After 100 years selling fabric, this Northern Liberties business worries it won’t survive Trump’s tariffs on China

For small-business owner Howard Katz, 2025 was supposed to be a year of celebration.

One hundred years after his grandfather started pushing a cart around Northern Liberties selling fabrics, the third-generation salesman is still running the family business from a store on Fifth Street.

Now, Katz, 67, isn’t sure the company will make it another year. President Donald Trump’s trade war further escalated Wednesday morning as he imposed a 104% minimum tax on goods from China — where Katz Leatherette Co. buys most of its materials — then in the afternoon raised the rate to 125%.

After Trump last week announced a new round of import taxes during a “liberation day” speech, Katz received a letter from an importer explaining that on top of the existing levies, some Chinese goods now faced a total tariff rate of 79%. And small businesses like his would have to bear at least some of the costs.

“There will be a tariff surcharge on all of our products,” wrote New York firm Nassimi, adding that it would not “pass on the full tariff,” according to a copy of the letter Katz shared with The Inquirer.

And that was before Trump — in response to China’s announcement that it would retaliate with its own tariffs on the U.S. — raised the minimum levy again. The new taxes, which took effect Wednesday, may be even higher for products such as fabrics that already faced tariffs dating back to Trump’s first term.

“Literally, I can’t even wrap my head around it, 100% tariffs,” Katz said. “I just can’t imagine that somebody came in last week to buy 20 yards of fabric, and it cost them $400; it’s now gonna cost them $800 for the same exact thing.”

“It’s just devastating, the price increase.”

Katz’s experience offers a snapshot of the challenges facing small businesses across the country as they grapple with uncertainty over trade, upended supply chains, and rising costs associated with cumulative Trump tariffs that one Wall Street firm said amounted to the biggest tax increase since 1968.

Businesses that source materials from countries in Asia — a major supplier of consumer goods — are under particular strain, as Trump slapped high tariffs not just on China but also Vietnam and Thailand.

Trump says he is remaking global trade to correct for decades in which the United States has been “looted, pillaged, raped, and plundered” by other countries through trade practices that harm American workers. Underscoring the magnitude of the policy shift, Trump on Saturday wrote on social media: “THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH, it won’t be easy, but the end result will be historic.”

After days of stock market volatility and increasing concerns about a potential recession, Trump on Wednesday announced a 90-day pause on some tariffs on countries other than China.

In the 1920s, Katz’s grandfather, Morris, would go to a local fabric manufacturer on Friday afternoons as they were discarding unused materials. He’d buy fabric for perhaps 5 cents a yard, his grandson said, then push a cart around Northern Liberties selling it for 50 cents, “or whatever he sold it for.”

Inside Katz’s store today, a framed newspaper clipping from 1925 shows his grandfather standing near Marshall Street where he rented space and sold fabric from a cart. After Katz’s father returned from Army service in World War II, the family bought a store on Sixth Street. The business has operated out of the three-story Fifth Street location since 1962.

Today, the four-employee company supplies upholsterers with fabrics, foam, and other supplies like staples and nails — which Katz said have also gotten more expensive because of Trump’s 25% tariffs on steel imports. Katz said he also gets some DIY customers who “want to redo their dining room seats.”

Every couple years, Katz buys hundreds of fabrics and selects some to include in a 50-page sample book that he shares with wholesalers and other customers.

The book has about 400 units of fabric, and Katz inventories at least two whole rolls of each. Revamping the book would be “unbearably expensive,” he said.

“I can’t just change on the flip of a coin and just say, ‘Well, I’m not going to buy this anymore,’ because I have it sampled … and inventoried, so I’m obligated to stay with a lot of my fabrics,” he said.

Katz has a lot of inventory on hand — probably enough to last a couple months, he said. “But once it runs down, I don’t know what to do. I’m hoping for a pause in the tariffs.”

He said he may have to “seriously decrease” inventory, stop selling certain products, or buy fabrics only once a customer makes an order.

The business has survived previous downturns, including oil shocks that increased the price of vinyl products. When the pandemic hit in 2020, business suffered, but because he wasn’t selling much, he didn’t have to buy material either, so he still had cash on hand.

Trump’s tariffs are different, he said.

“I don’t know how to stress this enough,” Katz said. “But we’ve been in business for 100 years. I’ve been involved in running this business for over 45 years, and I’ve never seen anything that affected my business as much as these tariffs.”

Trump has said he wants Americans to buy more goods made in the United States. He argues that his tariffs will help build up domestic industry to meet that demand by increasing costs on foreign products.

Some industries, such as steel, are applauding his efforts — especially with regard to China, which even many of Trump’s critics say has long used unfair trade practices to flood the world with cheap goods.

The National Council of Textile Organizations last week praised Trump “for getting tough on the predatory trade practices of China, Vietnam and other Asian suppliers that have long undermined domestic textile and apparel manufacturing.”

But some in the textile industry say the U.S. is unlikely to see a manufacturing revival, citing high American wages and a shortage of skilled workers, according to an April survey of home-furnishing businesses conducted for Furniture Today, a trade publication.

For his part, Katz said a product from China that costs $10 a yard is twice as expensive from domestic producers. “It’s always been out of my price range,” he said. And domestic manufacturers don’t offer the variety of products that Katz’s customers have come to expect.

Nevertheless, he said, tariffs may push him to reconsider. Katz also buys some products from Taiwan, which Trump slapped with 32% tariffs, and Canada, which faces a variety of levies on many goods.

But Canadian-made textiles remain duty-free, according to industry groups. That could give Katz an opening.

Yet he said that when he started buying fabrics from Canada during Trump’s first administration — in an effort to reduce his exposure to tariffs on China — those suppliers raised their prices, too. “Not because of the tariffs,” he said, “just because it was what the market could bear at the time.”

Katz, who lives in Old City, said he knew Trump campaigned on raising tariffs, and “I was hoping he wouldn’t win, but he did.”

“But I never imagined it would be to this extent,” Katz said. He takes a measure of solace in the fact that he’s not 20 years younger.

“I’m 67, but if somebody was running this business and was 47, I don’t know what they would do,” he said. “I don’t want to retire. … But I can. I can sell my business and retire and live happily ever after. But for every one of me, there’s 100 people who … probably can’t afford to do that.”