Australian businesses manufacturing in China caught by steepest US tariffs
Beatrice Toh has been living in a state of "delirium" as the tariffs on Chinese-made goods soar higher. (ABC News: Emilia Terzon)
Beatrice Toh was only just recently celebrating her business' launch in the United States.
The Melbourne-based entrepreneur started her children's company as a young mum, when she dreamed up a reusable alternative to throwaway colouring books.
The expansion of HeyDoodle to the US has been almost a year in the works, and it has cost time and money to configure the toy range for the American market.
Beatrice Toh celebrating her business's expansion into the US at a toy fair in New York in 2025. (Supplied)
Now, celebration has turned to stress and "delirium", as Ms Toh and her small staff navigate an escalating and fast-moving trade war between the US and China.
"It's definitely a curveball," she says.
HeyDoodle's experience goes against the headlines that US President Donald Trump has given Australia a relatively workable tariff of 10 per cent, as part of his administration's economic nationalism.
Tariffs are essentially a tax on goods as they enter a nation's borders.
In HeyDoodle's case, the company expects to pay the far higher tariff that the US has slapped on China — now more than 100 per cent and rising.
That's because the firm's silicone colouring mats are manufactured in China.
They are then shipped directly from a factory there to the US to wholesalers and retailers, such as bookshop giant Barnes & Noble.
US and Australian authorities can't confirm tariff details
Ms Toh doesn't believe it will matter that her company is Australian-owned.
She also doesn't think she can get around the Chinese tariff by bringing goods made there back to Australia before shipping them to the US.
"It's all about the country of origin," Ms Toh tells ABC News.
Neither US authorities nor Australia's own trade department confirmed this situation to ABC News.
Yet several trade law experts agreed with Ms Toh's initial assessment of the situation. And they contend the US will likely over-rule Australia's longstanding free trade agreement with the US.
The cost of this HeyDoodle colouring mat could soar in the US due to the tariffs on Chinese-made goods. (ABC News: Emilia Terzon)
KPMG chief economist Brendan Rynne notes that the statements that have come out of the Trump administration so far include ones about reducing "the risk of transhipment and evasion".
"It's about where the goods are produced," Mr Rynne says.
"The framework they're proposing to adopt seems to get changed on a daily basis."
Mr Rynne's understanding is that the tariffs being implemented by the US will be applied to the price stamped on products as they enter their border, known as "ad valorem" tariffs.
In HeyDoodle's case, this could push up the price of one of the brand's standard colouring book sets from $30 to upwards of $50.
Ms Toh doesn't think many American shoppers will pay that.
"It's not an essential item. It's just an activity for your child," she says.
"It's going to be tricky. There's going to be a portion of where we absorb the tariff, our wholesalers absorb some, and then the customers will just have to pay a higher price. But I think everybody suffers."
Australian brands exposed to China tariffs
Tariffs are also a new source of stress for swimwear company owner Steve Philpott.
Swimwear company owner Steve Philpott says the past few weeks have been "crazy". (ABC News: John Gunn)
Just like HeyDoodle, Mr Philpott's Sydney-based company has several labels that are made in China and sold into the US market, including its biggest brand, Sea Level.
He also has received the same advice from trade experts about the higher China tariffs applying to any products he makes there and then sends into the American market.
"It's been a bit of a roller-coaster," he says about the past few weeks.
"We have to see a bit of humour in it because it's just so crazy."
The fashion brand's exposure to the US market is substantial, with Mr Philpott estimating almost a quarter of Sea Level's sales are now there.
He agrees with Ms Toh that there's "no way" the brand can wholly pass the extra tariff onto US shoppers.
"The market won't handle that," he says.
Other fashion brands that manufacture in China and sell in the US market include luxury women's label Zimmermann, mass-market chain Cotton On, and iconic Australian underwear brand Bonds.
None of these companies replied to queries from ABC News.
"The bulk of Australian fashion is made offshore," Mr Philpott notes.
"It might sound nice that [Australia] is only getting 10 per cent [tariffs] right now, but if it's made offshore and it's made in China, the tariff is huge."
Mr Philpott was also already bracing for a less publicised change to trade rules between the US and China, due to come into effect in early May.
The "de minimis exemption", which allowed parcels valued under $US800 ($1,270) to enter the US duty-free, will end for Chinese goods that are mailed direct to American online shoppers.
This so-called "Shein and Temu tax" will also impact Australian brands that ship directly from China to online shoppers in the US, KPMG's Mr Rynne believes.
Loading...Companies could move manufacturing out of China
US President Donald Trump's tariffs have swung around wildly in the last few weeks, resulting in a wind back of those threatened against most nations to a flat 10 per cent, branded for now as a temporary pause.
The Trump administration says it's using these tariffs to prioritise manufacturing of goods in the US, however analysts observe that the singling out of China speaks to broader geopolitics.
Mr Philpott hopes the situation between the two economic superpowers calms down, and as a result he isn't making any "hasty decisions" about withdrawing production from China.
However, he's exploring contingency plans: factories in Cambodia, and further afield in Africa.
"They don't have the same supply chain and same ability as China does," he says.
"China is literally the best in the world for what we do. We have long-term relationships, 13 and 14 years, with factories.
"So moving to another country is not what we want to do. Setting up in the US is not viable for us either."
One of Mr Philpott's other brands, Bond-Eye, is mostly made in Australia, and he is now wondering whether that could be "leveraged" if the higher taxes on China and lower imposts on Australia continue.
One silver lining for exporters is the tanking Australian dollar, which briefly fell below 60 US cents at some points last week, making anything sent out from Australia cheaper for overseas buyers.
Australian swimwear brands like Sea Level and Bond Eye can't afford to absorb all of the tariffs. (ABC News: John Gunn)
"Producing more in Australian is challenging. Our [garment] industry has been so decimated," Mr Philpott says of making more garments onshore.
"The government really does need to support the Australian fashion industry."
In Melbourne, HeyDoodle's Beatrice Toh doesn't think she can move production of her silicone books to Australia, which she already tried to do when starting out, only to be told it wasn't possible.
"They said we don't have the inks necessary here to do it," she recalls.
"It would be great to get some [government] support, especially for small businesses.
"I've got lots of friends in the same boat at the moment. We all don't know what to do.
"We're running out of stock in the US. Do we send more stock in?"
In a statement, the government agency that works with Australian offshore traders says it has been "working closely with impacted industries and exporters".
Trade Minister Don Farrell declined to be interviewed for this story.
In a statement, he said the Australian government would "always stand up for Australia and support local businesses and Australian jobs" and said it was engaging with the United States.
"This includes advocating for no tariffs on Australian products and for a de-escalation in global trade tensions, while promoting greater trade diversification," he added.