As Canadian companies brace for the impact of US president Donald Trump’s latest tariffs, a Montreal-based business has been trying to recover from the levies he introduced last year.
Those tariffs helped push Ssense (pronounced “essence”), a trendy online clothes retailer, into a financial meltdown that sent shock waves through much of the fashion world.
Ssense’s website sells everything from a US$7,000 (approximately RM28,180) Chloe dress to a US$100 (RM403) pair of Converse sneakers.
It also lists products from lesser-known designers, some of whom say the platform has been a crucial source of sales.
This year, Ssense emerged from the Canadian equivalent of a Chapter 11 reorganisation (a legal process that lets a financially troubled business stay open and keep running while it restructures its debt in the US) and hopes to rebuild itself so that it can withstand trade wars between the US and Canada.
In particular, the company aims to lessen the burden of US tariffs by moving a core part of its operations to the US next year.
“It’s a game changer,” Rami Atallah, CEO of Ssense, said of the planned move in an interview.
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Trump has often said companies that want to avoid tariffs can set up in the US.
That Ssense and other Canadian companies are relocating suggests that his trade policies are in some cases having their intended effect.
Trump’s latest 50% tariffs on Canadian-made goods are expected to harm many Canadian companies.
But Janet Park, an Ssense spokesperson, said the company would not be much affected by the tariffs, because most of what it sells is not made in Canada.
Still, the tariffs Trump introduced last year weighed heavily on Ssense, which was struggling even before he took office.
The company had grown fast during the Covid-19 pandemic when people were shopping online more, but when that came to an end, Ssense was stuck with too much unsold inventory.
And a landmark change in US tariff policy helped force the company over the edge.
For years, US consumers did not pay duties on purchases valued at US$800 (RM3,220) or less from overseas retailers such as Ssense.
But last year, the Trump administration got rid of that exemption, and US shoppers had to start paying tariffs for those goods.
“In terms of the impact on our performance, the tariffs were by far the largest,” Atallah said.
When buying items on Ssense’s website, US customers typically have to pay the tariffs when they check out.
The sudden existence of the new additional charges hurt the company’s sales in the US, its biggest market.
Before the tariffs, nearly 60% of Ssense’s customers were in the US, but that dropped to 40% after the levies were introduced, according to restructuring documents.
Running out of cash, Ssense sought protection from its creditors a year ago and entered a court-supervised restructuring. Its implosion was a stunning comedown.
Ssense, which Atallah founded more than two decades ago with his two brothers, Palestinian immigrants from Syria, had become a global destination for shoppers looking for the latest fashions.
The company was valued at CA$5bil (RM14.5bil) in 2021, when Sequoia Capital, a prominent Silicon Valley venture capital firm, became an investor.
Quebec’s government investment fund has so far not recovered any of the CA$21mil (RM61mil) it lent the company, a spokesperson for the fund said.
Other lenders, whom the company owed CA$179mil (RM520mil), declined to comment on how much they got back in the restructuring.
Ssense, which has a store in Old Montreal, cut its workforce to around 700 full- and part-time employees from 1,200 last year.
Most of Ssense’s inventory is imported from around the world to its warehouse in Montreal. From there, items are shipped to the US and other countries.
Under its tariff workaround plan, Ssense intends to set up a big fulfillment centre in the US. Items from around the world will be housed there, and then sent to US customers.
To understand how having a US warehouse helps Ssense’s business, consider a cardigan made by Jacquemus, a French designer, priced at US$990 (RM3,985) on the company’s website.
A customer from the US would have to pay US$97 (RM390) in duties for that cardigan, or around 10% of the retail price.
But if the cardigan were imported to a US warehouse at a hypothetical wholesale price of US$300 (RM1,200), its tariff is likely to be around US$30 (RM120), a much lower duty.
And Ssense’s customers may not pay any US tariffs themselves.
Read more: US fashion industry fears the possibility of high tariffs under Donald Trump
Park, the spokesperson, said it was Ssense’s “goal” to absorb the cost of the lower duties on items imported to the US warehouse.
The company expects to open its warehouse in the US in the first quarter of next year, somewhere in the Northeast, she said.
Another company, from the logistics sector, would run the facility, Park said, adding that Ssense could not yet estimate how many jobs might be created at the warehouse.
Ssense will keep a fulfillment centre in Montreal, from which it will ship to customers outside the US. Its headquarters will remain in Canada.
Atallah, his brothers and a Canadian investment firm, First Avenue Advisory, bought most of Ssense’s assets in the restructuring, to form the new Ssense.
They paid CA$59mil (RM171mil) in cash, while assuming liabilities of CA$18mil (RM52mil), according to restructuring documents.
Park declined to say whether the Atallahs or First Avenue has a controlling stake in the company. First Avenue did not respond to a request for comment.
To try to increase its chance of success, Ssense is now selling fewer items, which reduces its need for cash, and it is using artificial intelligence to streamline some of its operations, company executives said.
It is also planning to sell its own line of clothing, starting at the end of next year, Park said. – ©2026 The New York Times Company
This article originally appeared in The New York Times.
