For entrepreneurs operating across borders, tariffs can create a business challenge that extends far beyond higher import costs. Constantly changing trade policies can make it difficult to set prices, forecast margins and plan inventory months in advance.
Dan Demsky, Co-Founder and CEO of Unbound Merino, has experienced that uncertainty firsthand. The Canadian entrepreneur joins us on the latest episode of Business Trends Today to share how he built the apparel company to help travelers pack less by creating versatile Merino wool clothing that resists odors and wrinkles while regulating temperature.
Unbound Merino has grown into a global direct-to-consumer brand with more than $100 million in sales, selling in more than 100 countries. But because most of its business comes from the U.S., the company has had to rethink how it manages cross-border operations as tariff policies keep shifting.
“We're okay for now because we prepared for it, but it feels like the tariff policy can change on a dime."
That unpredictability creates a particularly difficult problem for businesses that must commit to inventory well before they know what their costs will look like.
Facing uncertainty
According to Demsky, Unbound Merino sometimes faces lead times of six to 10 months when ordering inventory. By the time products arrive, tariff rates can change significantly, altering the economics of a product that was profitable when the order was placed.
For Unbound Merino, the impact varies depending on where a product is manufactured. The company produces apparel in countries including China, Vietnam, Japan, Portugal, Italy and Canada, creating a complex web of exposure to changing trade policies.
Its Canadian-made pants have presented a particularly difficult challenge when entering the U.S. market. Demsky said the company must either raise prices to preserve its existing margins or absorb the additional cost and take a loss on products that were previously profitable.
The situation also illustrates how tariffs can affect businesses in the country imposing them. While Unbound Merino is headquartered in Canada, Demsky said the current environment has created more uncertainty for the company’s U.S. operation, which includes American employees and a U.S. distribution warehouse. He also cautioned against viewing the dispute as affecting only one side of the border.
Despite the uncertainty, Demsky said the company has absorbed some of the disruption because it entered the period with cash reserves and time to prepare. He remains optimistic that the trade tensions will eventually be resolved, although he acknowledged that relying on that outcome introduces its own risk.
For other entrepreneurs, the lesson is less about predicting where tariff policy will go and more about building enough flexibility into the business to withstand changes.
Building a global brand
Long before tariffs became a major planning concern, Demsky was focused on finding a gap in the apparel market.
After discovering Merino wool, he saw an opportunity to create clothing designed specifically for travelers. Existing Merino products tended to focus on outdoor and activewear, while Demsky wanted pieces that could transition from a hike to a night out.
He launched Unbound Merino through Kickstarter, initially hoping to generate $30,000 in presales during the first month. The campaign ultimately generated roughly $400,000. The company has since built its business almost entirely through e-commerce and direct-to-consumer sales, without relying on traditional retail or wholesale distribution.
Now, Demsky sees those channels as the next phase of growth. That expansion could eventually include Unbound Merino’s own retail locations as well as wholesale distribution.
For now, however, the company continues to rely heavily on digital marketing, using paid advertising, search, influencers and constant testing to find effective ways to acquire customers.
Demsky said that approach gives smaller companies an opportunity to compete with much larger brands. That mindset, he said, has helped Unbound Merino grow by experimenting relentlessly, identifying what works and then investing more heavily in those channels.
For entrepreneurs facing similar challenges, Demsky’s experience underscores the importance of preparation, financial flexibility and the willingness to adjust when the business environment changes faster than expected.
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