A (0:02)

Do you feel like you were meant.

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To have a kick ass career as a hairstylist? Like you got into this industry to make big things happen? Maybe you're struggling to build a solid base and want some stability. Maybe you know social media is important, but it feels like a waste of time because you aren't seeing any results. Maybe you've already had some amazing success.

A (0:19)

But are craving more. Maybe you're ready to truly enjoy the.

B (0:23)

Freedom and flexibility this industry has to offer. Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you're ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists. I'm Brit Siva, social media and Marketing strategist just for Hairstylists and this is the Thriving Stylist Podcast.

A (0:51)

What is up? And welcome back to the Thriving Stylist Podcast. I'm your host Britt Siva and I want to actually say at the top of this episode, which is all about tariffs, that today's date is Monday, April 21st at time of this recording. So I know that's not when this episode is being released, but I think it's important only because so much about this is changing in real time. And I've already reported on tariffs once, but I kept it very high level because there's actually a ton that I said back then that is still in place today. And a lot of that was this is all very speculative. So it does feel like we're getting closer and closer and closer with tariffs and we've seen some movement and changes are taking place. But I think that once you listen to this episode, it will become a little bit more clear as to what's going on. And the other thing I want to say is so much of this is feeling scary because there is so much unknown. I was trying to do research for this episode and it usually takes me a couple of hours to research any given episode because I want to have, you know, legitimate sources and to be certain that what I'm reading and sharing is right and so much information even from legitimate sources is openly saying we're not sure. We don't know what it sounds like, what it looks like, because our administration is very much in negotiations and until negotiations are finalized, there's not going to be any systems announced because the system's not happening yet. And I think we as business owners, especially if you are like me and you're an over preparer and an over organizer and you want to know all of the details as early as you can. It makes us so overwhelmed and stressed out because it's like fear of the unknown. And we know this thing is coming and we know this thing is changing, but we don't know exactly how and we don't know how to navigate it. And that part is terrifying because it's like this looming monster that you know is coming, but you're not going to be sure how to tackle it until it gets here. I think that's where a lot of the stress comes from. So first things first, if you've not already listened to my previous episode on a US Administration Change, I'm going to share that link now because it's worth going back and listening. That's going to be episode 364, and it's called how to Prepare for the American Administration Change. So I want you to go back and listen to that because we talk about the background of why tariffs, why are we doing this, what happened with the tax cuts several years back and everything that happened with COVID relief and stimulus and PPP loans and the backstory of kind of how we got to here today. I do think that backstory helps to set the stage for where we are, because I know this sucks. I totally understand. I think when you understand the how we got here, it doesn't make it land easier, but it makes you realize like, well, what are we supposed to do? And in that I don't have the answers. I don't have the answers to is what is we supposed to do? But I think that when you see how we got to where we are, you realize we're at this crossroads. And the crossroads that we're at is that one of two things has to happen. Either income taxes have to be raised, which I don't think any of us want. Like, we're already like, oh my gosh, you're taxing us to the moon and back. Are you kidding me right now? Or something like, tariffs have to go into place. And when you look at the history of this decision, the US Government is in a massive deficit and it's only getting worse. And it's been there for a long time. And a lot of the relief that was put into place during COVID was a part of it, but there was no choice. Right? It's not like we could have skipped that. We had to do that. So based on the things that we had to do and all the decisions that have been made for Years and years and years we have this massive deficit. At some point that has to be paid back. And this is the unfortunate thing is when we got stimulus and we got ppp, there was no, like, we missed the asterisk part of those give outs where we were like, by the way, in a few years we're going to be coming for it. Nobody said that, but it was almost like this loan system that we didn't know we were participating in. And now there's this huge deficit that has to be taken care of. So what I said on that previous episode is that the American government got to this place where they had to decide, okay, do we raise tax or do we figure out another way to make the money? And right now they're