(Bloomberg) \u2014 When At Home Group Inc.\u2019s lawyer stood before a US bankruptcy judge last month asking to wipe out nearly $2 billion of the retailer\u2019s debt, the reason came quick: tariffs.<\/p>\n
It\u2019s a line that\u2019s showing up in more and more courtrooms. Tile importer Mosaic Cos. blamed them in a recent filing. Just weeks earlier, it was auto-parts supplier Marelli Holdings Co. and aluminum trader Sinobec Group Inc. In all, tariffs have been laid out as a key reason in at least 10 bankruptcies in the US since early April, when President Donald Trump first unveiled a new wave of levies, according to data compiled by Bloomberg.<\/p>\n
But to many economists and analysts, the tariff blame game doesn\u2019t hold up \u2014 at least not yet. For one, it\u2019s simply too early for the latest duties to have made a material impact on corporate performance, especially for companies that typically carry several months\u2019 worth of inventory, they say. What\u2019s more, recent data showing solid employment growth, rising wages and a persistently low jobless rate signal that the economy is still holding up.<\/p>\n
It\u2019s the latest chapter in a well-worn corporate bankruptcy playbook, where companies pin their collapse on everything from fickle consumers to currency swings \u2014 even bad weather \u2014 anything but their own missteps. While market watchers say tariffs could eventually push a number of struggling firms over the edge, right now they\u2019re seen more as an excuse to paint over deeper problems.<\/p>\n
\u201cCompanies are struggling, but the tariffs did not put them into bankruptcy,\u201d said Stephanie Roth, chief economist at Wolfe Research. \u201cUntil the labor market starts to crack in a real negative way, there\u2019s no great reason to believe that consumers should pull back or that the economy is weakening sufficiently.\u201d<\/p>\n
Take At Home, which sells everything from patio furniture to rugs to generic wall decor. Its woes began well before Trump\u2019s latest round of tariffs.<\/p>\n
Burdened with a high debt load following its 2021 takeover by private equity firm Hellman & Friedman, the impact of the Covid-19 pandemic on supply chains led to rising costs for material and labor.<\/p>\n
As consumers shifted to spending more on travel and leisure, waning demand for home goods also dented performance, leading to credit-rating downgrades and a distressed exchange in 2023.<\/p>\n
Last month, the Texas-based company said it will close at least 26 of its more than 250 stores as part of its bankruptcy.<\/p>\n
At its Rego Park location in Queens, New York \u2014 one that it plans to shutter \u2014 customers who braved the summer heat in search of bargains were lamenting its demise.<\/p>\n
Story Continues <\/p>\n
\u201cI am a little sad to see this one go because it\u2019s just so much easier to get something that fits your style,\u201d said Diana Delacruz, 22, who was browsing items at the store\u2019s going-out-of-business sale.<\/p>\n
A representative for At Home declined to comment.<\/p>\n
Marelli, the auto-parts supplier, for its part, said in a court filing that it was \u201cseverely affected\u201d by headwinds driven by auto tariffs rolled out by the Trump administration in March.<\/p>\n
But the company, which provides lighting systems and suspensions to the likes of Stellantis NV and Nissan Motor Co., was already contending with industry upheaval as electrification and automation forced carmakers to shift their strategy to cope with declining sales in key markets.<\/p>\n
\u201cThe market pressures impacting the entire automotive industry and lower production volumes we began seeing a year ago, long before current tariffs were put in place, were the main issues that constrained our working capital,\u201d Fernando Vivanco, Marelli\u2019s chief communications officer, said in an emailed response to questions.<\/p>\n
Some companies have said that tariffs are just one of a number reasons they\u2019ve struggled. In its June filing, Sunnova Energy International Inc. said cuts to government subsidies, inflation and higher interest rates were curbing demand for their equipment \u2014 while mentioning that the latest tariffs were another hurdle.<\/p>\n
Prominent names in the sector including SunPower Corp., Lumio, and Meyer Burger Technology AG\u2019s US operations have also filed for bankruptcy over the past year.<\/p>\n
A representative for Sunnova declined to comment beyond the bankruptcy filing.<\/p>\n
Market watchers say that depending on how current Trump administration negotiations play out, tariffs could ultimately play a much larger role in bankruptcies in the months ahead. Recent economic indicators \u2014 consumer spending, retail sales, US factory activity \u2014 already show a dent in demand amid the policy uncertainty. The number of companies at the greatest risk of defaulting are at an 11-month high, Moody\u2019s Ratings said in a report earlier this week<\/p>\n
So far, however, the overall damage to companies has been contained. S&P Global Ratings said earlier this month that only 31 credit grade cuts in recent months have been tied to tariffs, less than 1% of its total ratings actions.<\/p>\n
For now, some say that if plans for a restructuring were already in the works, Trump\u2019s levies may have just served as motivation to file for bankruptcy sooner.<\/p>\n
Some of these \u201csmell of the private capital people who are adept at using the bankruptcy laws to facilitate a restructure of a business that they want to keep but has an unsustainable debt burden,\u201d said Todd Baker, a senior fellow at the Richmond Center for Business, Law, and Public Policy at Columbia University.<\/p>\n
\u2014With assistance from Steven Church.<\/p>\n
\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) \u2014 When At Home Group Inc.\u2019s lawyer stood before a US bankruptcy judge last month asking to…\n","protected":false},"author":2,"featured_media":20182,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[18395,18394,7904,28,7255,101,18396,18392,942,18393,759],"class_list":["post-20181","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-bankruptcies","tag-bankruptcy-filing","tag-bloomberg","tag-business","tag-companies","tag-economy","tag-home-group","tag-marelli-holdings-co","tag-president-donald-trump","tag-sinobec-group-inc","tag-tariffs"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/20181","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=20181"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/20181\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/20182"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=20181"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=20181"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=20181"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}