Sheertex Inc., a Montreal-based textile startup known for its rip-resistant tights, is laying off about 40% of its workforce due to uncertainty surrounding U.S. tariffs on Canadian imports. CEO Katherine Homuth cited the potential for significant financial losses from the tariffs as the reason for the layoffs, which will impact approximately 140 employees.
Innovative Montreal textile manufacturing startup Sheertex Inc. is slashing the size of its work force, blaming uncertainty over the threat of U.S. tariffs for exacerbating its already tenuous financial situation.
“With the new tariffs we are facing 41-per-cent tariffs across all U.S. shipments,” she wrote. SRTX already pays a 16-per-cent duty as its products are not considered to be made in Canada under existing rules in the USMCA trade agreement. Those rules apply because more than 9 per cent of its raw materials are sourced outside the United States and Canada. The proposed change would also eliminate an exemption for packages shipped to consumers valued at less than US$800, she said.
Economists with Royal Bank of Canada have warned that Canada’s economy is not poised to absorb a shock at the scale of Mr. Trump’s tariffs. The country, which already faces a declining GDP per capita and stagnant investment, could face its “largest trade shock in nearly 100 years,” economists Frances Donald and Nathan Janzen wrote in a report on Sunday.
During its eight-year life, SRTX has uprooted from its original home in Ontario’s Muskoka region; convinced skeptical industry observers that it could create a viable, sturdier alternative to nylons; survived the COVID-19 pandemic; and raised US$200-million in equity and convertible debt from investors, including Swedish retail giant H&M, Lululemon founder Chip Wilson and clean-technology venture funds.
Ms. Homuth took an unconventional approach, candidly sharing her frustration and angst on social media about how difficult it was to finance her business. She even crowdsourced improvements to her investor pitch deck to help her break through with investors. With SRTX so close to breaking even, “either we raise the money and are a $50-million-plus revenue, profitable manufacturing company at the end of the year, or the company does not make it to the end of this year in its current shape or form,” she said.
TARIFFS CANADA ECONOMY MANUFACTURING SHEERTEXT
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