exploring the option of figuring out another way to make the money. So let's talk about kind of the parts and pieces that are in play and how you should react. So I asked on my Instagram story, what are your questions about tariffs? What are your biggest concerns? What can I tackle for you now before I get into any of what I'm going to share, I am not an expert on this by any means and I don't pretend to be. I did the best research I could possibly do. Like I mentioned, probably if you've tried to do any research you found similar to me, much of it is speculative because no final decisions have been made. I'm going to go through the history a little bit of the back and forth we've experienced, but because there's so much up in the air, a lot of this is speculative. And so I just want to share that I don't have a deep understanding of tariffs. I have enough of an understanding to offer some insights, but I don't want to pretend to be the expert. So just know that going into this I'm not putting on an expert hat. I'm just sharing best process and best thoughts as of this crossroads. Okay, so when I asked on my Instagram story, you know, what are the things you want to talk about regarding tariffs? Some of the common questions were what should we do pricing wise? Like if cost of everything's going up, how does that impact our prices? So many coaches are advising to raising prices. What's your take? How will we pay these tariffs? What is the. Oh, this was a great one. What is the point of tariffs if manufacturing in the US is already expensive and is going to go up? That's a good one. We're going to explore that. And what, if anything, should we stock up on ahead of this now, by the time this episode releases, if, if the most recent deadline stays intact, there will still be a tariff rollout. As of the recording of this episode, it looks like tariffs are rolling out in early May. There's a chance that that's going to get pushed again, but I'm recording this episode with that timeline in mind. So let's go back to the history of why tariffs were ever considered in the past. So the Tariff act of 1789 was one of the first bills ever passed by Congress. So it's been here for a long time. The reason I want to do the history lesson is because there's this study by Douglas Irwin. He's an economics professor at Dartmouth College. And what he says is there's three Rs of tariffs, revenue restriction, and reciprocity. So, meaning revenue, we all get that part. It's an attempt to make more money. The restriction is importing barriers to protect domestic industry. And we kind of get that part too, Right. We make it more expensive to bring stuff in from other countries so that what gets done here in the US Is prioritized. That's the concept. Now, it's not perfect, and we're going to get into that, but that's part of the concept. And then reciprocity. And this is the important piece to understand. It's a bargaining chip to cut deals with other countries. And if you've been following this even marginally closely, that's what's been going on for the last month or so is that President Trump announced he was doing these tariffs, gave a hard deadline of when it's going to happen, and a lot of countries came to the table and said, wait a second, we want to talk about this with you further. And for a lot of countries, he kind of hit pause. Not all the way, but kind of hit pause, not with all countries, and we'll talk about that, too. But basically he said, yeah, I'm willing to come to the table. And he's leveraging that last piece, the reciprocity, to see what kind of deals can be made. So now, going back to that tax thing, Donald Trump, when he was campaigning, made the statement that tariffs could replace income tax to fund the government. That statement itself I don't find widely supported by any research I did of like, yeah, like there's a chance that these tariffs could work well enough that we wouldn't have to pay income tax. I'm not finding anything that supports that, but that does support the research I had found previously that said, as a country, we're at the crossroads of raise taxes or do tariffs. We had to make a choice and tariffs was the decision. And so he kind of took that a step further and said this could actually replace taxes altogether. Again, I'm not saying that that's true. All I'm saying is it was something that was said during the campaign, and maybe that's part of the bigger, grander plan that we don't all know yet. I'm not sure. Now, with that, there is one more component. So Douglas Irwin, that professor at Dartmouth, did say you can't really achieve all three of the objectives at the same time. So he's saying there's these three Rs, revenue restriction and reciprocity. But you can't really have all three. So if you are doing the reciprocity like you're doing the bargaining chip thing, it may work from that perspective. But maybe you won't get the revenue that you were initially hoping to get, and instead you're getting something else. It's not revenue. Maybe it's something different and maybe the restriction does come into place, but you don't get the reciprocity. I don't know. But what he's saying is it's usually a trade off, like all of these three things are possible, but to get all three out of this initiative is rare. Now, the other thing to understand is that even if