Trump's tariffs threat is dividing business owners across the country
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The prospect of tariffs in the new Trump administration is dividing businesses around the country.
Some are scrambling to avoid the potential import taxes or preparing to pass the cost on to their customers. Others, however, are welcoming tariffs as a defense against foreign competition.
Here's a look at how three businesses are bracing for the tariffs.
The domestic manufacturer
Mark McClelland is in the pro-tariff camp.
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If you've ever sat in the bleachers to watch a high school football game, you may have come in contact with McClelland's product. His company, Tower Extrusions, manufactures bleacher seats and thousands of other aluminum products.
"Think of a big Play-Doh machine," McClelland says of the manufacturing process. "We take a log of aluminum and push it through a die in the shape of some form."
McClelland's business, based in Olney, Texas, operates eleven aluminum presses, cranking out bleachers, window frames, car parts and more.
"It's kind of one of those old-line businesses that people don't really think about, but when you look around, our product is kind of everywhere," he says.
Starting around 2010, McClelland's company and others the industry began to face increased competition from China. They fought back and won anti-dumping tariffs on Chinese aluminum products, but the import threat soon metastasized.
"What used to be just a China problem now has spread," McClelland says, with surging imports from Vietnam, Turkey, India, and Mexico. "And of course Mexico is the one I really worry about, because there's a direct route to our market."
Foreign companies now supply about 35 percent of the extruded aluminum products in the U.S., McClelland adds, nearly double their share from five years ago.
"They're selling at prices we can't compete with," McClelland says. "It's going to shut down our industry if we don't do something."
President-elect Donald Trump has proposed adding a tax of 10 percent to 20 percent on all imports, and McClelland is counting on those sweeping tariffs to provide a more level playing field.
He acknowledges, however, that import taxes are a double-edged sword. His company has to pay more for the raw aluminum that goes into its products now because of tariffs that Trump imposed the last time he was in the White House.
"It drove up our raw material costs by 10%, whether we imported them or not," McClelland recalls. "Even if it was produced domestically, it raises your costs 10 percent."
The importer
Among those business owners who face higher costs is Bobby Djavaheri.
He worries that tariffs will raise the cost of his popular air fryers and other appliances, most of which are manufactured in China.
"I don't think the American consumer understands what's at stake here," says Djavaheri, whose company, Yedi Houseware Appliances, is based in Los Angeles.
If Trump makes good on his threat to impose a 60 percent tariff on imports from China, he estimates that "a $130 item will turn into something way above $200."
"Americans are directly being taxed with these tariffs, not the Chinese," Djavaheri says.
Some have suggested that Trump is merely using the threat of tariffs as a bargaining chip and that import taxes are unlikely to take full effect — but Djavaheri isn't counting on that.
"I take it very seriously," he says. "We're trying to ramp up our imports prior to the president-elect getting sworn in."
Other importers are also racing to stockpile products before any tariffs take effect.
"If companies have the wherewithal to pull this product forward, to build up inventory and get their cost basis down before the new tariffs are put in, they're trying it," says Gene Seroka, executive director at the Port of Los Angeles. The port is busier than usual this time of year, unloading hundreds of thousands of shipping containers from Asia each month.
One of Djavaheri's suppliers has also considered moving his factory from China to Mexico to avoid the steepest tariffs.
But that may not necessarily work. Last month, Trump proposed slapping a 25% tariff on imports from both Mexico and Canada, two of the United States' biggest trading partners.
The discounter
Peter Elitzer is another business owner worried about the impact of tariffs.
He says even a 10 percent tariff would be painful for the customers who shop at his discount clothing stores. Bargain-hunters who frequent Elitzer's Label Shopper stores on the East Coast and in the Midwest are already cautious about spending money.
"They're only buying when they need to have something," Elitzer says. "So it's cold and they need a sweatshirt or jacket, they'll come out and get it. If it's too cold in the spring and they don't need to buy T-shirts, they don't buy T-shirts."
That makes Elitzer wary about filling warehouses ahead of the potential tariffs with clothes that might not sell and run the risk of falling out of fashion. He'll take his chances on imports from India, Indonesia and Cambodia, knowing that if tariffs do come, he'll have to raise prices.
"There's no question in my mind this is not going to be good news for the consumer at all," Elitzer says. "Particularly if they're trying to get inflation under control. It's the worst possible time to do that."
Most of the clothing items in his stores sell for $19.99 or below — less than he was charging a decade ago.
"The overwhelming majority of Americans don't shop in the high-end department stores," he says. "They're shopping in Walmart and they're shopping in the Label Shoppers of the world. And they're looking for value."
Copyright 2024, NPR
