The impact of potential tariffs on imports in Donald Trump‘s second presidential administration is causing business owners across different sectors to reevaluate how they would operate in such an economic environment.
During his campaign, the president-elect floated tariffs with up to 60 percent duties on Chinese goods and up to 20 percent on imports from other countries, vowing to bring business power back to the United States.
An American economy impacted by high inflation following the COVID-19 pandemic played a large role in Trump’s recent victory. However, economists, business owners and general consumers wonder if tariffs—which have not been officially announced—could offset economic gains and again raise inflation that has drastically fallen from its 9.1 percent peak in June 2022.
On the campaign trail September 24 in Savannah, Georgia, Trump pledged “to bring thousands and thousands of businesses and trillions of dollars in wealth back to the good old USA.”
“The word tariff properly used is a beautiful word … A lot of bad people didn’t like that word, but now they’re finding out I was right, and we will take in hundreds of billions of dollars into our Treasury and use that money to benefit the American citizens,” Trump told gathered supporters. “And it will not cause inflation, by the way.”
He pointed to tariffs imposed in 2018, during his first presidential stint, that amounted to nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products valued at approximately $380 billion in 2018 and 2019, according to the Tax Foundation. Most of Trump’s tariffs were kept by the Biden administration.
“In his first term, President Trump instituted tariffs against China that created jobs, spurred investment, and resulted in no inflation,” Republican National Committee spokesperson Anna Kelly told Newsweek, adding that Trump in his second term “will re-shore American jobs, keep inflation low, and raise real wages by lowering taxes, cutting regulations, and unshackling American energy.”
Photo-illustration by Newsweek/Getty
A Trump campaign spokesperson told Newsweek before the election that Trump’s economic program must incorporate an additional $5,000 annual per household savings, integral to renewing the success of his regulatory reduction. It also must incorporate the savings and wealth effect from Democrats‘ “war on energy.”
A March 2023 report issued by the U.S. International Trade Commission, which analyzed the effects of Section 232 and Section 301 tariffs on more than $300 billion of U.S. imports, found that tariffs lowered Chinese imports by 13 percent, increased U.S. production by 0.4 percent, and increased prices of U.S. products by 0.2 percent.
Mixed Responses in the Agricultural Sector
Fourth-generation farmer Joe Maxwell of Missouri raises hogs, sheep and grain crops on his land. The former state senator and lieutenant governor is also cofounder of the nonpartisan Farm Action and has assisted presidential, U.S. Senate and House candidates in developing antitrust, agriculture and food policy positions.
Maxwell told Newsweek that he and other farmers and collaborative organizations have conducted analyses for Trump’s tariffs if they come to fruition.
“I’ll explain one thing everybody in this country needs to know: If the president [Trump], and I’m certain that he will, fulfills his commitment to increase tariffs up to 20 percent across the board, 60 percent on China, 200 percent on John Deere manufactured in Mexico, then we’re going to pay more than just to put this in the consumers’ stores.
“In 1992, [independent presidential candidate] Ross Perot said there would be a giant sucking sound if free trade like NAFTA [North American Free Trade Agreement] went through. That sucking sound is over, and with it went a lot of our domestic production.”
Maxwell said his farm would assuredly have to pay more for necessary items like nitrogen fertilizers, adding that price gouging already occurred during the pandemic. Competition is so thin already, as two companies (CF Industries and Nutrien) control over 50 percent of the market, for example.
“The big takeaway for us, as a group that looks at corporate power and concentration in the market, is that these broad tariffs only protect the monopolies that already exist in the United States,” he said. “I use fertilizer as an example that the president is not protecting domestic production. He’s protecting monopolies. He’s protecting billionaires.”
Maxwell’s talked to fellow farmers who were ardent Trump supporters, some of whom are reportedly in “denial” about the economic effects of such tariffs.
“There’s a mixed bag there as it relates to competition,” Maxwell added. “Many are not trusting of government. They’re hoping that the free market will keep the checks and balances in place.
“But we’re in a different time with this monopoly control because one of the main forces of market dynamics is competition that doesn’t exist. We’re asking them to rethink their theories.”
Tariffs are viewed differently by Bill Bullard, CEO for the past 23 years of R-CALF (Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America)—the largest producer-only membership-based organization that exclusively represents U.S. cattle and sheep producers on domestic and international trade and marketing issues. It has about 4,000 members in 43 states.
He’s referred to tariffs as a “solution” that can stimulate and promote the domestic sheep industry by counterbalancing the industry’s disadvantage when it comes to trading with countries with low currency valuations and low production costs. He and his ilk have called for tariffs for years.
“Our industry is saddled year after year with a tremendous trade deficit. … Our sheep industry has been decimated by unlimited imports,” Bullard said. “We are calling for tariff rate quotas in order to give our domestic sheep industry the room it needs to breathe and to rebuild without just the untenable pressure of much cheaper imports that have reduced our production capacity in the United States.
“[It’s about] putting our domestic producers on a level playing field with imports from countries that do not have to meet identical production and safety standards that our producers do. And this is true for both the cattle and the sheep industry.”
