Halloween Costume Seller’s View on US Tariff Volatility

To enthusiasts of a particular generation who enjoy pranks, Fraser Smeaton stands out as a true icon. Alongside his brother Ali and their former housemate Gregor Lawson, this Scottish entrepreneur established Morph Costumes. The company, based in the UK, revolutionized the market in 2009 by introducing an innovative version of the zentai full-body spandex suit, which quickly led to a wave of viral video sensations. One memorable incident occurred in 2018 when a group of improvisational performers ‘morphed’ the GAP store on Fifth Avenue, necessitating police intervention. The video of that event amassed millions of views across social platforms.

The United States represents the largest market for Morph Costumes, especially during the Halloween season. From kids in Detroit to those in West Palm Beach, nothing excites them more than donning ghostly attire or applying fake blood for the festivities. Operating from the company’s headquarters in Edinburgh, Smeaton has become profoundly knowledgeable about international tariff regulations and the detrimental consequences of economic instability and trade restrictions. Perhaps the President ought to consult with him for firsthand insights.

Morph Costumes serves as a quintessential case study illustrating the real-world repercussions of tariffs on everyday businesses. The company manufactures its products in China, a nation that boasts a three-decade advantage in apparel production capabilities compared to other global players. Relocating manufacturing operations to another country proves to be financially unfeasible due to exorbitant costs involved.

Ever since Donald Trump assumed office for his second term in the White House, the import duties imposed on Morph Costumes—which supplies major retailers like Walmart and Target—have fluctuated dramatically. These rates have swung from zero percent to 20 percent, then spiked to 50 percent, and even teased an extreme 145 percent before retreating to 20 percent. A recent Supreme Court decision declared these tariffs unlawful, resetting them to zero temporarily. However, the President soon introduced a fresh 10 percent tariff, though reports suggest some ambiguity regarding whether the intended rate is actually 15 percent.

Smeaton remarked to me with the characteristic Scottish dry wit, “It is certainly not good for investment… or for the US consumer. They are paying higher prices.” As a result of these policies, Morph Costumes’ products have increased in price by 9 percent, following a staggering $3 million duty bill that effectively erased the bulk of the company’s profits.

While elevated prices for witch costumes might not spark outrage in supermarket aisles, they undoubtedly offer valuable economic lessons. Tariffs, essentially taxes on imported goods, generate revenue for the US government—Smeaton noted that payments are due within seven to ten days. Simultaneously, they drive up inflationary pressures on a broad spectrum of products, ranging from superhero costumes to household appliances like fridge-freezers. The ripple effects on the cost of living directly influence public sentiment and electoral outcomes.

In a report distributed to investors and analysts last fall, Goldman Sachs observed, “We find that consumer prices have risen disproportionately in categories facing larger tariff increases.” Their most recent update projected that “tariff passthrough increased core PCE (Personal Consumption Expenditure) prices by about 0.7% through January and will raise prices by a further 0.1% in the remainder of 2026.” These analyses underscore the persistent inflationary impact of such measures.

The President has frequently positioned tariffs as a mechanism to facilitate the return of manufacturing jobs to American soil, a concept known as reshoring. While this strategy might hold merit for heavy industry—such as Volvo expanding operations at its Ridgeville facility in South Carolina—it falls short for numerous businesses dependent on Chinese manufacturing. Notably, approximately 75 percent of all toys sold in the US originate from China.

Smeaton elaborated, “Cut-and-sew is not the type of work Americans want.” He highlighted the stark disparity in labor costs: “In China, labor costs are $2-3 an hour. In America they are $20 an hour.” According to him, tariffs would need to escalate to an astronomical 500 percent to even contemplate reshoring as a viable option. By that point, most companies in similar positions would have already succumbed to financial pressures and ceased operations.

In search of viable alternatives, Morph Costumes has extensively explored production possibilities in countries like Vietnam, Bangladesh, and Cambodia. However, none of these locations possess the comprehensive expertise—from sourcing fabrics to crafting zippers—that China provides, particularly for the small-batch runs essential in the fast-paced world of consumer goods.

Smeaton shared a specific setback: “We planned to open a factory in India, but then there was a fallout there and tariffs were imposed, so we had to cancel that idea.” This experience exemplifies the cascading challenges businesses face amid shifting global trade dynamics.

For the President, unpredictability sometimes serves as an intentional approach. Yet for enterprises like Smeaton’s, the antithesis—predictable stability—is crucial for sustainable growth. Donning a Morph suit can indeed be entertaining and propel videos to 5 million views on platforms like YouTube. Nevertheless, the sudden evaporation of profits due to the latest White House policy announcement is anything but amusing; it poses a serious threat to business viability.

This narrative from Morph Costumes illuminates broader patterns in global trade. The volatility in tariff policies not only hampers investment decisions but also burdens American consumers with higher costs at a time when economic pressures are already mounting. Businesses operating in competitive sectors like seasonal apparel must navigate these uncertainties, often absorbing significant financial hits that erode profit margins and stifle expansion plans.

Smeaton’s experience also reveals the intricacies of supply chain dependencies. China’s dominance in manufacturing stems from decades of investment in infrastructure, skilled labor, and efficient production ecosystems tailored to high-volume, low-margin goods. Disrupting this through tariffs without equivalent domestic alternatives leads to inefficiencies rather than innovation in many cases.

Economists continue to debate the long-term efficacy of tariffs as a reshoring tool. While proponents argue they protect domestic industries, critics point to evidence showing pass-through costs to consumers and minimal shifts in production locations for labor-intensive goods. Goldman Sachs’ projections suggest ongoing inflationary effects, potentially influencing Federal Reserve policies and broader economic strategies throughout 2026.

For SMEs like Morph Costumes, which rely on slim margins and seasonal peaks, such policy swings can determine survival. The $3 million duty bill Smeaton mentioned not only wiped out profits but likely forced reviews of pricing strategies, supplier negotiations, and even product assortments to mitigate future risks. This reactive mode detracts from proactive innovation, such as developing new costume designs that could capture viral trends.

Looking ahead, Smeaton advocates for policy consistency to foster a conducive environment for cross-border trade. Stability would enable better forecasting, long-term supplier contracts, and investments in marketing to sustain Halloween dominance in the US market. Until then, businesses remain at the mercy of geopolitical and judicial whims, underscoring the need for dialogue between leaders and industry practitioners like Smeaton.