Less than 24 hours after a lower court ruling on Wednesday found that President Trump had illegally used an emergency powers law to enact global tariffs, a federal appeals court paused that decision and allowed the tariffs to continue – for now, that is. The legal topsy-turvy added a fresh round of uncertainty for business owners like Leslie Jordan, who started a company in Portland nearly 40 years ago which manufactures athletic apparel and accessories made in factories in China and Pakistan.
In April, when President Trump enacted tariffs of 145% on goods made in China, Jordan had to pay nearly 200% in duties to get her products cleared through customs. She lost business as some orders got canceled and scrambled to move production to factories in countries like Egypt and Vietnam, which face lower tariff rates than China. She also started getting emails from companies that offered their services to help her avoid high tariffs through illegal schemes, such as misclassifying the imported goods or shipping them through a different country.
Jordan recently shared her experiences with the New York Times in their investigation into the rise of trade fraud as a consequence of the tariffs. She joins us to share more details and how she thinks the federal government can more effectively crack down on tariff cheats.
The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: From the Gert Boyle Studio at OPB, this is Think Out Loud. I’m Dave Miller. Last week was just the latest tariff seesaw in a five-month period that has seen plenty of them. Less than 24 hours after a lower court found that President Trump had illegally enacted global tariffs, a federal appeals court paused that decision and allowed the tariffs to continue.
It all means more uncertainty for business owners like Leslie Jordan, who started a company in Portland nearly 40 years ago. Leslie Jordan, Inc. manufactures athletic apparel and accessories in factories in China and Pakistan. Jordan joins us now to talk about what it’s been like to run a business in this tumultuous time and the illegal offers she’s been getting to avoid paying tariffs. It’s great to have you on Think Out Loud.
Leslie Jordan: Thank you.
Miller: What’s the range of products that you manufacture and sell?
Jordan: We do a lot of products from apparel … we do a lot of T-shirts, we do athletic T-shirts, activewear, athleisure. We do jackets, we do quarter zips. We do bags, accessories, socks, towels and blankets. We also do medals and we sell promotional items to a lot of activewear events, regular events, corporations and a lot of nonprofit national organizations.
Miller: What’s the range of countries where you have contracted to do manufacturing? Where do your products actually get made?
Jordan: We have a lot of countries we’re familiar with, we’ve worked with. We started with Pakistan and Egypt. But probably the past 10-12 years we’ve been predominantly in China – about 90% of our product is in China. A lot of our outerwear we do in Pakistan, but we have the ability to do products elsewhere.
Miller: Ninety percent of the last decade or so. Why China?
Jordan: We found a great factory there, great relationship. We’re really like partners, they’re like our right arm. They do so much for us. Pricing is fantastic. They’re responsive, 24/7, like we are. And they have great product. They also have very quick delivery. We’re known to have probably the quickest delivery in the industry, that we can bring something in from China in three to six weeks if we have to.
Miller: Meaning … let’s say some company that’s having a 10K run, they say, “We want you to design a shirt for us, but the shirt that we had fell through, so how quickly can you get it to us?” From that first call to having some boxes of shirts delivered to, I don’t know, Wichita, Kansas, how long might it take?
Jordan: Well, we like to say six to eight weeks, but we can do it in probably two to three weeks if we have to. A lot of times we kid, we say we’re “Rescue City,” like when you gave that example, something fell through …
Miller: That’s actually happened?
Jordan: We’ve been known to do things really … We did a bag order for something, a big promotion, three months, something fell through. We did it, I think, in three weeks, delivered about 5,000 bags. So we’re a pretty quick turn.
Miller: Can you explain how tariffs work? Obviously, us people who are not involved in manufacturing or trade, we’ve never heard so much about tariffs as we have in the last couple of months. But it’s a little bit of a mystery as to when it gets paid, who’s literally paying it and how that system works. What are the ways that tariffs are paid?
Jordan: There’s probably two basic ways of working with tariffs. One, as a buyer, my factory makes the goods. I take ownership of the goods at the factory. Then I’m responsible for bringing them in and disclosing the amount of the price of the product I paid to the factory, the composition of the product to get the harmonized tariff code …
Miller: Harmonized tariff code – you mean, if it’s like cotton ...
