The escalating trade war between the United States and China is starting to affect Australian businesses, albeit indirectly. A notable example is RAQ, a swimwear brand directed by Sophia Argyropoulos, which saw significant revenue losses when US tariffs on Chinese imports surged from 10% in February to a staggering 145% by April. As a consequence, Argyropoulos had to deactivate the brand’s US website, resulting in a 20% decline in sales.
Despite being an Australian-owned business that operates from Melbourne, RAQ’s swimwear is manufactured in China. This designation classifies their products as Chinese imports under US tariff policies. Consequently, following President Trump’s initial 10% tariff implementation, RAQ began passing on costs to American customers. As tariffs increased, Argyropoulos attempted to absorb the costs while hiking prices. However, the latter option became untenable once tariffs skyrocketed to 145%, rendering their products prohibitively expensive for consumers and leading to the inevitable closure of their US online sales.
The impact of these tariffs aligns poorly with the seasonal nature of the swimwear industry, as the brand traditionally relies on US sales to sustain cash flow during winter months in Australia. Argyropoulos emphasised that losing this revenue source, especially at such a crucial time, has put her business at a severe disadvantage.
While some cost-saving measures, like cutting US marketing, have been implemented, they haven’t compensated for the significant revenue loss. Moreover, relocating manufacturing operations to Australia isn’t feasible due to the specific technical skills needed to produce their unique designs, which are currently only available in China. Establishing a new factory would demand a massive investment, something a small business like RAQ cannot shoulder.
Argyropoulos is also concerned that continued tariffs could threaten the survival of small businesses reliant on US markets. Since halting operations in the US, RAQ has struggled to regain its sales momentum. The brand is now looking towards potential expansion into the UK market in hopes of recovering from this setback, although Argyropoulos realises such moves cannot be executed instantly.
In a position filled with uncertainty, she strives to remain optimistic about new opportunities while recognising the significant challenges ahead. Ultimately, the trade conflict not only complicates RAQ’s current operations but could have lasting effects on the brand’s future viability.