The recent imposition of tariffs on secondhand clothing is set to disrupt the vibrant import and export market in Toronto, a key hub for the industry. These tariffs will impact Canadian vintage and resale businesses significantly, increasing the cost of importing U.S. goods by 25%. The de minimis threshold, which allows shipments under $800 to pass through duty-free, will no longer shield these businesses from the financial blow. This change threatens the livelihood of many within the circular economy, including vintage resellers, rag houses, and thrift stores.
Toronto's role as a central point for the flow of used clothing is under strain due to these tariffs. Canadian businesses, heavily reliant on U.S. sources for their inventory, now face increased costs and challenges. Many resellers source their items from "rag houses," which import clothing in bulk from the U.S. Claudia Filipsky, a prominent figure in the industry, expressed concerns over the quality and availability of items. She highlighted that without access to the unique and culturally rich pieces from U.S. bales, Canadian sellers might lose their competitive edge.
"It's not necessarily just that the cost of the U.S. clothing will go up — it just won't come in at all and it'll affect my bottom line in the sense where I won't have high enough quality items to sell … if we can't curate some of the best vintage that we possibly can in the city, then we lose that [client base]." – Claudia Filipsky
This situation is exacerbated by a shrinking pool of potential customers in Canada compared to the U.S., compounded by inflation which has curbed consumer spending. Canadian businesses are not only losing a major source of inventory but also face difficulties in replacing their U.S. customer base with Canadian buyers. The nostalgia for defunct local brands might increase demand for Canadian-made vintage items, yet this shift may not suffice to fill the gap left by reduced access to U.S. goods.
The tariffs' ambiguity further complicates matters. There is uncertainty regarding whether they apply to all items from Canada or only those made within its borders. David Soberman and Urquhart have both pointed out potential exceptions based on the country of origin.
"Theoretically something that's being transshipped should not be taxed." – Soberman
"In theory it's based on country of origin." – Urquhart
The confusion poses significant operational challenges for businesses reliant on clarity and predictability. As Soberman noted, uncertainty can be as damaging as the tariffs themselves.
"If you're thinking about this from the perspective of a firm that is engaging in this business, uncertainty and delays can be as damaging as the tariffs themselves." – Soberman
As Canadian businesses grapple with these changes, some may pivot to sourcing more from Canadian bales. This shift could increase demand for local vintage items, yet it remains uncertain how significantly it will affect the market dynamics.
"[The bales] are basically these thousand pound cubes of clothing … and you crack them open and all the clothing comes out. You don't know what's going to be in it. You don't know what you're going to find." – Claudia Filipsky
"People want U.S. bales because they want items from the U.S. that are better to sell. They have an older culture — for example, people have lived in their homes since the 1800s. When, unfortunately, those people pass away and they clear out their stuff, there's amazing pieces that tell so much rich history." – Claudia Filipsky
The cost implications are also steep for rag houses and pickers who rely on these bales for inventory. Filipsky points out that if bales become more expensive, so too will picker prices, affecting overall business sustainability.
"[Rag houses] know that people need them to run their businesses. And if the bales are going to get more expensive, then that means their expenses go up. Which means then you as the picker, your prices go up and if you rely on these places to source your inventory, you are probably going to pay that price because you know that the quality of the stuff is what's going to keep your business afloat." – Claudia Filipsky
Some in the industry, like Marc Keeling, plan to tap into existing networks and stockpiles of U.S.-made vintage items despite potential profit hits.
"Thankfully I have a pretty big network within this industry and some of the people within my network have been picking and collecting for decades and decades. I know some people much older than me who have been picking for much longer than me who have garages full and storage lockers full of 'made in USA' vintage that came from the States that I can purchase in wholesale — it isn't ideal because we pay a bit more, but I'd rather pay a bit more, take a little bit of a hit on my profit than just shut down." – Marc Keeling
