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Monday, August 26, 2019

Trade war is increasingly hurting small businesses

The intensifying trade war with China is increasingly hurting small and mid-sized businesses across the U.S., and the tariffs announced Friday raised the stakes. Tariffs imposed over the past year mainly affected agricultural products and manufacturing components, but the latest round has prompted small business owners to delay store openings, freeze hiring, and consider price increases.

For example, Cindy Michael, who owns a yarn store in Cuyahoga Falls, Ohio, says her latest yarn bill was $447, instead of the usual $120 or so. It turns out that the yarn, which comes from a Dutch company but is manufactured in China, is now subject to 25% tariffs from China and 5% tariffs from the European Union, Ray Strickland reports for WKYC-TV in Cleveland.

"Michael says if she does business with another company, she could end up in the same predicament where she’s blindsided by the company’s products being manufactured in China," Strickland reports. "Using a distributor in the U.S means they pay the tariff cost, and in turn the distributor could make her pay more. According to her, doing business with a company in the US is more expensive too."

Brewers will get hit too, since brewing machinery is on the list for the new tariffs. Adrian and Dara Sawczuk, who have been planning to open a brewery in Myrtle Beach, S.C., have been forced to downsize their operation and possibly delay the opening. They had planned to order $300,000 of brewing equipment from China, but can't afford a 15% tax on that, CNBC's Spencer Kimball reports.

"He would order the equipment from a domestic manufacturer — the problem is there just aren’t that many in the U.S. that offer the equipment he needs at a price that makes sense for the business," Kimball reports. "And it would create a supply problem if breweries suddenly started sourcing all their equipment domestically, Sawczuk said."

Sawczuk told Kimball, "There’s a day either my shareholders are going to make less money, I’m going to pay my employees less, or I’m going to charge my customers more."

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