Facing an ‘existential threat,' a Vermont business helped take on Trump's tariffs

Boston Globe

2 days ago

Although Terry Precision Cycling manufactures much of its merchandise in Spokane, Wash., it also imports materials and finished goods from China, Taiwan, Vietnam, El Salvador, Italy and the Philippines, said Nik Holm, its president. President Trump has sharply increased tariffs on all those countries, creating what Holm called 'an existential threat' to his company.
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So he decided to join four other US businesses in filing a lawsuit challenging the legality of those tariffs, which
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'To have the best chance of survival was to join up here,' Holm told the Globe, noting the high tariffs Trump slapped on China added nearly $50 to the cost of a Caicos short. He was forced to pass most of that cost onto his customers, hiking the retail price to $199.95 from an anticipated $165.
'When you're up against the wall ...there was no hesitancy for me personally because as president I knew it was the best path forward for our company to have our best footing,' Holm said of joining the lawsuit against Trump.
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In the suit filed by the Liberty Justice Center, a libertarian public interest law firm, and a second one filed by 12 Democratic state attorneys general, the US Court of International Trade Wednesday ruled Trump's tariffs are illegal. The ruling, which is a blow to Trump's aggressive trade policy, was
then temporarily halted by the US Court of Appeals for the Federal Circuit and could ultimately be decided by the Supreme Court.
White House officials have said they believe Trump's tariff authority ultimately will be upheld. But Holm remains optimistic the courts will quash the higher levies.
'We're a small company dealing with global supply chain disruptions and rising costs caused by these tariffs that shouldn't have been in there in the first place,' he said. The ruling helps him believe that 'we're going to come through this...and have better clarity on the other side.'
Nik Holm, president of Terry Precision Cycling. (Terry Precision Cycling)
Terry Precision Cycling
There's been little clarity up to this point. The 16-employee company has scrambled to keep up with Trump's constant changes to tariff rates while trying to find alternative sources for the unique materials in its products.
'We haven't been working on innovation the last couple of months,' he said. 'We've been working on tariff mitigation and sourcing products from other channels.'
Holm declined to say who he voted for in the 2024 election, but said his politics weren't involved in the decision to join the suit.
'This wasn't a political move in the sense that we were going after the Trump administration,' he said. 'We were going after the survival... of our company.'
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Terry Precision Cycling is located in progressive Burlington, but its customers are from around the country and Holm said there has been some backlash in the chat section of its website for joining the lawsuit.
'That's even more of a reason that we need to stick our neck out there because somebody has to do it,' Holm said.
The company is used to paying tariffs. Even before Trump took office in January, the base tariff rate on its imported biking tops was 32 percent, Holm said. But the dramatically increases from Trump were an unforeseen hit.
Holm said he started the year targeting $50,000 in operating income. The tariffs have added $45,000 to his costs. And if they stay in place, the hit will be $1.2 million next year.
'That just would not be sustainable,' he said. " And obviously all that would have to be somehow passed to the consumer or adjusted supply chains."
But adjusting supply chains in such a specialized business and doing more domestic manufacturing is not easy.
One of the company's product lines used to be made in the United States, but the manufacturer couldn't find enough workers to do the sewing so production moved to China, Holm said. And even for the products Terry Precision Cycling makes in Spokane, all the high-end fabrics they use come from abroad.
'El Salvador, China, Italy, a number of European countries have...fabric mills that just don't exist in this country,' he said.
The K-L Manufacturing facility in Spokane, Wash., which makes products for Terry Precision Cycling of Burlington, Vt. (Terry Precision Cycling)
Terry Precision Cycling
Trump has said the tariffs are designed to bring more manufacturing back to the United States. But Holm said it would take years to develop factories that can produce those materials domestically.
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'That would take quite some time and quite some investment in infrastructure and... some incentives to build out [to produce] the fabric and chamois and elastic and zippers and everything that goes into the garments we build,' he said. 'That would be a big feat for the country to do, to say, 'Hey, we're going to make this all in the United States.' '
And were that even possible, the cost of domestically-produced materials would be much higher., Holm said. The lower cost of its goods from China has helped offset the higher cost of manufacturing others in Spokane, he said. Doing it all in the United States would mean substantial price increases for consumers.
In the meantime, Holm has been trying to find ways to reduce the cost of the tariffs.
'We look at our Philippine supplier and say, 'What else can you do? Can you do more to take away from the Chinese made goods?' ' he said. One of his Chinese manufacturers is building a factory in Cambodia, but Trump increased tariffs on that country as well.
Like many US businesses, Terry Precision Cycling is just trying to keep its head above water as the tariff issue plays out in court and in negotiations between the Trump administration and foreign trading partners.
'It's a lot of uncertainty for sure,' Holm said. 'We and everybody else are stuck between a rock and a hard place currently.'
Jim Puzzanghera can be reached at