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The uncertain days of US businesses

From her home in Phoenix, Arizona, 36-year-old Erica Campbell, the owner of a business specializing in Catholic items, is anxiously awaiting a shipment from China. The goods were loaded into containers before President Donald Trump imposed a new 10% tariff on all Chinese imports on February 1. She believes she may have avoided the additional tax this time, but she remains concerned about future tariff hikes.

A cargo ship loaded with containers at the Port of Oakland, California amid trade tensions over increased US tariffs. (Photo: Reuters)

"I can't predict what will happen next. I'm on high alert," Campbell said.

Trump’s tariffs on China have thrown millions of small American businesses into turmoil. For decades, US companies have designed products domestically while relying on Chinese factories for efficient and cost-effective manufacturing. This is how Apple produces iPhones, and it is also how Campbell, a mother of three, runs a US $2 million-a-year business from her kitchen.

“The best machinery, skilled labor, and ability to produce quality goods at reasonable prices are all in China,” said Bill Keefe, co-founder of the luxury sleepwear brand Julianna Rae. Even for businesses considering relocating manufacturing to the US, finding a suitable factory remains a significant challenge.

Chris Miksovsky, owner of Humangear, a company specializing in travel and outdoor gear, attempted to find domestic manufacturing partners. He contacted six US companies via email; four did not respond, one disappeared after initial discussions, and the last one replied late without providing a price quote.

“Imposing tariffs to bring jobs back to America sounds reasonable, but we must ensure that the US has the manufacturing capacity and more importantly, enough companies willing to take on the challenge,” Miksovsky said.

Some businesses previously relocated production to Mexico to avoid Trump’s first-term tariffs, but now they face the risk of being taxed twice, once for imported raw materials like steel and aluminum and again when shipping finished products to the US.

Shawn Ernst, owner of Snap Supply, a company specializing in appliance repair parts, noted that the price of an oven component, currently US $23, could soon rise to US $31. If prices increase too much, he fears losing his competitive edge against Chinese suppliers selling directly on Amazon.

Uncertainty in tariff policies

Trump declared that the 10% tariff was merely a "warning shot." During his previous election campaign, he had pledged to raise tariffs up to 60%.

Trucks sit idle in a parking lot on the outskirts of Ciudad Juarez, Mexico, on March 5 as Mexican businesses temporarily halt exports to the United States, waiting for tariffs to be lifted. (Photo: Reuters)

According to the Associated Press (AP), the trade war has raised concerns among the business community. Broad import tariffs have been imposed on Canada, Mexico, and China through executive orders. Additionally, Trump has considered retaliatory tariffs against countries with higher import duties on American goods.

Gregory Husisian, a trade attorney at Foley & Lardner, stated that his firm would not proceed with any investments until the situation becomes clearer. "At least in Trump's first term, businesses knew the rules of the game. Now, they don't know whether they’re playing Monopoly or tic-tac-toe," said he.

Democratic Representative Don Beyer of Virginia warned that the President’s tariff policies are throwing the entire North American economy into disarray. "There are businesses that don’t even know whether the products they trade will be subject to tariffs," he said.

Tariffs harm the economy partly because they are paid by importers, who often pass these costs onto consumers, fueling inflationary pressure. Additionally, tariffs provoke retaliatory measures from trade partners, causing economic damage across all affected regions.

Economic losses further complicate business decisions. This uncertainty can lead to delays or cancellations of investments, key drivers of economic growth, according to Eswar Prasad, an economist at Cornell University.

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