What They Are Saying: Businesses React To “Catastrophic” Tariff Announcement

May 9, 2019 by AFP

ARLINGTON, Va. – President Trump announced plans to increase tariffs on $200 billion worth of Chinese goods to 25% on Friday, and threatened more tariffs will follow that, escalating a misguided trade war.

Americans for Prosperity has consistently opposed tariffs and barriers to free trade. Today AFP President Tim Phillips has this to say:

“It’s undeniable that American businesses and consumers will feel the impact of a 25 percent tariff increase on Chinese goods. This White House has accomplished many significant economic and regulatory reforms that have reduced unemployment, lowered taxes and removed barriers to opportunity for millions of Americans. Our economy is thriving despite these tariffs, not because of them. We strongly encourage the administration to listen to America’s job creators who need trade barriers reduced, not expanded.”

The reaction from businesses across the country wasn’t exactly favorable either. Take a look below.

BUSINESSES REACT TO “CATASTROPHIC” TARIFF ANNOUNCEMENT

On May 5, President Trump Announced He Would Escalate Tariffs On $200 Billion Worth Of Chinese Goods To 25 Percent, Giving Importers Just Five Days Notice. “President Donald Trump’s decision to escalate tariffs on $200 billion of Chinese goods on Friday is angering American businesses that say they were taken by surprise. Importers received just five days’ notice about the sudden rise in the tariff rate to 25% from 10%.”(Katie Lobosco, “‘We’re Freaked’: Trump Startles US Businesses With Fresh Tariff Hike,” CNN Politics, 5/7/19)

Scott Wine – Chairman & CEO OF Polaris Industries – Called The Potential Increase Of Tariffs To 25 Percent “Downright Catastrophic In Terms Of Impact On The Company & Employees.” “The CEO of manufacturing company Polaris Industries is calling an impending tariff increase a catastrophe for his business. In a phone call with CNBC Tuesday, Polaris CEO and Chairman Scott Wine flagged major implications of the White House’s plan to up tariffs on Chinese goods to 25%, effective Friday night if the U.S. and China aren’t able to strike a trade deal. ‘At 25% it’s downright catastrophic in terms of impact on the company and employees,’ Wine told CNBC’s Morgan Brennan.” (Kate Rooney, “Polaris CEO Calls Potential Tariff Increase ‘Downright Catastrophic’ For Business,” CNBC, 5/7/19)

Wine Said That Higher Tariffs Could Eliminate A Third Of The Company’s Net Income And Cost Between $195-$200 Million. “If new tariffs are introduced on Friday, it’s expecting to take a hit of between $195 million and $200 million, Wine said. The CEO also said the increased tariffs could erase a third of the company’s net income. The company has an employee stock ownership plan, and in this case employees own 5% of the company. Wine underscored the effect it could have on Polaris’s stock, and therefore employees. ‘When we are hit with tariffs, that’s what I mean by impact to employees,’ he said. ‘Through no fault of our own, one-third of our net income could go away.’” (Kate Rooney, “Polaris CEO Calls Potential Tariff Increase ‘Downright Catastrophic’ For Business,” CNBC, 5/7/19)

Wine: “What’s Most Ironic Is I Invested $150 Million To Build New Plant In Huntsville — At The Same Time Our Competitor Built One In Mexico… They Don’t Pay The Tariffs, And We Do.” (Kate Rooney, “Polaris CEO Calls Potential Tariff Increase ‘Downright Catastrophic’ For Business,” CNBC, 5/7/19)

Wine: “Ultimately If This Was Not Resolved, We Would Have No Choice But To Move Production To Mexico… This Would Essentially Be Forcing Me To Push Jobs Outside The U.S.” (Kate Rooney, “Polaris CEO Calls Potential Tariff Increase ‘Downright Catastrophic’ For Business,” CNBC, 5/7/19)