Jordan: If it’s like cotton or polyester, there’s different tariff codes, or if it’s accessories. So we get the harmonized tariff code and we get the price. This goes on a commercial invoice and we get the commercial invoice as the buyer, if we’re taking ownership at the factory. And then that commercial invoice goes to our custom agent, who fills out the customs entry form for our goods to be in, containing mainly the price and the harmonized tariff code – the classification of the product. That’s one way.
Miller: So, for that first one, if I understand it correctly, that’s the way you normally operate. You buy the bags, say, at the factory itself and then you’re the one who’s managing the import of that from a port in China to, say, Long Beach or someplace in the U.S. When would you actually pay the tariff?
Jordan: We pay the tariff when it clears customs and …
Miller: When it arrives in the U.S. Not when it leaves there, but when it arrives in the U.S?
Jordan: When it arrives in the U.S.
Miller: OK. And that’s because you take ownership at the factory.
Jordan: We’re taking ownership.
Miller: What’s the other system?
Jordan: The other system is something called the DDP system. What I just described, our system is FOB: Freight on Board at the factory. DDP is Delivered Duty Paid. It was set up originally for a lot of people who didn’t have freight forwarders, didn’t know what they were doing, new businesses. So somebody said, “We’ll just deliver your goods to you in the U.S. You don’t have to worry about anything. We’ll pay the tariff. We’ll do everything.” So on the DDP, the factory – and they normally get a third party who’s a freight forwarder – they keep the ownership, they bring the goods in. They are responsible for disclosing the price of the good, the classification of the good, and they clear customs. Those companies that do the DDP are both China companies or could be USA companies, but they keep control of the duty until the product lands. Then we take control when it lands in the U.S.
Miller: So those are the two basic methods. What were the highest tariffs that you were facing at some point in the last five months?
Jordan: The highest tariff was 184.5% – almost two times what the product costs.
Miller: So, help us understand. For, say, a T-shirt that you are manufacturing, how much were you paying for that T-shirt?
Jordan: If I pay $4 or $5 for a T-shirt I’m manufacturing and then I have a 200% tariff, if I take, arbitrarily, $5 and double that, I’m at $10 on my tariff – twice as much as my cost. That’s like $15. It’s absolutely out of sight.
Miller: That’s obviously what we’re talking about, the manufacturing cost, but is there any potential profit there, if you had to pay $10? I mean, at this point, you’re paying $15 for the manufacturing plus the tax, the tariff. How much might you be able to sell that T-shirt for?
Jordan: Well, the problem is that we custom manufacture and normally take orders, like I say, four, six, eight weeks in advance. It’s very hard to determine a price to a customer and a cost if you don’t know your landed price. And that’s the roller coaster the tariffs have put companies like myself on, because when they set that tariff, it’s effective immediately. So I already set a price with my customer. I’m not setting a price when it lands. I set a price before it landed. And I set a price with my customer, including a tariff that was maybe only $2 – and now my tariff is $10.
Miller: Oh, so in that sense your business model is different than a retailer like The Gap, where they might say, “Oh, OK, we’ve been selling these T-shirts for $14.99, but now we’re going to sell them for $19.99. We’ll just slap some new price tags on them, because our cost of goods has gone up.”
You’re saying you had a contract with your buyers and that’s why you actually made these T-shirts with all their logos on them. Can you go back and say, “Hey, this is what happened?”
Jordan: Sure, the customers were fully aware of what was happening, so we went back and discussed it with them and asked them to help us. We had to pay the tariff and the duty. We weren’t gonna lie, like some of the DDP people who bring it in. They’re undervaluing the price, they’re doing all sorts of things, but we don’t. We had to pay the tariff, so the customers, many of them, we shared it with them, so neither one company or the other would really be hurt.
Miller: I mean, you had a contract, right? So if you went to them and said, “hey, just so you know, you said you’d buy these for, I don’t know, $12 a piece or whatever, but if you do that, that’s actually less than our cost of production at this point,” they didn’t have to take you up on that offer. The only reason they would do it is out of the goodness of their heart?
Jordan: That is correct. They didn’t have to because we had a contract with them. We have a lot of longtime customers, been in business a long time. And just to be fair to both of us, they really understood and agreed. I mean, we were at a point where we had several hundred thousand in tariffs that we weren’t expecting to pay. Literally, companies left products at the docks, at Long Beach, at the harbor, because they couldn’t afford to pay the tariffs. The tariffs were more than they could get from the customers and more than they were anticipating, so we were fortunate that our customers were willing to share with us in the costs.
