Canadian luxury retailer Ssense filed for bankruptcy protection

Canadian luxury fashion retailer Ssense said it plans to file for bankruptcy protection, partly because U.S. tariffs include U.S. combined low-value packages, which have just come into effect.

The Montreal-based company said in an email to CEO Rami Atallah that it was “surprised” by eliminating the minimum exemption to the U.S.

The De Minimis exemption allows tax-free shipping to the U.S. for packages of $800 ($1,100; £592) or less and is widely used by e-commerce companies and retailers around the world to ship small packages to the U.S.

President Donald Trump issued an executive order that suspended the waiver last month.

“Our landscape has changed dramatically over the past year and has increased trade pressures,” Atala said in an email on Thursday.

This, combined with the suspension of the minimum waiver and the lender’s move to sell the company without its consent, “creates a direct liquidity crisis that cannot solve the short-term fix.” He said.

Mr Atallah said SSENSE will “protect the company, retain control over our donkeys and operations, and defend our future”.

He said it plans to continue paying salaries and benefits coverage for employees and “intentionally operated on a habitual business basis.”

A Ssense spokesman said in a statement that the company believes it is “in the fundamental strengths of our business.”

“While we seek a path forward in collaboration, our main lenders choose to put the company under the CCAA [Companies’ Creditors Arrangement Act] Protect and start the sales process without our consent. ”

The spokesman said the company will file its own CCAA application – allowing financially troubled companies to undergo restructuring – to protect the company.

Founded by Mr. Atallah and his brother in 2003, Ssense has become a popular online fashion retailer, employing approximately 1,200 people worldwide.

US venture capital firm Sequoia Capital is valued at $4 billion in 2021.

The Canadian company is one of many mid-sized and mid-sized businesses, expressing concerns about Trump’s long-standing waiver for U.S. combined goods.

Tapestry is the parent company of American fashion brand coaches, and its leather bags are sold from about $200 to $1,000. Analysts this month expect it to lose $160 million in profits due to changes in tariff policies, about one-third of which is attributed to the elimination of the De Minimis rules.

Some people, such as Canada’s Canadian Clothing Retailers Province, suspended shipments to the United States due to additional tariffs.

According to American custom, nearly 1.4 billion parcels (total value of over $6.4 billion) entered the United States last year without the duties subject to exemption.

The De Minimis exemption was introduced in 1938 to avoid the charge of small import taxes in the United States.

Over the years, the threshold for the rule has risen and is widely used by e-commerce companies and retailers around the world.

Trump and his predecessor, Joe Biden, criticized the policy for being harmful to U.S. businesses and said they had abused smuggling illegal goods, including drugs like fentanyl.

Now, businesses and individuals shipped to the United States will pay their duties based on tariff rates imposed by the United States in the country of origin. Otherwise, they can choose to say at the White House that a fixed fee ranges from $80 to $200.

Canada faces a 35% tariff on goods shipped to the United States, although most of it is exempt under a North American free trade agreement. It also faces sector-specific tariffs on metals and vehicles.