we read that a tariff is going into effect that affects our relationship with any given country, it does not mean that all goods imported from that country will be impacted. For example, one of the things that I found in my research is that avocados from Mexico are still going to be imported tariff free. So avocados fall into one of the categories that does not get impacted by these tariffs, even if other Mexican goods do. Avocados, and I'm guessing other produce too. I think they were just using avocados, for example, because everybody loves guacamole here in the US when we see that there are certain cases where the tariff doesn't go into place, you can see where the bargaining starts to come in. Where it's like, okay, it's some things, but it's not other things. Where it's things where our administration believes, like, listen, the produce coming in from Mexico is a huge asset to the US and we don't want to lose any of that. They don't impart any kind of tariff onto that. So just know it's not necessarily as sweeping as it first seems. Top level. Now the other thing too, is that the whole point of tariffs or the way it gets explained is it's to make sure that more gets done here in the US right now. @ their core, tariffs could make demand for domestically manufactured products, which was the big promise. Right. We're going to do it all in house and it's going to be great for manufacturers here in the United States. The challenge is, and what's different now than was, say 100 years ago is we have this huge global supply chain which even a hundred years ago did exist, but I mean, at the scale we have now, it's massive. Even an American based company or an American based manufacturer could be using parts, pieces and components from anywhere else around the world. So it's, even if we were to produce something here in the States, it doesn't mean it wouldn't be impacted by these tariffs if they're bringing in parts and pieces from other countries. Okay, so let's do a quick timeline. Then we're going to talk about China and then we're going to talk about strategic advice. So April 2, 2025, President Trump issued an executive order which was a baseline reciprocal tariff of 10% on pretty much all U.S. trading partners. And that was to go into effect April 5th. And then there was additional reciprocal tariffs on 57 countries. That was in effect April 9th, however, and we saw what happened to the stock market and it felt really scary and it felt like the bottom fell out. Right. On April 10, the president suspended the country specific reciprocal tariff portion for all countries except China for a period of 90 days to allow for negotiations. So at the time of the recording of this podcast, we're in that negotiation period, leaving a 10% across the board tariff in place. So what he said was, you know, some countries where it was like 25% or more, that piece we put on pause and that there's room for negotiation, but there is a 10% across the board tariff in place. That 10% stayed. But for those individualized reciprocal tariffs on the 57 other countries, he said, let's come to the table and see what we can get worked out. Okay, so let's talk about collecting that 10% in place tariff, which is tricky and it's a little bit in limbo. And I'm going to explain what I found in my research. But again, this was tough and I'm trying to put the pieces together. So the US Customs and Border Protection bulletin provided a 51 day grace period, meaning that for cargoes loaded and in transit to the US by early April, I believe it was April 5th. Let me cross check. Yes, April 5th would avoid paying that additional charge so long as the cargoes arrived in the US by May 27th. So there's kind of like this additional grace period. It's like if the goods were already on the boat and headed to the US by early April and they get here by end of May, they're going to avoid that new 10% duty charge. However, if something were to be loaded on the boat, say now, they would not get this grace period exemption. Now in the other research I found it said if your package passes is through custom on or after May 2, the tariff could be owed. But it's unclear how it will be collected and what the additional processing and handling fees will be due in addition to the tariff. So let's talk about, about that part. USPS has loosely said that there will be a $9 flat fee to process the package on top of what you owe as the tariff. So let's say that you owed, you know, $14 as part of your 10%, it would be $14 plus $9 to USPS. So the $14 would go towards the tariff and then, and that would go to the government and then the $9 would go to USPS for running through this entire process. So in the research it says that for USPS international packages, you would pay the duty and any associated fees either at the post office by mail or through pay.gov you'll get a notification that will include the amount due and instructions on how to make the payment. So my question, and I can't find this for sure, but I can only assume is does this mean shipping is going to be even slower and longer? I would guess so. If you've ever shipped anything in internationally, it takes a minute. Like there's no Amazon Prime 2 day shipping and now it's going to get worse, right? If we have to go through a customs process and there's all this stuff held up, I