Tariff Talk

Buckle up, y’all. It’s time for Tariff Talk.

The Beginning: 2008-2017

Kelbourne Woolens was founded in August of 2008. Those of you old enough will remember the financial crisis that happened that month. It wasn’t an ideal time to start a business, but we were two scrappy women with enough naïveté and gumption to think we could weather that storm and grow independently, and are proud that the next 9 years of business proved us correct.

At the time, all of the yarns we sold were made in Peru. We did not pay any tariffs on the imports thanks to US-PTPA, and thus landed cost was determined exclusively by yarn cost and freight charges. While we knew about tariffs, they did not affect our business model or pricing structure.

The Middle: 2017-2024

Our business experienced a huge upheaval throughout 2017, much of which we kept private. The end result of gigantic changes behind the scenes meant we had to start from the beginning. We formed our own line of yarns and partnered with both Soak and BC Garn as their US distributors.

Products from Soak, a company based in Canada with goods manufactured in Canada, fell under NAFTA, but tariffs played a role in the BC Garn pricing structure. While we were importing BC Garn yarns from Germany, the tariff imposed on imports were—and still are!—based on where the product is manufactured, not where it ships from, and the materials used in the product. As BC Garn uses mills in Peru, Turkey, and Italy, and fibers from organic wool to tussah silk, every yarn had a different tariff rate (that we paid), which averaged around 6%. This rate was a consistent and expected part of the business, and one we could rely on as steady and unchanging. A few years later, we began distributing Navia yarns from the Faroe Islands. Navia mainly uses mills in Turkey to manufacture their mostly wool yarns, and we paid a 6ish% tariff on those as well.

The Kelbourne Woolens brand began with yarns from Peru, and quickly expanded in 2018 to include Germantown, entirely sourced and spun in the US, and then in 2019 we brought on Lucky Tweed, made in Donegal, Ireland. While the Germantown line isn’t affected by tariffs, anything made in Ireland followed the same 6ish% rule as the yarns from BC Garn. Since then, we’ve brought in more yarns from Peru and Ireland and quadrupled the Germantown line, which also includes Keystone, a yarn made from deadstock acrylic sourced from our mill the US, and domestic wool.

The Middle 2.0: Covid

Covid hit right as we were getting back on our feet after almost 3 years of overwhelming uncertainty. It also was a clear indication that many (many!) people did not fully understand how the supply chain worked, from toilet paper to yarn. The biggest change we made as a business, and one that still sticks to this day, was opening up our website to sell direct to consumer.

While pretty much everything else made zero sense, the tariffs stayed the same throughout this time.

The Present: 2025 and Beyond

Those of you familiar with the Kelbourne style of communication know we tend to keep it cool when it comes to public discourse. Initially, the tariffs were no exception, as the sheer quantity of unknows and unpredictability left us reeling and uncertain. The (first) day the tariffs were introduced began with a call to Ireland before we made it to the office, and ended with a meeting with Germany once we were already back home. Everyone hoped it was all bluster and the threats would be just empty air.

There continues to be uncertainty, it is clear people still don’t quite understand what tariffs are, who pays them (the importer!!!), and the percentages flying out of the White House seem to come at the slightest whim, directed at anyone within sight. Many consumers spent the summer floating on the de minimus rule, confident in the fact that imported goods under $800 were exempt and therefore a non-issue. De minimus never affected our business model, as our role as distributors meant the volume we import went far beyond the limit. In fact, we have paid an additional 10-20% on all imports since March, including those from Peru. The only way we have avoided paying a tariff on product from Canada was by placing our entire 2025 order—usually spread out over multiple smaller shipments—during the 30 day grace period back in February.

We do not know what the rest of the year will look like.There are a few things that still, and most likely always, will hold true:
• If you take away one thing from reading this post, let it be this: the importing company (or consumer) pays the tariff.
• The tariff is calculated from the manufacturing location and materials used, not the shipping origin.
• Business, especially ones like ours completely independent from parent companies, cannot afford to pay additional tariffs without it severely affecting their bottom line.
• The US has systematically and profoundly reduced domestic textile manufacturing over the last 100 years, with consumers playing a key role in driving this decline.
• Tariffs will do nothing to help domestic textile manufacturing without massive infrastructure investment at federal and state levels.

Questions? Comments? Concerns? Let us know!

*Key Terms
• Landed Cost: The total cost of bringing an item from the manufacturer (mill) to our warehouse.
• Freight Charges: The cost of transporting a shipment from one place to another, usually internationally. International freight is moved either via air or boat.
• US-PTPA: The US-Peru free trade agreement put in place in 2009.
• NAFTA: The North American Free Trade Agreement, put in place in 1994 between Canada, The United States, and Mexico. It changed in 2020 the USMCA, the United States, Mexico, Canada Agreement.