Trump’s Tariffs: A Deep Dive into the Divisive Impact on American Business

The potential imposition of tariffs by the incoming Trump administration is creating ripples of concern across the landscape of American businesses. While some industries are scrambling to counteract the high costs, others see a protective advantage against foreign competition. Below, we explore how three businesses are preparing for this contentious economic maneuver.

The Domestic Manufacturer

Mark McClelland stands firmly in support of tariffs. His company, Tower Extrusions, is a major player in the aluminum industry, producing essential items from bleacher seats to car parts. Based in Olney, Texas, McClelland’s eleven aluminum presses are crucial in supplying a range of domestic products. However, the company has seen increased competition from foreign sources since as early as 2010.

“Think of it like a big Play-Doh machine,” McClelland describes the operation, where a log of aluminum is processed into various shapes. Despite their efforts and previous anti-dumping tariffs on Chinese imports, the threat has expanded globally with imports from Vietnam, Turkey, and Mexico posing new challenges.

Currently, foreign companies control nearly 35% of the U.S. extruded aluminum market. McClelland is banking on Trump’s proposed 10% to 20% tariffs to level the playing field but notes a significant downside: “It’s a double-edged sword,” he explains. “Our raw material costs rose by 10% during his last presidency because tariffs increased domestic prices too.”

The Importer

Bobby Djavaheri, on the other hand, finds himself on the receiving end of tariff challenges. His company, Yedi Houseware Appliances, based in Los Angeles, heavily relies on products manufactured in China, like their signature air fryers.

Djavaheri worries a proposed 60% tariff could see a $130 item skyrocket to over $200, unnecessarily burdening American consumers: “They’re the ones paying these tariffs, not the Chinese,” he says.

• If tariffs are imposed, Djavaheri anticipates severe impacts on pricing.
• He’s actively enhancing imports before the potential tariffs hit.
• Some of his suppliers are even considering relocating factories to Mexico, albeit facing potential tariffs there as well.
• The Port of Los Angeles is witnessing heightened activity as importers build up inventories.

Although some believe the tariff threat may be a strategic bluff, Djavaheri isn’t taking any chances, preparing for any eventualities the new administration might bring.

The Discounter

For Peter Elitzer, who helms the Label Shopper, a chain of discount clothing stores, the notion of tariffs presents a stark financial worry. His clientele, comprising largely of thrifty shoppers across the East Coast and Midwest, would feel the immediate pinch of even a minor increase in prices.

“For our customers, purchasing decisions are need-based,” Elitzer notes. “If cold or seasonal needs arise, they purchase, but they’re cautious otherwise.”

• Potential stockpiling seems unwise due to the unpredictability of fashion trends and consumer needs.
• Elitzer aims to play safe with imports primarily from India, Indonesia, and Cambodia, but acknowledges a limitation if prices rise.
• He stresses, “Any additional tariffs at this point are detrimental, especially in an economic climate striving to control inflation.”

Most items in his stores price under $20, underscoring the criticality of maintaining affordability: “The masses are shopping on budgets, seeking value, not luxury.”

Conclusion

As Trump’s tariff intentions loom, American businesses foundationally strong for decades react variably. From domestic manufacturers demanding fair competition, import-dependent companies strategizing to mitigate losses, to discount retailers fearful of alienating cost-sensitive customers, the landscape is reshaping in anticipation of shifting policies. How each sector evolves will define its resilience in an ever-globalizing economy.

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Source: https://www.opb.org/article/2024/12/15/trump-s-tariffs-are-dividing-business-owners-across-the-country/