can only imagine the buildup that could take place especially if we don't 100% know what we're doing and we're trying to track down things and have they paid theirs? I mean, I've never worked at a post office but I can only imagine this is new. We don't quite know what we're doing. It feels long and for me, yeah, the money part, and we'll talk about the money part, the shipping delays I'm genuinely concerned about because it sounds like the package gets here and then the process begins and it's like, oh my gosh, is there a three day processing window? How long do we have to pick it up. What if I pay it? If I pay it right now, can I come get it right now? It sounds like you could send in a check. So it's like a mailing it a check and then when do you get the check? And how do I know that you got it? And does that mean that you're going to deliver it? So now you got the check, Do I get confirmation that you got the check? And then how long after you get the check and process it, is it coming to you? Now? I assume most of us would just use the pay.gov website because the check sounds really, I don't know, like long. It just sounds like it would take a million years. So if I'm going through pay.gov, will you then go ahead and ship it off to me today? Do you have the manpower to do that? Do we have the logistics to do it? I don't know. Those are the things they don't have the questions on. But I think the slowdown of shipping is not something I've heard a lot about, and in my research that genuinely concerns me a little bit is that are we going to have this lull where things are sold out for a minute because there's this downtime and shipping from foreign countries becomes unpredictable because the process isn't ironed out. That is a concern for me is are we going to run out of 6N because we can't get it shipped in from the color distributor and all of your supply stores and all of the Internet doesn't have it because it's just not here. That concerns me also. And I don't think that's a piece that's widely talked about. So let's talk about China for a minute and then we're going to talk about what to do and how to do it. So China is a little bit of a special snowflake right now. And I want to talk to you about the timeline. So on April 4, China responded to President Trump's initial action by announcing a 34% tariff on all imported goods originating from the US on April 8th. So four days later, President Trump responded to China's action by increasing the reciprocal tariff on Chinese goods to 84%, effective April 9. So on April 9, President Trump countered China's actions by increasing the reciprocal tariff on Chinese goods to 125%, effective April 10. And then on April 11, China responded again, raising the tariff on U.S. goods to 125%, effective April 12. And that's kind of where we are. So we're at a standstill at the time of this recording. I would hope and assume that negotiations are in place. I truly have no idea. And that's scary. The specialists that are likely to be most effective by this is going to be extension specialists. And that's a lot of the questions I'm getting right now. We'll talk about hair color in a minute. But extension artists have the greatest risk of impact because so many extension distributors do pull from China. And So if there's 125% tariff in effect, yes, your cost is doubled. Right. You're paying more for the tariff than you are for the actual product itself. And so then the question becomes, how do I pull that off? You have options. And I think that every single everybody's going to do it differently. And I want you to keep that in mind. So I'm going to give you options. But I want you to think to yourself, what makes sense for you, values wise? What makes sense for your market? What can you afford? Like, I want you to think of all the things. So some of you are going to say, I got to pass that along to my client. Okay, I understand. Like, you can't eat the cost if you were somebody who did a markup on the hair, which a lot of people were charging for the hair, like retail. When you look at how a lot of major companies are navigating this, at least in the short term, they are taking a profit margin loss. Ouch, that stinks. But whenever I'm researching for anything, I always look at like, okay, what are the big companies doing? Because the big companies have big profits and big salaries and big risk on the line and they're playing a big game. And if they are saying we're going to eat the margin, I have to think to myself, they are leveraging the competitive advantage of that because for companies who cannot afford to eat the margin, they're going to have to raise their prices. And what do you want, the thing that's more expensive or the thing that's cheaper? If the product is the same, do you want the one that's cheaper or more expensive? Product is exactly the same. You want cheaper or more expensive? You want cheaper. So because we're in the service based industry, which is going to lead into my next kind of segue here, because we're in the service based industry, I think eating the profit margin, if you had one to exist on things like hair extensions and even on retail, man, if you look at those things and think about eating away at your profit margin, it Might be how you hang on. And I know that that's tough and then slowly raise over time, but