The Impact of Tariffs on Businesses
The announcement of a 90-day tariff pause on dozens of countries by President Donald Trump has brought relief to some, but many business owners and managers are still concerned about the long-term effects of his tariff regime. A dozen business owners and managers spoke with Reuters about the impacts of Trump’s tariffs, providing an early idea of what many more Americans might expect.
Uncertainty and Rising Costs
One of the business owners who spoke with Reuters is Steve Shriver, the founder and CEO of Eco Lips, a Cedar Rapids, Iowa-based company that makes organic health and beauty products with ingredients sourced from more than 50 countries and sold in 40,000 stores nationwide. Shriver forecast that his 12-month cost of goods could rise by $5 million, atop his typical $10 million annual outlay for ingredients that cannot be grown in the U.S., such as vanilla, coconut oil, and cacao.
"We’re constantly dealing with the uncertainty of the future and of our future supply chains," Shriver said. "I don’t trust it. It’s a 90-day pause. It could change again in 10 days. There are still 10% tariffs across the board, and that’s a substantial addition to our prices."
Daily Price Increase Notifications
Paul Kusler, the owner of Into the Wind, a beloved Boulder, Colorado, kite and toy store that has been around for 45 years, receives daily price increase notifications from suppliers. Most of the goods Kusler sells are manufactured in China. "The tariffs on China are simply unworkable, it’s a serious threat to our business," he said. "We pay bills weekly. These price increases are happening now for items I already have in the door."
Kusler said the increased prices he has seen have been between 7% and 10% – but those reflect the brief period that tariffs on China were at 34% following Trump’s "Liberation Day" announcement of the trade taxes on April 2. Kusler thinks he can absorb around 3% of increased costs. He added that he has already seen and will continue to feel suppressed consumer demand amid economic turbulence.
"People aren’t going to buy toys if they are worried about prices rising for food and other staples," he said.
Suppressed Consumer Demand
Emily Ley, the owner of Simplified, a Pensacola, Florida-based company that specializes in high-end office planners for women, has seen a significant impact on her business. Since Trump announced tariffs on Chinese goods in 2017, she has paid well over $1 million in trade taxes to the U.S. government. She forecast that at the new tariff level for China, she will nearly match that $1 million within the next 12 months.
Ley said she tried for years to have her goods manufactured in the U.S., but could find no way to do it and still make a profit. "This could put us under, put us out of business," she said. "We’re scrambling right now over what to do."
Tariffs on Canada and Mexico
Aisha Ahmad-Post, the executive director for the Newman Center for the Performing Arts at the University of Denver, received a letter from Montreal-based Ducharme that it was required to comply with the new Trump trade taxes and "apply the corresponding tariffs to your project." At the time, those tariffs for Canada were at 25% – an increase in $140,000 for the Newman Center seat project.
"The chairs are already in production, it’s not like we can just pivot," Ahmad-Post said. "Now we’re stuck trying to figure out how we’ll pay for this."
Conclusion
The businesses that spoke with Reuters are among many that are feeling the impact of Trump’s tariff regime. The uncertainty and rising costs are causing concern among business owners and managers, who are unsure of what the future holds. While the 90-day tariff pause may bring some relief, the long-term effects of Trump’s tariffs are still unclear.
FAQs
Q: What are the tariffs on Chinese imports?
A: Trump has imposed tariffs on Chinese imports, raising them effectively to 145% when levies imposed earlier this year are taken into account.
Q: What are the tariffs on imports from most other nations?
A: Trump has kept tariffs on imports from most other nations at 10% for 90 days.
Q: What are the tariffs on Canada and Mexico?
A: Tariffs on Canada and Mexico remain at 25% for goods not covered by the region’s existing trade deal.
Q: How are businesses reacting to the tariffs?
A: Businesses are reacting by canceling purchase orders, halting expansion plans, and delaying hiring.