Farmers and small businesses air tariff concerns
Iowa farmer Aaron Lehman was one of a group of several farmers and small business owners airing concerns about how tariff uncertainty is affecting their business at a July 9 press call. Lehman is also president of the Iowa Farmers Union.
Another Iowa corn grower, Robert Hemeseth, a National Corn Growers Association board member who was recently elected to serve as president of Farmers for Free Trade, also presented at the event. Hemeseth decried what he called the “shotgun approach” of current tariff negotiations and said, “It’s been 12 or 13 years since we signed a free trade agreement. Other countries are signing free trade agreement with each other. We are no longer on a level playing field. We are seeing negative margins on corn and soybeans.”
“I get the concern about unfair trading practices,” Hegeseth added. “But the longer this goes on, the harder it will be to get those markets back. We are watching our market share around the world decline. We want to make our money in the marketplace.”
The small business owners on the call hailed from all across the country and occupied different niches, but all shared one thing in common: they also rely on a supply chain that includes foreign vendors.
Introducing the group, Lehman stressed, “Tariff policies are not abstract. They are affecting real people and businesses. Our farms are being impacted by chaotic tariff and trade policies.” Lehman said the uncertainty is causing farmers to put off buying equipment, causing downstream economic ripples. It is also halting innovation in farming practices and “has not gotten us any closer to fair trade,” he said.
Nick Colombo, co-founder of Switchgrass Spirits of St. Louis, Missouri, which makes and sells craft spirits, said, “Six months ago, we were having talks about selling in France and South Korea, but no longer. The tariff uncertainty has halted those talks. We are paying more for Italian glass.”
Colombo’s company also has farm ripples, since he buys his grain from several midwestern states, along with some barley from Canada. All his whisky barrels are bought in Missouri. Colombo said half of all whisky produced in the United States is typically sold overseas, but customers are pulling back due to tariff uncertainty. “We will have to raise prices; it’s just a matter of time,” he said. “The effects will be catastrophic.”
Angela Hawkins founded a sleep products company in 2017 called Bamblu based in Atlanta, Georgia, which incorporates bamboo fibers into sheets and bed linens. When talk of tariffs began surfacing, she researched alternatives to China, which produces almost all bamboo fibers used in clothing and bed clothes. She found there were no alternatives.
Regarding tariff policies, she said, “Decisions are being made that are too unstable and have too many fluctuations. We have been left unable to plan. The holiday season is our Superbowl, and we have to make decisions about that right now. What will my return on investment be by December? I have no idea. My production, hiring and marketing are all up in the air.”
Supply chains and warehouses cope
Rachel Lutz, a third-generation retailer, founded a women’s apparel and accessories fashion house called the Peacock Room in Detroit, Michigan, starting with $1,500 on her credit card, that now earns about $1.5 million in revenues a year. She pointed out that 97% of all U.S. clothing is made overseas.
“There are barely any textile mills left in the U.S. Even clothing makers that assemble clothing in the U.S. use imported cloth.” She said she does business with about 100 vendors, each one of which has had to deal with tariff issues. One of her vendors has been absorbing a 25% tariff since the spring, “but that is not sustainable.”
Unlike large companies, small businesses like hers don’t have the capital to build up large stockpiles before tariffs kick in. And warehouses, too, have supply problems as a result of tariffs. One United Kingdom supplier shut down its U.S. warehouse and completely pulled out of the U.S. market.
“I’m absorbing tariffs so far, but I’ll have to raise prices soon,” she said. She noted that even shoppers with household wealth who can afford higher prices for fashions are cutting back on their shopping because of uncertainty. “This is a manufactured crisis,” she said, “that is affecting real people and real businesses.”
David Bulcock is general manager and managing partner of Rochester Brewing and Roasting Company in Kansas City, Missouri, which combines a taproom and coffeehouse for a unique “third place.” He said his company had been set to be an “anchor tenant” in a large shopping facility when tariff uncertainty froze the deal. “Bankers and investors got nervous and everything came to a screeching halt.” His production costs have risen 50%, in large part due to tariffs on steel and aluminum his company uses for cans.