you could have that as a competitive advantage. If you're like, I'm not going to eat the margin, I'm going to keep doing what I'm doing, then you got to have higher perceived value. You got to show up and be better. Because I don't think all buyers or all consumers make choices based on the money. But you gotta look really, really worth it if you're not gonna eat the margin. If you wanna sustain the margin and you wanna keep the markup, or if you didn't have a markup and you're like, brit, I never marked up my extensions, my clients were paying cost, then I get it. You don't have much of a choice. You have to either eat it on the service side, which I don't know what your markup was, or your margin was, you might not be able to, or you have to charge the client more. Whenever we're in a position where we're charging a client more for anything, the value of the service, their perceived value, the way you market yourself must increase because you must look like somebody who is worth making a bigger investment with or somebody will go find somebody else. I know that's frustrating, but I do think a lot of our industry played a very comfy, cozy game for a long time where they tried, but they didn't try that hard. They did the social media thing when they could. They post four or five times a month. Their website's just whatever the messaging is, fine, that's not going to work. And, you know, whether you're impacted by this tariff thing or not, I think that's like my big message of 2025 is, that's not going to work. You're going to have to step it up marketing wise to offset some of these things. Like, it all is a big giant circle of life, like a business circle of life. And it's all going to impact each other. And I think improving your perceived value is an alternative way to navigate this cost increase. Because if you look like you're more worth it, your demand will be there. And if the demand is there and people are willing to pay, you don't have to decrease your prices. But if people weren't that willing to pay before, and it was already kind of like pulling teeth to get somebody to come in. Oof. Raising your price is not going to do you any favors. And so we have to kind of look at what makes sense for you and for your business. And what can you pull off? But if I was somebody who was doing an extension markup, I might just take that markup as a loss, even if temporarily like this could change, we don't know, and then reconsider down the line. But that would be if you could afford it. My soft suggestion. Okay, so let's talk about hair color for a minute. So I did a little bit of research, imperfect research. And it looked like most, well, a color was produced in Germany as well as gold. Well, redkem produces in Canada. So we're looking at color coming from all different international markets. Whenever we are looking at increased cost of goods. I go back personally to my old Trusty, thriving stylist 7 factor dynamic pricing calculator. So that's what I want to do right now because I think even this is very confusing. I was talking to a stylist. Actually I wasn't talking to her. I was reading her post in a Facebook group and she was talking about how she was in salon centric and the salon centric rep mentioned that the cost of I believe it was Redkin color was going to go up by about 20% and oh my gosh, how dare they. I haven't been tracking the cost of Redken hair color full transparency, but I do know that the cost of doing anything has increased by around 21% since 2021. So from 2021 to 2025, the cost of doing pretty much anything business wise in the US whether you're importing things or not increased by 21%. So I don't know if Redken is trying to close that gap. Maybe they had not raised their prices in recent years or not significantly. That might not have anything to do with tariffs or it might, I don't know the behind the scenes of it, but it's like we're already feeling that financial crunch. So cost of color is a huge expense to take into consideration as a stylist. No doubt. Let's look at the impact that it has. So I've pulled up a dynamic pricing calculator for thrivers and I have a stylus information in here and I'm not going to go into all the details I put into this calculator. We do that on other episodes. Let's just run soup to nuts numbers for a stylist. So in the terms that I have in this calculator right this second for this stylist with the way they're set up, their root touch up, the suggested price point is $82 and 12 cents. Okay, keep that in mind. 82.12. Right now in the calculator, we have the average cost of permanent color cost per application at $10. So we look at cost per application in our thriving stylus pricing calculator. Have it at $10. So let's say that the cost of color goes up by 20%, which we're like, oh, my gosh, 20%. Okay, so instead of the cost of the permanent color being $10, well, now it's $12. Okay, I've entered that into the calculator. So now it's suggesting that a root touchup becomes 8662. So we went from 8212 to 8662. So for this particular stylist, they would need to raise their root touch up price by $4 to cover this tariff situation. Potentially if the cost of buying a box of color increased by 20%. Now what if buying the box of color increased by 30%? Okay, so it went from $10 to $13. Okay, so now it's suggesting we charge 88 