By Lina Irawan 
The initial concept was deceptively simple: create a costume that completely envelops the wearer, allowing them to see out but remaining anonymous, fostering a sense of playful mischief. This innovation struck a chord, particularly with a younger, internet-savvy demographic. Early viral videos, often spontaneous and humorous, showcased individuals in Morphsuits performing stunts, dancing in public, or simply causing good-natured chaos. This organic, user-generated content became the bedrock of Morph’s marketing strategy, long before "influencer marketing" became a buzzword. The suits, initially available in a limited palette, quickly expanded into a kaleidoscopic range of colors and designs, from superheroes to animals, all while retaining their distinctive, full-coverage aesthetic.
The company’s marketing genius reached a crescendo in 2018 when a band of improv artists, clad in signature Morphsuits, "morphed" the iconic GAP store on Fifth Avenue in New York City. This audacious public performance, which saw performers seamlessly blending into the store’s displays and interacting with unsuspecting customers, quickly drew a crowd and, eventually, the attention of the NYPD. The resulting video, a masterclass in guerrilla marketing, received millions of views across platforms like YouTube, further cementing Morph Costumes’ status as a brand synonymous with viral spectacle and harmless rebellion. This kind of spontaneous, high-impact marketing, costing relatively little but generating immense reach, was crucial for a startup aiming to challenge established players in the costume industry. It also showcased the product’s inherent ability to create memorable, shareable moments, a critical factor in the digital age.
However, behind the masks and viral fame, Fraser Smeaton, who spearheads the company’s operations from its Edinburgh headquarters, has found himself navigating a far less whimsical reality. The playful entrepreneur has been forced to become an unexpected expert in the intricacies of global tariff policy, grappling with the profound and often damaging impact of economic volatility and ever-shifting barriers to trade. His journey from costume innovator to an unwitting authority on international commerce is a testament to how macro-level political decisions can dramatically alter the fortunes of even the most agile businesses. Indeed, Smeaton’s experiences are so illustrative of current trade challenges that one might suggest the President himself could benefit from a direct consultation with this Scottish pragmatist.
Morph Costumes’ biggest market, by a significant margin, is America. The annual Halloween festivities, a cultural institution where children and adults alike embrace the fantastical, drive a substantial portion of their sales. From the bustling streets of Detroit to the sun-drenched neighborhoods of West Palm Beach, Americans eagerly don ghost outfits, superhero capes, and, increasingly, Morphsuits, making the U.S. market indispensable to the company’s bottom line. The sheer scale and enthusiasm of the American costume market provide both immense opportunity and significant exposure to U.S. trade policies.
The core challenge for Morph Costumes, and countless other consumer goods companies, lies in its manufacturing model. Like a vast majority of the global apparel and textile industry, Morph produces its costumes in China. This isn’t a matter of choice driven by mere cost-cutting; it’s a reflection of China’s unparalleled dominance in the clothing production sector. For over three decades, China has meticulously built an integrated, efficient, and sophisticated supply chain that remains unmatched anywhere else in the world. This ecosystem encompasses everything from readily available raw materials (fabrics, dyes, zippers, fasteners) to a highly skilled and adaptable labor force, advanced manufacturing infrastructure, and streamlined logistics networks. Moving production elsewhere, Smeaton explains, is not merely expensive; it’s prohibitively so, often bordering on impossible without fundamentally altering the product’s quality, availability, or price point.
The advent of Donald Trump’s second term in the White House ushered in an era of unprecedented volatility for businesses like Morph. The administration’s aggressive stance on trade, particularly with China, manifested in a series of rapidly changing import taxes that sent shockwaves through global supply chains. For Morph, a key supplier to retail giants like Walmart and Target, these U.S. import tariffs have lurched wildly from zero to 20%, then escalated dramatically to 50%, before briefly flirting with an astonishing 145%. This dizzying fluctuation created an environment of extreme uncertainty, making long-term planning, inventory management, and pricing strategies virtually impossible. Businesses thrive on predictability; this was anything but. The situation was further complicated by legal challenges, culminating in a Supreme Court intervention last week that ruled the tariffs illegal, briefly returning them to zero. However, this respite was short-lived, as the President then announced a new 10% tariff, leaving businesses in a state of confusion regarding whether the actual figure might be 15%. This constant policy whiplash is, as Smeaton wryly understates with the characteristic stoicism common to Scots, "certainly not good for investment." He adds pointedly, "Or for the US consumer. They are paying higher prices." Indeed, Morph Costumes’ outfits now cost 9% more, a direct consequence of the company being hit by a staggering $3 million duty bill, which effectively wiped out most of its profits.