He also imports his coffee beans. He was set to do more hiring, including replacing himself as head brewer. He, too, called the tariff crisis a “self-own.” “It’s next to impossible for business my size to expand” in the current climate of uncertainty, he said.
More workers, not more jobs
Steve Jenkins’ company, Jenkins Enterprises of North Little Rock, Arkansas, makes and wholesales toys, gifts, novelties and branded sports-related items like keychains, mugs and drinkware. An important part of his market is college sports fans, and the fall college football season is a key time for his sales. He’s been traveling to China since 1996 and has formed many good relationships with vendors there. “I have customers who will pay $10 for a ceramic mug with a Texas Longhorns logo on it, but are they going to pay $24.50 for that same mug after the 145% tariffs kick in?”
Jenkins’ company employs 70 workers in Arkansas and Tulsa, Oklahoma, assembling jewelry and other items. “What about my American workers?”, he asked. “The components come from overseas, but Americans assemble them, label them, package them, market them and ship them.”
Jenkins said unemployment in Arkansas is currently below 4%. “That means everyone who wants a job has one,” he said. “It’s not popular to say this, but what we need is not more jobs, but more workers. We’ve got the jobs.”
All of the presenters stressed that it’s the uncertainty and constant swings in tariff policy, even more than the tariffs themselves, that undermine their business plans. Colombo, the craft whisky maker, said “the tariff effects are the opposite of what everyone says they should be. The uncertainty is the worst. Everything that manufacturing touches is getting hit right now.”
In the Q&A period, a reporter from a public radio station asked, “How many of you voted for Trump and do you have any regrets?” Both Jenkins and Hemeseth said that while they are unhappy about the tariff policies and how they are affecting their business, they are not one-issue voters and would vote for Trump again.
A new round of punitive country tariffs is set to take effect Aug. 1, a deadline that Trump declared “hard” on his Truth Social site after deferring some of them. His team has been moving on doing trade deals but only a few countries have negotiated them yet. Trump recently announced his intention to hit Brazil with 50% tariffs, in part due to what he said was its “witch-hunting” treatment of its ex-president Bolsonaro. The 50% rate he is threatening to impose on Brazil is the highest tariff Trump has slapped on any nation so and much more than the 10% he said in his April 2 “Liberation Day” announcement that he would put on Brazil. Trump said in a July 9 Truth Social post that 50% would be “far less than what is needed” to achieve a “level playing field.”
David Murray can be reached at [email protected].
Tariffs at a glance
According to Reuters, here are the current tariffs in effect as of July 10:
PRODUCT TARIFFS IN EFFECT
Steel and aluminum – 50%
Autos and auto parts – 25%
PRODUCT TARIFFS – THREATENED
Copper – 50% to take effect Aug. 1
Pharmaceuticals – up to 200%
Semiconductors – 25% or higher
Movies – 100%
Timber and lumber
Critical minerals
Aircraft, engines and parts
COUNTRY TARIFFS IN EFFECT
Canada – 10% on energy products, 25% for other products not covered by the U.S.-Canada-Mexico Agreement
Mexico – 25% for products not covered by USMCA
China – 30%, with additional tariffs on some products
United Kingdom – 10%, with some auto and metal imports exempt from higher global rates
Vietnam – 20% for some products, 40% on transshipments from third countries
COUNTRY TARIFFS THREATENED TO TAKE EFFECT AUGUST 1
Algeria 30%
Bangladesh 35%
Bosnia and Herzegovina 30%
Brazil 50%
Brunei 25%
Cambodia 36%
Indonesia 32%
Iraq 30%
Japan 25%
Kazakhstan 25%
Laos 40%
Libya 30%
Malaysia 25%
Moldova 25%
Myanmar 40%
Philippines 20%
Serbia 35%
Sri Lanka 30%
South Africa 30%
South Korea 25%
Thailand 36%
Tunisia 25%