He said the U.S. has already lost over half of all the cattle producers in business going back to 1980. Meanwhile, the industry has lost 52 percent of its independent beef cattle operations and 60 percent of full-time sheep producers.
“Unless we take aggressive steps to level the playing field through the use of tariffs, we will continue to see a steep decline or steep reduction in the number of cattle and sheep farmers and ranchers,” he added.
Senators Joni Ernst and Chuck Grassley, both Republicans from Iowa, were both previously critical of tariffs during Trump’s first term—the latter saying that a trade war would invite “retaliation” on agricultural products that shape a lot of his state’s economy.
When asked by Newsweek on his past remarks, Grassley directed blame at the Biden-Harris administration.
“I’m a free trader because farmers like those in Iowa depend on export markets to sell a third of what they produce,” Grassley said. “I’m for exporting American goods, not American jobs. Unfortunately, the Biden-Harris administration has failed to broker a single new trade agreement over the past four years, limiting export options for farmers. On top of that, farmers are also struggling with high input costs brought on by Biden-Harris inflation.”
Ernst in 2018 said “there is a real danger that increased tariffs on U.S. exports will harm Iowa producers and undermine the rural economy. She told Newsweek, however, that President Joe Biden and Vice President Kamala Harris “wrecked” the economy and created increased input costs for farmers and producers.
“President Trump is focused on doing what is right for America and our economy, and Iowa farmers and small business owners have a fighter in him,” Ernst said.
‘Layoffs Would Be Inevitable’
Las Vegas, Nevada-based Alice Vaughn, 34, is founder and CEO of MilkToast Brands.
The company launched in 2017 and creates a wide variety of products, including humorous novelty items and stylish dog carriers. Her business team consists of about 40 people, including contractors, collaborators and other professionals.
Vaughn told Newsweek that in response to the 2018 tariffs, she was “forced into some tough decisions.” That included enduring a 10 percent to 25 percent cost increase and marginally increased consumer costs as to not break their wallets.
She said additional tariffs would be “devastating.”
“All my products are currently made internationally, and while some might suggest I ‘just switch to American manufacturers,’ it’s not that simple,” she said. “Even U.S.-based manufacturers source materials and equipment globally, so tariffs would affect them, too. And for certain products, the manufacturing capabilities simply don’t exist domestically. Decades of offshoring have built a global economy that can’t be reversed overnight.
“If these tariffs are implemented, layoffs would be inevitable. The financial strain would force me to cut back on my team, limit new product development, and scale down operations. Customers, already feeling the pinch of inflation, would be hit with higher prices, which would drive down demand.”
She described it as a “domino effect” of higher costs, fewer customers and reduced revenue.
Brian Williams, longtime entrepreneur also based in Las Vegas, has his hand in many businesses.
He owns GainzBox, a subscription box service tailored to fitness enthusiasts, and Hoopis Pickleball, which caters to the rapidly growing pickleball community. He is also director of Million Dollar Sellers (MDS), a highly exclusive community of over 600 e-commerce entrepreneurs collectively generating more than $7.9 billion in revenue on Amazon.
“We’re looking at alternative locations to make our products and we’re also preparing by just being able to add either enough value to the product itself so we can raise prices, or if we’re not able to do that given the market conditions just become more efficient so that we can we can remain profitable,” Williams said.
One potential safe space of sorts from tariffs that he and others are looking at is NATO countries like Mexico and Turkey, with the thought being that the U.S. won’t drive hard bargains with traditional allies.
“Talk is cheap, right?” he added. “So, who knows exactly where the tariffs are gonna end up. Are they gonna stay the same? Are they gonna go up? What countries are going to be affected, etc.? … It’s difficult to prepare completely for that. It’s a great concern and it’s a hot topic of how we’re going to pivot to make it work.”
Travis Peterson, of Tustin, California, has owned and operated novelty card company Joker Greeting for nine years. It only has three workers, including him, but he partners with others for warehouse space.
He said if tariffs are implemented, he could maybe realistically sell his $11 cards for a buck more and maybe people won’t notice anyway. But he said he tries to be fair with his customer base, which often includes new clientele.
Also, the prospect of wanting more domestic manufacturers doesn’t work for many, considering that automation could run from $250,000 to $500,000 just for a business like his.
“I think the math is pretty simple that if I pay higher taxes my margins will shrink, or I have to find a way to raise prices,” Peterson told Newsweek. “Or, I will need to move manufacturing outside of China—which I think most will do but not the USA. I would like to manufacture in the USA but it would only be possible with automated machines, and I’d still have to import many other materials to make it possible.
“I am not afraid at the moment and it’s not my biggest challenge, either. I take things one day at a time. This was a concern last [Trump] term as well. I’m not totally sold it will change much this second term.”
When asked whether they have received an uptick in correspondence from small- business owners expressing concerns about potential tariffs, a Small Business Administration spokesperson told Newsweek that they “cannot comment or speculate on potential policies of the next administration.”