Miller: When you had tariffs that were close to 200% at the highest – and this is for China in particular – what was going through your mind in terms of your medium-range plans? I mean, one thing is if, in the short-term, we have this shipment that’s just come in, is it possible to get some more money from the buyers, if they’ll be kind to us and respect our long-term relationship. But in terms of your medium-term plans for, say, looking for filling new orders, what options did you have?
Jordan: We went in high gear to speak with other factories we knew over the years, speak with factories in Egypt, in Vietnam, in Pakistan, and get them on board with sending them our samples, products, fabric. It’s a lot, it takes time, but we got them on board to do the orders for us, to move out of China for the orders. And also we spoke to some people in Mexico and the USA. So we were out talking to a lot of other factories, because that’s really a very high price with the almost 200% tariff.
Miller: How much more advanced is China for this kind of textile manufacturing than the rest of the world?
Jordan: They’re much more advanced, much more technically competent, detailed. In fact, a lot of the fabric in other countries comes from China. China is one of the biggest fabric ...
Miller: Still? Even with what you’re talking about, if you’re going to have something made in Vietnam or Pakistan, the bolts of this technical fabric or whatever, it’s still going to be made in China?
Jordan: Yeah. still. Some of them do. You know, Egypt makes some of their own, but a lot of them … Vietnam gets fabric from China. Mexico gets fabric from China. A lot of them get fabric and incidentals. So they’re a key player, if not for the full manufacturing but for the trimmings and fabric.
Miller: Do you know what’s happened to the factory that you said … And it seemed like you were speaking with real fondness, too, about the factory in China that you’d have a relationship with for a number of years now. Have they laid people off?
Jordan: They did. We struggled with them and we tried to keep some business there. Some customers weren’t on as tight a budget and were able to afford to pay a little bit more. We really worked with them with some things to keep them alive. Now that the tariffs came down a little bit, we’re doing better. We didn’t want to see them go out of business but they did lay people off. And many people in their area went out of business very quickly. [It’s] very sad.
Miller: How much of your manufacturing have you now shifted to other countries?
Jordan: We started to … not a lot. It takes us a while, some of it. But we went in a holding pattern, too, where customers could wait and where we could do it quickly in five to six weeks, they didn’t need them. So we went into a holding pattern of not processing the orders. Getting them ready, designing them, styling them, doing everything, but not processing, knowing we would do a quicker turn, hoping they would come down – which is what they did.
Miller: But again, with this uncertainty, you have no idea if they will stay down. I’m just trying to figure out how you run a business with that kind of uncertainty, that literal day-to-day uncertainty?
Jordan: It is very stressful. It’s very stressful. And not knowing day-to-day – I’ve said to people, probably more stressful than when we went through COVID, because of the uncertainty and the immediate action of putting them in effect immediately. To put a tariff for 200% and say it will be effective in three months, let your goods come in that you’re already priced, but to make it effective immediately with things you priced, it’s very difficult.
But we’ll get through it. We got through COVID. COVID was difficult and we’ll get through this. And we do have the other factories on board now more than ever. If he does do a spike again, they’re ready to go. We got the oars greased and we have the other countries ready to go, but I hope he doesn’t.
Miller: I want to turn to the tariff cheating schemes that I mentioned briefly in my intro and that you referenced briefly. First of all, can you give a sense for how many offers you’ve gotten, how many emails you’ve gotten saying, “hey, we have a way for you to not pay these tariffs?” How rampant are these offers?
Jordan: I was probably getting one a day for about a month when the tariff spiked. And not only me, my factory was getting it, because the freight forwarder people who bring it in from the factory, they make the deal with the factory. They buy it from the factory, so my factory was getting solicitations, two, three a day, by the people that wanted to do the DDP – Delivered Duty Pay.
Miller: Can you explain as if I were, I don’t know, a 7th grader, and if you can speak in … It doesn’t seem like the emails you’re getting are hiding too much either, but how do these schemes work?
Jordan: It amazed me that they weren’t hiding. I got emails from companies and they just said, “Don’t worry about the tariffs, don’t worry about high tariffs, we’ll take care of you. You will pay a low tariff or maybe no tariff. We have a lot of plans for you and one of the plans would be, we’re just gonna lower the commercial invoice. So when we present your goods to customs, we give them the commercial invoice, the cost to the factory, we’re just gonna make it lower.”
Miller: So if it was supposed to be, say, $4, if that’s actually what you were gonna pay that factory for that T-shirt ...