While higher prices for witches’ outfits or superhero costumes may not immediately spark a riot in the aisles of your local supermarket, Smeaton’s experience contains a crucial lesson with far-reaching economic implications. Tariffs, essentially a tax on imported goods, serve a dual purpose for the U.S. government: they generate revenue (bills, Smeaton noted, typically fall due in seven to ten days) and are intended to protect domestic industries. However, they also act as a direct inflationary pressure, pushing up prices across all affected goods, from Morphsuits to fridge-freezers and automobiles. This "cost-of-living effect" has a direct and often immediate read-through to consumer sentiment and, ultimately, to the polls.
Economic analysis consistently supports Smeaton’s observations. Last autumn, Goldman Sachs, in a note to investors and analysts, reported, "We find that consumer prices have risen disproportionately in categories facing larger tariff increases." An updated forecast this week further estimated 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." Core PCE, the Federal Reserve’s preferred measure of inflation, explicitly excludes volatile food and energy prices, making it a reliable indicator of underlying price trends. These figures underscore that tariffs are not just abstract policy tools; they translate directly into tangible increases in household expenses, eroding purchasing power and contributing to broader economic anxieties. The political implications of rising inflation, particularly for an incumbent administration, are significant, as voters often connect economic hardship directly to government policy.
The President’s stated rationale for imposing tariffs often centers on encouraging the "reshoring" of jobs back to the U.S., thereby bolstering domestic manufacturing and reducing reliance on foreign supply chains. While this strategy might yield some success in specific, large-scale manufacturing sectors—for example, Volvo’s expansion of production at its Ridgeville plant in South Carolina demonstrates that certain high-value, high-automation industries can be incentivized to return—it largely fails for many firms that rely on China for labor-intensive production. The "cut-and-sew" industry, which includes textiles, apparel, and toys, exemplifies this disconnect. An overwhelming three-quarters of all U.S. toys are manufactured in China, and the costume industry shares similar characteristics.
"Cut-and-sew is not the type of work Americans want," Smeaton candidly states, highlighting a fundamental challenge. The disparity in labor costs is stark: "In China, labor costs are $2-3 an hour. In America, they are $20 an hour." To make reshoring economically viable for Morph Costumes, Smeaton estimates that tariffs would need to rise to an astronomical 500%. Long before reaching such a figure, he warns, many firms would simply be forced out of business. The issue isn’t merely wages; it’s the entire ecosystem. The U.S. lacks the extensive network of specialized suppliers, machinery, skilled labor, and efficient logistics that China has cultivated over decades for this specific type of manufacturing. Rebuilding such an infrastructure from scratch would require massive investment, years of development, and still might not achieve the same efficiencies.
In a bid to mitigate the risks associated with an unpredictable Chinese supply chain and escalating tariffs, Morph Costumes has diligently scoured the world for alternative production locations. Countries like Vietnam, Bangladesh, and Cambodia, often touted as emerging manufacturing hubs, were thoroughly investigated. However, none could offer the deep, integrated expertise available in China, which spans everything from precise cloth-sourcing to specialized zip-making. Crucially, China’s manufacturing base is also adept at handling the necessarily small batches and rapid turnaround times required for fast-moving consumer goods like costumes, an agility that newer manufacturing economies often struggle to match. This capability is vital for responding to seasonal demands and evolving trends in the costume market.
The difficulties encountered weren’t limited to capability gaps. "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," Smeaton recounts, illustrating the broader geopolitical and economic instability that plagues global supply chain diversification efforts. Whether this "fallout" was a result of domestic policy changes, international trade disputes involving India, or other unforeseen circumstances, it underscores the persistent challenges faced by businesses attempting to de-risk their operations. The goal of supply chain resilience, often discussed in post-pandemic boardrooms, is far easier to articulate than to achieve in practice.
When it comes to the President, chaos is often seen as a strategic tool, a means to disrupt established norms and force concessions. For businesses like Smeaton’s, however, the very opposite is needed: stability. Predictable policies, clear trade rules, and a consistent economic environment are the lifeblood of investment, innovation, and long-term growth. While wearing Morphsuits might be a source of fun and garner millions of views on YouTube, the reality of having one’s profits wiped out by the latest announcement from the White House is anything but a laughing matter. It transforms an entrepreneurial success story into a cautionary tale about the real-world costs of trade policy volatility, reminding us that behind every viral sensation and every consumer product, there are real businesses and real people grappling with an increasingly complex global economic landscape.