There’s a lot in the news these days about the Trump tariffs. Many people are confused about what this will mean to all Americans. In general, these tariffs will cause an increase in the prices of thousands of items that we’ve been importing from China.
For small business owners, these tariffs will be painful because they include increases in the price of things we all need and use every day. These include:
- Automobiles and many of their component parts
- Computers and many of their parts including minuscule things like screws
- Food and beverages
- Steel and aluminum
- Corn and wheat
You can see from the list that the merchandise runs across a very wide range. For instance, if you own a catering company or a restaurant, the price of small items like Coca-Cola will go up, thus causing you to have to raise your prices to match.
Small Business Owners Will Feel the Brunt
Price increases will probably hit small business owners harder than anyone else. That’s because so many of these companies are running on tight profit margins. They’re in a position where they must pass on higher costs to the end user in order to stay in business.
The steel tariffs are a good example because steel is used in the manufacture of many products. The 25% rise in steel imports mean that if you are using steel in any way, you’ll need to add that 25% to your final cost. Food manufacturers use steel and aluminum to make cans. So, plainly speaking, the cost of a can of beans could rise by at least 25%. Canned beverages will go up as well. Anyone who resells these products will most likely increase their prices to make up the difference.
Unemployment Rates Could Soar
Another big and potentially painful hit that Americans will take is job losses. Economists are predicting that 700,000 Americans will lose their jobs before all this is over. The White House has already put aside $12 billion as a bail-out for farmers who are losing money fast and furiously because of the Trade War.
But this is only the beginning. Many other small business owners will suffer and there may not be any bailout money to help them get through this. Instead, they’ll be forced to close their doors. This will eventually result in millions of Americans having to collect unemployment … another huge economic strain for the American economy.
Workers who are currently employed in America’s big seaports are already suffering.
Mario Cordero, the executive director of the Port of Long Beach, CA, commented, saying, “It would be a game-changer. It would be detrimental to jobs at the port and detrimental to the state and national economy.”
Now that the whole country is aware of this and they are beginning to come to grips with what this could mean for America’s economic future, how will the White House respond? At the moment, the Trump administration is not backing down. In fact, he is threatening to impose another $200 billion in tariffs on Chinese goods.
In the end, getting into a Trade War with a country like China does not look like a good business idea. It will hurt our small businesses and result in higher prices on thousands of items we all buy and use daily. Small business owners are the backbone of America and when you break that backbone, you endanger the whole body.