Jordan: They would lower it to $2 or $1.50. And therefore, they’re paying duty on a lower cost. They also would misclassify. They would classify under a code that is a lower tariff code, maybe even not an apparel code, just a code that has a very, very low duty – 5% to 10%. So in lowering the amount the duty would be paid on, and lowering the percentage of the duty by misclassifying, that’s how they were doing it. They also would tranship and they laid it out. Some of them were not as blatant, but there were a lot that were just blatant …
Miller: Tranship?
Jordan: Tranship means they’ll bring it into another country, put the label from the other country ... so they’ll bring it over to Vietnam or some other country from China. They’ll put a “Made in Vietnam” label and they’ll bring it in that Vietnam was the certificate [country] of origin.
Miller: Which is completely illegal, because in this case, the apparel was fully assembled, manufactured in China. The only thing that was added in Vietnam is the label itself. That goes against the law.
Jordan: That’s a good point, because if it was transformed in Vietnam by other things, then it would be OK to change that origin, but not just putting a label on. It was fully done. So the transhipment was another thing they were doing.
Miller: And I should say, we contacted you after we saw part of your story in a recent New York Times article about these scams. When you would get these email solicitations, one a day for a month or more, was there any part of you that said, “You know what, I want my business to survive and no one’s really going to be too hurt by this, so, yeah, why don’t I just say that I paid $1.50 for this shirt instead of $3?”
Jordan: It’s just not in me to … I know there were a lot of people very desperate to do that and it might have crossed my mind, but it’s just the legal thing to do. I just wanted to stand by what was legally the proper thing to do, work through it, get other factories, and hope that the president would get his senses about him, lower the tariffs and have us survive.
Miller: Do you have any way of knowing how many manufacturers are actually taking these tariff avoidance scammers up on their offers?
Jordan: I would say there are some. We hear about low pricing all across the apparel industry and I would say getting low pricing from the scammers … I don’t know for sure how they’re doing it, but I would say – I call them the scammers – they probably wouldn’t be out there doing it if they weren’t having a surviving business and a good scheme that they were doing.
Miller: What would it take to prevent these tariff cheaters from succeeding? I mean, what kind of inspections would be necessary?
Jordan: I think two things I could say. One would be, when things come in, they don’t know if they come in by the buyer paid FOB or the DDP method. I think they should isolate and have a special isolation for things that are coming in DDP, because those are the people that are cheating, and put them in a strict enforcement area where those containers would be highly inspected. And therefore that would help.
Another thing is, there is a bill in the Congress right now, Bill 1869. It is supported by a couple of our Congresspeople. We have six people in Oregon in the U.S. Congress. It’s a bill to protect American companies and industry from international trading fraud. And the bill will give the CBC, Department of Justice, more revenue in money and resources, and make these acts criminal.
Right now, these acts are civil. If someone gets caught, they pay a little fine. They probably made more money than the fine ever costs them. But if it’s a criminal act, they’re gonna go to jail for three years. So I urge every Congressperson, Senators around to get on that 1869. It was put in in March. It’s sitting in the House, waiting for it to come up for vote. And that would really help, because I think they do need more resources with the rampant and the volume that’s going on with the people that are cheating.
Miller: The president has given a few very different rationales for these tariffs. One is that he wants to bring back domestic manufacturing, broadly. Another is that he doesn’t like our country’s trade imbalance. And third – and this is more about Mexico and Canada – is that he wants to curtail fentanyl being brought into the country. But for that first one, which I think I maybe heard the most about, bringing back manufacturing, do you think that very high tariffs will lead to a resurgence in textile manufacturing in the U.S.?
Jordan: Absolutely not. Absolutely not. It would take a lot of time – years – to build factories. And like I said, many of the products in the factories are from China. There’s a lot of local screen printers, for example. They say they’re local. Their products are made in China, a lot of them. Other manufacturers in the USA., the fabric is made in China.
It takes a lot to get a factory set up, the system and the process. That just can’t happen overnight. And what’s gonna happen, in the five years it takes, to all the companies that have been working for the business, waiting for a USA factory to get set up? It’s just not a realistic thing. Anybody in the apparel industry will say that … just not realistic at all.
Miller: Leslie Jordan, thanks very much.
Jordan: Thank you.
Miller: Leslie Jordan started Leslie Jordan, Inc., in Portland, nearly 40 years ago. It designs and manufactures custom event apparel and accessories.
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