The Trump administration’s proposed tariffs on imports from China, Mexico, and Canada have created uncertainty and concern among American businesses. Many companies are struggling to plan for the future, unsure of how the tariffs will impact their costs and operations. Erica Campbell, owner of a Catholic goods business in Phoenix, is one of many entrepreneurs affected by the tariffs.
She imports products from China and worries that additional duties could drive up her costs. Like Campbell, countless small businesses across the U.S. have relied on Chinese factories for efficient and affordable production. Treasury Secretary Scott Bessent believes that China will absorb the cost of the tariffs, stating, “China will pay for the tariffs because their business model is exporting their way out of this inflation.
They will eat any tariffs that go on.” However, many American companies report that they, not their Chinese suppliers, are shouldering the burden of the tariffs. The uncertainty surrounding the tariffs has led some businesses to consider raising prices or cutting jobs. Randy Carr, CEO of World Emblem, says that if the proposed 25% duties on imports from Mexico are imposed, he will have to increase prices by 5% to 10% and lay off workers in the U.S. to offset the costs.
American businesses face tariff uncertainty
Economists warn that the tariffs could push inflation higher and slow economic growth. Data released by the Commerce Department shows that consumer spending fell by 0.2% in January, possibly due to rising economic uncertainty.
While inflation has cooled recently, experts caution that the progress could be undone by the tariffs. The Federal Reserve, tasked with keeping inflation in check, is closely monitoring the situation. Jeffrey Schmid, president of the Fed’s Kansas City branch, expressed concern that the tariffs could both drive up prices and weigh on economic growth, putting the central bank in a difficult position.
As the Trump administration moves forward with its tariff plans, American businesses are bracing for the impact. Many toy companies, for example, had hoped to share the costs of a 10% tariff with retailers but now face the prospect of having to raise prices under a 20% duty. Curtis McGill, CFO of toy maker Hey Buddy Hey Pal, described the situation as “a nightmare scenario.”
The uncertainty surrounding the tariffs has left many companies in limbo, unable to make long-term plans or investments.
As the global trade landscape continues to shift, American businesses are left to navigate an increasingly complex and unpredictable environment.