Sheertex, the Montreal-based manufacturer known for its resilient pantyhose, is facing considerable challenges as it announces the temporary layoff of 40 percent of its workforce due to impending tariffs from the United States. Founded in 2017, Sheertex has quickly risen to prominence within the textile industry, but the looming threat of increased tariffs has shaken its operational stability.
Katherine Homuth, the company’s chief executive, revealed the drastic move, which affects about 140 of the 350 employees and contractors. Homuth highlighted the distressing reality of the situation, noting, "We are in a worst-case scenario" due to the financial pressures stemming from expected U.S. tariffs.
According to Homuth, Sheertex derives 85 percent of its sales from the U.S. market, placing the company at considerable risk as it grapples with the possibility of facing tariffs as high as 41 percent on its products. Currently, the company already incurs a 16 percent duty on shipments to the U.S. because some of its raw materials are sourced outside North America. An additional 25 percent tariff—threatened by President Donald Trump—would severely diminish the company's profitability.
Homuth explained the additional burden posed by the proposed removal of the de minimis exemption, which previously allowed low-value packages to be shipped duty-free to American consumers. If the U.S. follows through with this change, every shipment under $800 would now face duties, compounding the financial strain on Sheertex.
The impact of these tariff threats isn’t isolated to Sheertex alone. The Canadian Chamber of Commerce has been vocal about the necessity for the Canadian government to respond proactively to trade tensions. Candace Laing, the chamber’s CEO, urged Parliament to reconvene and assert Canada’s position, stating, "We need to send a strong message to President Trump and the world... Tariffs tomorrow instead of tariffs today still leave businesses, workers, and families in the lurch."
While President Trump recently suspended his threat to impose steep tariffs on Mexican and Canadian imports for 30 days, he proceeded to implement significant tariffs on all Chinese imports. This suspension offers Sheertex minimal relief, as the company has expressed the urgency of transferring as much inventory to the U.S. as possible before potential tariffs take effect. Despite the grace period, company leaders have acknowledged it's insufficient to offset the anticipated financial impact of the proposed tariff structure.
Laing’s comments also resonate with the broader concerns surrounding the fragility of domestic manufacturing in Canada. Homuth lamented the precarious nature of Canadian brands which rely heavily on local production. "Canadian brands using overseas production can pivot quickly to mitigate tariff impacts, but companies like ours, which invest significantly to build operations on home soil, face dramatically higher stakes," she said during her address to the media.
The perilous state of Sheertex can be viewed against the backdrop of the broader textile industry, where fluctuations and changes to trade policy can spell doom for smaller manufacturers trying to carve out a niche. Other companies have also reported experiencing challenges due to the trade environment, trying to find domestic partners for production amid shifting regulatory landscapes.
Homuth pointed out how significant investments, amounting to “tens of millions,” had been made to establish manufacturing capabilities locally, including over $200 million raised from investors such as Hennes & Mauritz AB and other financial entities. The current financial situation not only impacts employees but also endangers these substantial investments by creating uncertainty and fatiguing any future fundraising efforts due to the unpredictable market.
Tenacious as it is, Sheertex's future hangs perilously on trade relations between Canada and the U.S. The current administration's aggressive tariff proposals represent nothing less than existential threats to companies reliant on cross-border trade. The imposition of these tariffs would undermine the financial stability of Sheertex and its workforce, leading to potential long-term consequences if the trade environment does not improve.
Despite the temporary layoff of many dedicated employees, Homuth remains hopeful about minimizing damage. Sheertex is actively working to expedite fundraising rounds, recover from the impacts of the tariffs, and secure its operations as best as possible during these turbulent times. The company is learning from the experience, much like many others across Canada, considering how to adapt strategically to this shifting trade climate.
Meanwhile, the impact of this decision serves as a stark reminder of the fragile state of domestic manufacturing within Canada, prompting calls for greater support and resilience against such external pressures. The story of Sheertex highlights not just individual corporate struggles, but also symbolizes broader economic challenges faced by many Canadian enterprises concerned about their future viability.