Tiffany Zarfas Williams – Owner Of Texas-Based The Luggage Shop – Said She Already Received Notice From Her Biggest Vendor That Prices Would Increase Due To The New Tariff Announcement. “‘I thought we were finally figuring out how to make this work, and now we have to start all over,’ said Tiffany Zarfas Williams, owner of the Luggage Shop of Lubbock in Texas. About 84% of the luggage, backpacks and briefcases she sells were hit with tariffs. Earlier in the year, she would receive emails from vendors on a daily basis about price increases. Zarfas Williams raised her own prices accordingly, and adjusted the assortment of items on the floor. But by Monday afternoon, she had already received a new email from one of her biggest vendors reminding her that a higher tariff would result in a higher price.” (Katie Lobosco, “‘We’re Freaked’: Trump Startles US Businesses With Fresh Tariff Hike,” CNN Politics, 5/7/19)

After Noting That Her Store Had Already Taken A Big Hit From Tariffs Last Year, Zarfas Williams Called Adding Another 15 Percent To The Price “A Whole New Ballgame.” “Sales of the higher-end items at Luggage Shop of Lubbock have already taken a hit and adding another 15% to the price would be ‘a whole new ballgame,’ she said.” (Katie Lobosco, “‘We’re Freaked’: Trump Startles US Businesses With Fresh Tariff Hike,” CNN Politics, 5/7/19)

Zarfas Williams: “I Definitely Want China To Be Held Accountable, But I Don’t Know Why We Are Punishing Consumers In Our Own Country. That’s The Part That’s Hard To Understand As A Small Business Owner In Texas.” (Katie Lobosco, “‘We’re Freaked’: Trump Startles US Businesses With Fresh Tariff Hike,” CNN Politics, 5/7/19)

The New York Times Reported Williams Is Holding Off On Hiring More Workers And That Higher Tariffs Will Change What Consumers Are Ready To Buy From Her. “This week, Ms. Williams said, she started getting calls from wholesalers warning that prices will go up again if Mr. Trump makes good on his threat to increase tariffs on Chinese imports. ‘It’s very concerning,’ said Ms. Williams, whose grandfather opened the shop in 1951. “It will change what consumers are ready to buy from us.” As she waits to assess the damage, she said, she is holding off on hiring more workers.” (Matt Phillips, Ana Swanson, & Alan Rappeport, “Fear Of Intensifying Trade War Ricochets Through Economy,” The New York Times, 5/7/19)

President Joe Shamie Of Delta Children Of New York Said His Company Would Be Unable To Absorb The Costs Of New Tariffs And Noted, “Our Prices Will Go Up Drastically.” “Delta Children in New York, which sells cribs that it imports from China, swallowed most of the costs stemming from the first round of tariffs, the company’s president, Joe Shamie, said. He said he had increased prices to retailers by only about 3 percent. A new round of tariffs? ‘We can’t absorb them,’ said Mr. Shamie, who described his company as the world’s largest seller of cribs. ‘Our prices will go up drastically.’” (Matt Phillips, Ana Swanson, & Alan Rappeport, “Fear Of Intensifying Trade War Ricochets Through Economy,” The New York Times, 5/7/19)

The New York Times Reported That If Crib Sales Decline Due To Price Increases As A Result Of Higher Tariffs Shamie Will Have To Consider Layoffs. “The average price of a crib is between $200 and $250, but prices will top $300 if the higher tariffs are enacted, most likely leading some families to forgo buying a new crib, he said. Delta Children employs 350 workers. If crib sales decline because of the tariffs, Mr. Shamie said, he will have to consider layoffs.” (Matt Phillips, Ana Swanson, & Alan Rappeport, “Fear Of Intensifying Trade War Ricochets Through Economy,” The New York Times, 5/7/19)

Rick Helfenbein – President & CEO Of American Apparel & Footwear Association – Said That Fears Of Higher Tariffs On Clothing And Footwear Imports Are Creating A Panic At His Company. “The administration strategically put the earlier tariffs on imports mostly used in the production of other items, like semiconductors or refrigerators. That means the next round could tax more items that are directly sold to consumers New tariffs would hit the core of clothing and footwear imports, said Rick Helfenbein, president and CEO of the American Apparel & Footwear Association. ‘That’s why we’re freaked,’ he said. A significant portion of hats, luggage, clothing and shoes sold in the United States come from China, leaving importers with little choice to source items from elsewhere in the short-term. Other countries don’t have the capacity to take on more production immediately.” (Katie Lobosco, “‘We’re Freaked’: Trump Startles US Businesses With Fresh Tariff Hike,” CNN Politics, 5/7/19)