bucks. So we went from 82 to 88. So that's $6 increase per client. For root touch ups, it does not impact haircuts. If you were doing like a highlight, we look at cost of application per ounce. So I don't know how many ounces of lightener and developer you use when you're doing a highlight. I mean, call it 3 ounces of lightener and 3 ounces of developer. I mean, 6 ounces total would be a good amount. And depending on what kind of color application you're doing might be too much. It might not be enough. When you break down the cost of the lightener you buy per ounce, it actually becomes pretty inexpensive. So your cost increase on that is actually going to be even less. So for this stylist, they had entered in their cost of lightener per ounce as a dollar sixty. So let's say that it increases by 20%. That's an increase of 32 cents. So now the cost of a partial highlight application, let's call it, goes from $1.60. Now, we did not include cost of toner. That would be something totally different. But $1.60 plus 32 cents, we went from $1.60 to $2. Can you afford to eat the additional 32 cents per highlight client? If it were me, I'd eat the 32 cents. Even if you're doing 100 highlight clients in a month, it's an additional $32. Like, let me just teach you how to attract one new client and there's no issue there. So I think that the biggest pain points are going to be things like root touch ups, overall color applications, color corrections, of course, right. That's where we're going to feel it. But we're talking about an increase of $4 to $6. We're not talking, I think where the confusion lies is we're like 10% tariff, I have to raise my prices by 10%. Not usually if you are a lower price stylist, like if your root touch up is $40, then yeah, increasing to 44 is a 10% increase. But if you're above that place and space, probably not. It's actually going to be probably lower impact. But again, we don't know for sure. For the average stylist, you're going to be paying this additional cost when you work with a beauty supplier that is local here to the US for those of you who are importing things like extensions from China, you're the ones who are going to be negotiating with USPS and doing all of those things and worried about the longer lead times. But even if you are getting color from your local distributor, truly I am at this crossroads much more concerned about the extended lead times and keeping product in stock with this new process than I am about actual cost increase. It's not going to be 10 to 20% of your service charge, it's 10 to 20% of the product cost. Our competitive advantage in this whole thing. And please remember this like this is one of the key takeaways for you. We're in the service based industry and most of our margin is based on our demand. If we were selling sneakers, if we were selling tires, if we were selling iPhones, this would be a lot scarier because we're selling a physical good. We are not leveraging the cost of doing the service. For most of us, that's not what I coach to in pricing. We take it into account, but we're not leveraging that cost as how we price ourselves. We're pricing ourselves based on six other factors, cost being one of them. But there's six other things to balance. So if you're pricing yourself smart and you're remembering, wait a second, I'm not in the business of selling physical goods. Yes, there's a cost to run my business, but I am selling services. It takes a lot of the pressure away. Now the other the, you know, counter argument to that is yeah, but my clients are going to be paying more for other things. Maybe, or maybe you become the thing that they choose to splurge on. Like yeah, maybe they can't afford to buy designer shoes anymore because get too expensive or maybe they can't afford to buy shoes at Target anymore because they start to be too expensive. But your price of running your business would not be necessarily as impacted as a tire manufacturer. So when the prices are soaring at all of these other places, your prices may take a bump, but it's not going to be as astronomical, at least at this crossroads with everything that we're seeing right now as it feels like it could be. So I'm not saying don't worry, everything's going to be fine. I think stay vigilant. I think let's keep an eye on what's going on. What are the challenges? How are people feeling about it? What happens with consumer spending? I will keep a pulse on that and see what's going on. Right now the data doesn't support a downturn in consumer spending, but that could change at any time. I want you to have solace in knowing that thank goodness we are in a service based business and not a consumer goods based business. This would hurt a lot more if we were extension peeps. I have My heart goes out to you. I know this is not going to be easy. You're at a crossroads of difficult decisions. For those who don't do extensions at scale. I think it'll be a small pain point, but more of a cut on the hand versus a bullet hole in the arm. So like I said, I'm no expert. Let's keep the conversation going. Let's keep the questions pouring in. If anything comes up for you, please hit me up in the DMs or leave me a rating or review on itunes and I'll support you as best as I can. As like always say so much love, happy business building and I'll see you on the next one.