I Founded Cuts Clothing, Voted for Trump. Tariffs Are Bad for Business | Invesloan.com

This as-told-to essay is based on a conversation with Steven Borrelli, founder of Cuts Clothing, in Culver City, California. It’s been edited for length and clarity.

I’ve been a consistent supporter of Donald Trump.

I supported him in 2016, 2020, and 2024 because I believed he was someone who was pro-business, pro-family values, and pro-no wars. That’s the candidate I wanted for the future.

Today, I still support Trump. I believe in his “America First” vision. I think offshoring US manufacturing was a mistake, and I agree with the president that that should be a huge initiative we should prioritize.

But it can’t be done overnight.

I founded Cuts Clothing in 2016. I was inspired to start a clothing brand that was comfortable, but still appropriate for the office, after my boss at an ad agency I worked for kicked me out of a boardroom meeting because my shirt wasn’t formal enough.

I was around 26 years old. I saved up $50,000 to start the business with four people and no outside funding.

Fast forward six, seven years, I was running a business with about 30 people, seeing hundreds of millions of dollars in sales. We are now one of the leaders in the direct-to-consumer men’s everyday, casual athleisure space.

To compete in the global marketplace, where Chinese resellers cut costs, and to maintain our margins, our clothes are manufactured in Vietnam, China, Peru, and the Dominican Republic. By outsourcing production, we get cheaper 3PLs, or third-party logistics.

Cuts Clothing also takes advantage of a customs regulation known as Section 321 de minimis which provides an exemption on tariffs for low-costs goods.

This rule is essentially a loophole that allows us to send our product to Mexico before it reaches consumers, helping us avoid tariffs. It has survived the previous Trump administration and is one that almost all e-commerce companies in America use.

Trump’s promise to get rid of this rule and the speed of which he’s implementing tariffs could cause a lot of businesses to fail.

Like many companies, Cuts began to shift production months before Trump came into office.

We started shifting a lot of our production out of China and to Vietnam and the Dominican Republic around September. Still, things take months for the adjustments to set in.

You might have old inventory that you haven’t sold some previous years, for example. We started moving production in September of last year and we’re just now getting some of our first POs, or purchase orders, from other countries, while we still have China inventory from previous orders.

Businesses could also use more heads up on when and where tariffs would be implemented.

If the tariffs are here and then there — we can’t make a business decision today and redo it if the tariffs changes tomorrow. You’ve already placed an order. That is a decision you’ll have to see through for seven or eight months by the time your order it to sell it.

So when there’s so much uncertainty, we’re really afraid to make a move. It causes businesses to freeze.

Right now, our inventory from China is sitting in our distribution center in Mexico because we’d lose all margin. We can’t be profitable if we have to sell with 145% tariffs.

Imagine you’re selling a product that costs $20 to make and you sell it for $50. That gives you a $30-gross margin to cover everything else in the business, including marketing, operations, and payroll.

To maintain our current margin with a 145% tariff, we’d now need to raise the MSRP to $79. Even with a 30 to 50% tariff there are major implications for businesses. At above 100%, it becomes impossible.

I’m fortunate enough to be in the clothing industry because we move quickly. We will be able to make it out fine, but a lot of businesses probably need more than a year to get out of offshore manufacturing.

Reviving US production also would take a couple billion dollars in investments throughout two or three years, at least.

There needs to be a strategic plan to give grants to businesses in America. No one wants to ship stuff and deal with a global supply chain. If it was here, it would be so much better and we would pilot that if we got a US grant.

But to do that without a really good process is the death of businesses.

Again, I still support Trump. I believe that in the end he will be fair to American businesses. I believe he’s going to figure it out and I want to be part of the solution.

My plea is that Trump listens to businesses on the ground.

Let us help you. We’re on the same team.