Chicago boutique owner feels squeeze from Trump tariffs

CHICAGO - Businesses across the country are feeling the effects of President Donald Trump's tariffs, and Chicago is no exception.

Locally, boutique owners are scrambling to keep up with changes caused by the sweeping costs of importing goods, with the fashion industry expected to take a major hit—and some comparing this to the obstacles they faced at the start of the pandemic.

What we know:

Trump's tariffs are creating a major obstacle and new challenges for retailers everywhere. Family-owned stores and local shops are likely to take the brunt of the impact.

Located on Chestnut Street near Mies Van Der Rohe Way—on the border of Streeterville and the Gold Coast—the owners of SPACE 519, a small luxury department store on Chestnut Street, are seeing firsthand the shifts in vendor pricing.

"Our whole business model is predicated on finding special things that are not readily available," said Lance Lawson, owner, SPACE 519.

The shop sells highly curated clothing items, jewelry, and home decor. It also houses a 40-seat restaurant.

"[The tariffs] are going to make our margins much thinner," Lawson said.

Most of the goods and products they sell come from Europe, and there's already been a big bump in costs.

"We really rely on our European partners, and we travel extensively all throughout the year to the European markets where we do the majority of our buying."

Lawson is now preparing for hurdles ahead. Before recent changes, he says tariffs on goods from Europe were sitting well below 10 percent. He explains that on Saturday, they jumped to 10 percent, and that they could soon reach up to 25 percent on most of the items he imports.

Plus, one expert interviewed by The Guardian says extreme tariffs have the capability of setting the fashion industry back almost 50 years—predicting that European designers could end up selling primarily in Europe.

What they're saying:

As a result of Trump's tariffs, Lawson says he is already seeing an unavoidable ripple effect.

"We, everyday pretty much, are making transfers and importing goods into the store, so automatically, the first thing on Thursday morning, the Euro just jumped way up. At its height on Thursday, it was trading almost eight points higher than it was earlier in the day. So again, a transfer that I was making that day is many thousands of dollars more than it would have been the day before, and I have to import the goods that day," Lawson explained. "Plus, for us, a lot of the items that we bring in, I pay the duty on, so for instance today, I’m making transfers, bringing things in through DHL, and I’m already paying this higher duty, I don’t have any ability to mark any of those goods up anymore because I’ve already set the pricing for those goods so I’m just going to have to eat my share of that extra increase."

Lawson, like many other small business owners, says he hopes to limit increases that are passed along to his customers.

"Anyone right now that is looking at their 401K or watching anything in financial news is feeling very uneasy. No one needs anything that they’re buying from me—I’m not selling their milk and cereal, I’m selling things that are emotional that certainly have a place, but I can’t afford to scare my customers away," Lawson said.

It's something Rob Karr, president and CEO of the Illinois Retail Merchants Association (IRMA) is seeing across all industries. He shares that in many situations, retailers will have their hands tied.

"At the end of the day, again, that price point is largely set by the time it gets to the shelf, whether it's the grocery store, the restaurant, the pharmacy, the hardware store," Karr said.

He expects that in some form, tariffs will impact everything we buy.

"You’re going to see retailers who are already making decisions on what they're going to be able to stock. At what price point? Are we going to have the same variety? Are we going have as much?" Karr said. "It’s certainly going to set us all back."

Dig deeper:

Karr is meeting with Governor JB Pritzker in Springfield on Tuesday to discuss the impact tariffs are having and will continue to have on small businesses.

Karr adds that despite higher prices, retailers still must pay their employees and keep the lights on, making this even more challenging.