I invested $30,000 to scale my European-based tote bag business in the US — then tariffs hit

Catalina Mendoza set up the Tote Library with her husband.Courtesy of Catalina MendozaCatalina Mendoza cried on TikTok after tariffs forced her tote bag business to halt sales to the US.The Tote Library spent more than $30,000 on marketing, trying to expand further in the US market.Now, she says it feels like starting from scratch as they shift their focus to Europe.This as-told-to essay is based on a conversation with Catalina Mendoza, a 26-year-old cofounder of a luxury tote bag business based in Germany. The business's financials have been verified by Business Insider. The following has been edited for length and clarity.I'd always cringe when I saw people crying on social media. I never wanted to be one of them.But in April, my husband got off a call with our suppliers in China and told me we had to stop selling in the US immediately. Tariffs on US imports from China had jumped to 145%. We started hearing about tariffs earlier in the year, but we were caught up in the decision-making process and didn't act fast enough.Once they were in effect, I knew we had to inform our customers, so I made a TikTok video — and in it, I cried. It wasn't fake whatsoever. This whole experience has been upsetting and, honestly, frightening.We had no prior business experienceMy husband and I launched The Tote Library, a luxury tote bag business, in 2022. I was still an art student at the time, and while my husband had studied marketing, neither of us had much practical business experience.The idea was to turn my designs into something functional and cute.Catalina Mendoza was an art student when she decided to set up The Tote Library.Courtesy of Catalina MendozaI made the first prototype, and we found a supplier in China on Taobao, a local online shopping platform, who could produce it. My husband used Google Translate to communicate with them. We launched with about five bags per design and started marketing them on social media.I began posting videos online using trending audio. Eventually, one video gained traction. It wasn't a viral sensation, but it got tens of thousands of views. We sold out immediately.Social media felt like the key to e-commerce. I kept posting and grew my account. Even though we were based in Europe, our biggest traction came from the US. The American market made up almost 50% of our total sales.Last year, we wanted to scale up. We dreamed of expanding beyond tote bags, launching other luxury items, and even homeware. We also focused heavily on growing our business in the US. Our ambition was to open a warehouse there so we could ship faster to our American customers.Over the next six months, we invested heavily in the US market, mainly through paid ads on Meta and other social media.We spent more than $32,000 on our US-based campaign. We also gifted more than 1,000 bags to creators in the US, covering the production and international shipping costs. It was a high-cost risk, but it felt worth taking.That was until the tariffs came into effect in April.Investing in US sales felt like a risk worth taking, then tariffs hitAlmost overnight, our US sales dropped to zero because we had to remove the country from our Shopify store.Our luxury items already sit at the high end of the tote bag market, and increasing prices to cover the tariff rise wasn't an option.It was terrifying. We had worked so hard, and just as we were ready to grow, it felt like it had been snatched away in an instant.In May, a 90-day grace period temporarily reduced the tariffs. We decided to reopen sales to the US, but the shift probably confused our customers. We don't know what happens after the grace period ends. It feels so unpredictable, and I already feel like our reputation in the US has taken a hit.While US sales are up and down, the TikTok video of me crying went viral, increasing brand awareness in Europe.Our main focus now is on European consumers. We plan to start producing locally and marketing more toward what people in Europe like. I'm even considering a rebrand catering to European tastes.I'm looking into moving production, potentially to Portugal. Producing in Portugal will likely make the bags more expensive, but I've learned that having supply chains closer to home means you have more control.It's been a major setback for our businessI'm trying to remain positive about the future, but it feels like we're starting from scratch.The business is our only source of income. We're looking into whether we need side jobs to bring in some stability. I also have two people working with us on social media and marketing, and suddenly, I'm worried about making enough to cover payroll.The Tote Library is the sole source of income for Catalina Mendoza and her husband, Patrik Walk.Courtesy of Catalina MendozaWe've become accustomed to a certain lifestyle, but we will undoubtedly need to cut back. I'm originally from Chile, and up until now, I've been able to visit home at least once a year. With all this instability, I'm not sure I can justify spending money on plane tickets or vacations anymore.Emotionally, it feels like a step back. Some days, it's hard to show up as the face of the company when I'm not feeling my best.I just try to remind myself that this isn't the end of the world. If I've learned one thing from this experience, it's that I can't rely on the US or a single market, especially in the current political climate.Read the original article on Business Insider

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