Helfenbein: “This Confirms Our Worst Fears. There Are Those Of Us Who Are Optimists And Thought It Would Go Away And Those Who Say It Could Come Back At Any Time — And This Points To The Latter.” (Katie Lobosco, “‘We’re Freaked’: Trump Startles US Businesses With Fresh Tariff Hike,” CNN Politics, 5/7/19)

Helfenbein: “Businesses Have Barely Been Able To Survive The 10 Percent Tariff. 25 Percent Is Not Survivable.” (Elise Oggioni, “Trump’s New China Tariffs Will Kill Retail Industry: American Apparel And Footwear Assn. CEO,” Fox Business, 5/7/19)

Helfenbein: “41 Percent Of All Apparel, 72 Percent Of All Footwear, 84 Percent Of All Accessories Come Into China. We Can’t Escape It, And With The Imminent Rise From 10 To 25 Percent, Our Members Have Goods On The Water. They’re Going To Get Hammered.” (Elise Oggioni, “Trump’s New China Tariffs Will Kill Retail Industry: American Apparel And Footwear Assn. CEO,” Fox Business, 5/7/19)

Helfenbein: “Two-Thirds Of The GDP Is Consumer Based. 10 Percent Of The Jobs In America Are Retail. And In The First Four Months Of This Year, More Stores Have Announced Closings Than All Of Last Year.” (Elise Oggioni, “Trump’s New China Tariffs Will Kill Retail Industry: American Apparel And Footwear Assn. CEO,” Fox Business, 5/7/19)

Steven Smith – Owner Of Luggage & Leather Depot In Bethesda, MD – Said An Increase In Tariffs To 25 Percent “Would Absolutely Kill Our Business.” “Steven Smith, owner of Luggage & Leather Depot in Bethesda, Maryland, said a jump in tariffs to 25 percent ‘would absolutely kill our business.’ He said his sales are off as much as 20 percent after he raised prices to reflect the higher costs. ‘If it goes to 25 percent, forget it. People reach a limit,’ Smith said.” (Lisa Baertlein & Jason Lange, “Trump’s Tariff Push Squeezes Businesses And Consumers,” Reuters, 5/7/19)

President John Bozzella Of Global Automakers Is Worried That Higher Tariffs Will Make Imported Car Parts More Expensive And Said That The “Auto Industry Would Face Some Significant Pain.” “The auto industry, for example, is worried that tariffs will make imported car parts more expensive, and that China will put retaliatory tariffs on American-made cars sold in China, said John Bozzella, the president of Global Automakers, which represents international car companies. ‘Our concern is, as we go back into a phase of tit-for-tat tariffs, that the auto industry would face some significant pain,’ Mr. Bozzella said.” (Matt Phillips, Ana Swanson, & Alan Rappeport, “Fear Of Intensifying Trade War Ricochets Through Economy,” The New York Times, 5/7/19)

President Of The American Chemistry Council Said The Risks Of Using Tariffs As A Negotiating Tactic Are “Simply Too High,” While Benefits Remain Unclear. “Tariffs would also hurt the chemicals industry, which depends on China for several chemicals that are not available anywhere else and are critical to American manufacturing, said Cal Dooley, the president of the American Chemistry Council. ‘The risks of continuing to use tariffs as a negotiating tactic with China are simply too high — and any potential benefits still unclear,’ Mr. Dooley said.” (Matt Phillips, Ana Swanson, & Alan Rappeport, “Fear Of Intensifying Trade War Ricochets Through Economy,” The New York Times, 5/7/19)

