly and unpredictably, there is often no way to adjust in time. And for some businesses, there is no way to survive.

If your business has been impacted by tariffs, join thousands of others speaking out. Sign the We Pay the Tariffs letter today and help us push for real relief.

We Pay the Tariffs has also launched a new survey on small business tariff impacts, the IEEPA refunds/process, and future tariff expectations. Please help us reach our (lofty) goal of 500 respondents by May 15 by answering the survey now and/or sharing it with other impacted small businesses.