Tween-focused fashion retailer Claire’s announced on Wednesday that it has filed for Chapter 11 bankruptcy protection, the second time it has done so in seven years. Claire’s relies on low-cost imports from Asia to sell merchandise to its customers, and tariffs introduced by President Donald Trump have played a key role in the company’s financial distress.
Imports from China were one of the main targets of the tariffs Trump announced at his “Liberation Day” event at the White House in April. Despite warnings from economists and other figures that tariffs increase costs and are an economic negative, Trump has stood by the policy.
Claire’s currently has a nearly $500 million loan it is struggling to pay, but tariff costs have made it more difficult for the retailer to generate cash to pay off its obligations.
Trump and his team said that after his tariff announcements he would quickly secure “deals” with countries for new tariff agreements. But thus far, the administration has been unable to secure an agreement with China—replicating his failed attempt at waging a trade war with China in his first term.
Retailers have further been squeezed by the Trump administration’s decision last week to soon suspend the de minimis provision, which previously allowed shipments worth $800 or less to avoid tariffs. Those charges will now be incurred by retailers, which will most likely pass on those costs to consumers. The tariff fees effectively work as a tax hike, affecting middle- and lower-income families.
Former Vice President Kamala Harris warned the country about this possibility during her 2024 presidential campaign, describing Trump’s tariff plans as a “sales tax on the American people.”
More and more companies filing for bankruptcy protection have been citing tariffs alongside other struggles they are facing.
Home decor chain At Home announced in June that it had filed for bankruptcy. “While we have made significant progress advancing our initiatives to date, we are operating against the backdrop of an increasingly dynamic and rapidly evolving trade environment as we navigate the impact of tariffs,” CEO Brad Weston said in a statement.
Tariffs are contributing to an economic slowdown. Recent employment data shows that the Trump administration’s tariffs and mass layoffs are having a negative effect. But in response to this concrete economic data, Trump has not reversed course. Instead, he is promoting debunked conspiracy theories about jobs data being manipulated by shadowy forces.
Meanwhile, retailers like Claire’s and the rest of America are stuck with the fallout.