David French – Senior Vice President Of Government Relations At The National Retail Federation – Noted, “A Sudden Tariff Increase With Less Than A Week’s Notice Would Severely Disrupt U.S. Businesses.” “‘A sudden tariff increase with less than a week’s notice would severely disrupt U.S. businesses, especially small companies that have limited resources to mitigate the impact,’ says David French, senior vice president of government relations for the National Retail Federation.” (Paul Davidson, “Trump’s Threatened Tariff Hike To 25% On Chinese Goods Would Hurt Consumers, The Economy,” USA Today, 5/7/19)

French: “American Consumers Will Face Higher Prices, And U.S. Jobs Will Be Lost.” (Paul Davidson, “Trump’s Threatened Tariff Hike To 25% On Chinese Goods Would Hurt Consumers, The Economy,” USA Today, 5/7/19)

CEO Alex Camara Of Seattle-Based AudioControl Said That An Increase In Tariffs To 25 percent Would Be “Impossible To Absorb,” And Have A “Severe Impact.” “AudioControl, which makes high-end audio equipment, imports about 25% of its parts from China, says Alex Camara, CEO of the Seattle-based company. Of the 10% tariff, he says, ‘We’ve primarily absorbed the cost, which has been painful.’” (Paul Davidson, “Trump’s Threatened Tariff Hike To 25% On Chinese Goods Would Hurt Consumers, The Economy,” USA Today, 5/7/19)

USA Today: Camara Estimated That His Businesses Would Have To Raise Overall Prices To Retailers And Dealers By 8-12 Percent And Those Costs Would Be Passed On To Consumers. “Camara estimates he would have to raise overall prices to dealers and retailers by 8% to 12%, costs that would be passed to consumers and that could crimp sales. He says he also would have to curtail his investments in new technologies.” (Paul Davidson, “Trump’s Threatened Tariff Hike To 25% On Chinese Goods Would Hurt Consumers, The Economy,” USA Today, 5/7/19)

USA Today: Vice President Sage Chandler Of The Consumer Technology Association Said That Increasing Tariffs To 25 Percent Would Further Intensify A Trend Of Consumer Electronics Makers Shifting Production From China To Other Southeast Asian Countries. “Some consumer electronics makers already have started shifting production from China to other Southeast Asian countries, a tactic that would intensify under a 25% duty, says Sage Chandler, vice president of international trade for the Consumer Technology Association.” (Paul Davidson, “Trump’s Threatened Tariff Hike To 25% On Chinese Goods Would Hurt Consumers, The Economy,” USA Today, 5/7/19)

USA Today: Principal Robert Heiblim Of Bluesalve Partners – A Manufacturer Of Bluetooth Speakers Located In Boonton, NJ – Said That If Tariffs Increase To 25 Percent He Would Probably Pass About Half Of The Increase To His Dealers Causing Them To Raise Prices For Consumers. “Bluesalve Partners of Boonton, New Jersey, makes Bluetooth speakers and other products through contractors in China. When the 10% tariff took effect, company Principal Robert Heiblim renegotiated prices with its Chinese suppliers and imported extra products before the 25% duty was slated to take effect early this year. If the 25% levy is enacted, he says, he has sufficient inventory to last a couple of months but then would probably pass about half the 25% tariff to his dealers. They in turn would raise retail prices.” (Paul Davidson, “Trump’s Threatened Tariff Hike To 25% On Chinese Goods Would Hurt Consumers, The Economy,” USA Today, 5/7/19)

Heiblim Said If The New Tariffs Take Affect He Would Reduce His Hiring Plans From 20 New Workers To Just Three Or Five And Limit Raises. “‘There is no way around it,’ he says. Heiblim, who plans to add up to 20 employees to his staff of 25, says he instead would reduce his hiring plans to just three to five people, limit raises and cut his advertising budget.” (Paul Davidson, “Trump’s Threatened Tariff Hike To 25% On Chinese Goods Would Hurt Consumers, The Economy,” USA Today, 5/7/19)

After Raising Prices Following The 10 Percent Tariff That Took Affect Last Year, Kent International – A Bicycle Manufacturer – Said A New 25 Percent Tariff “Would Be Devastating To Us Both In Sales And In Lost Profits.” “Kent International, a bike maker based in Parsippany, New Jersey, raised prices 10% last year because of the tariffs. Sales fell but then recovered as consumers adjusted, says CEO Arnold Kamler. But ‘bicycles are very price sensitive, and another 15% price increase would be devastating to us both in sales and in lost profits,’ Kamler says.” (Paul Davidson, “Trump’s Threatened Tariff Hike To 25% On Chinese Goods Would Hurt Consumers, The Economy,” USA Today, 5/7/19)

CEO Arnold Kamler: “People Don’t Realize That Not Everybody Is Rich… When Suddenly Our Prices, Which Went Up 7% To 10% Last Fall, Go Up Another 10% To 15%, This Slows Business Down And People Will Cancel Or Postpone The Purchase Of New Bicycles.” (James Langford, ‘They Have To Stop’: Small Businesses Alarmed By New Trump Tariff Threat,” Washington Examiner, 5/8/19)

Beth Aberg – Owner Of Random Harvest Home Furnishings Based In The Washington D.C. Area – Said She Has Already Been Forced To Pass On Most Of The Cost Increases Related To A 10 Percent Tariff Last Year On To Consumers And Called The Increase To 25 Percent “Really Significant.” “Beth Aberg measures the cost of President Trump’s tariffs on $200 billion of Chinese imports in dining-room table prices and dismayed furniture shoppers. The owner of Random Harvest Home Furnishings, which operates three stores in the D.C., area, said she has already been forced to pass on most of the cost increase from the 10% duties the White House imposed last year. If the president follows through on his Sunday threat to double them to 25%, ‘It will stop us carrying almost everything that we carry from China,’ she told the Washington Examiner. ‘Because furniture items are already higher ticket, an increase from 10% to 25% is really significant,’ she added. ‘I don’t think the administration understands how much damage it’s doing, both to the U.S. economy and the consumer.’” (James Langford, ‘They Have To Stop’: Small Businesses Alarmed By New Trump Tariff Threat,” Washington Examiner, 5/8/19)

Lisa Hu – Founder Of The Handbag Company Lux & Nyx – Said That She Has Already Scrapped Plans To Sell Her Handbags In Department Stores Because She Would Have To Shoulder The Burden Of New Costs From Increasing Tariffs. “Hu said she has largely scrapped plans to sell her handbags in department stores because she is worried she will have to shoulder the burden of new tariffs that might arise between the time stores place an order and when the imports arrive. Instead, she will focus on selling her handbags, which start at about $200, on her website, where she has more control over pricing.” (Abha Bhattarai, “‘Are These Tariffs Going To Happen?’ U.S. Retailers Fearful As They Try To Plan For Holidays.,” The Washington Post, 5/7/19)

Hu: “You Start A Business Thinking You Know How Much Things Are Going To Cost, And Then Something Like This Comes Along And Changes Everything…Are These Tariffs Going To Happen? Are They Not? I’m Having To Make Long-Term Decisions Based On The Little Information I Have Now.” (Abha Bhattarai, “‘Are These Tariffs Going To Happen?’ U.S. Retailers Fearful As They Try To Plan For Holidays.,” The Washington Post, 5/7/19)

Amy Rutherford Of Red Bard Mercantile Said New Tariffs Would Result In Higher Prices For Consumers And Noted, “It Will Definitely Take Away From How Much People Will Spend In Our Stores This Year… Instead Of Buying Five Things, They Might Just Buy Three If Everything Costs More.” (Abha Bhattarai, “‘Are These Tariffs Going To Happen?’ U.S. Retailers Fearful As They Try To Plan For Holidays.,” The Washington Post, 5/7/19)

For further information or to set up an interview, please send an email to GCipriano@afphq.org.

Through broad-based grassroots outreach, Americans for Prosperity (AFP) is driving long-term solutions to the country’s biggest problems. AFP activists engage friends and neighbors on key issues and encourage them to take an active role in building a culture of mutual benefit, where people succeed by helping one another. AFP recruits and unites activists in 35 states behind a common goal of advancing policies that will help people improve their lives. For more information, visit www.americansforprosperity.org

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