Key Takeaways:
– President-elect Donald Trump plans to impose 25% tariffs on goods from Canada and Mexico and 10% on Chinese imports.
– The proposed tariffs have prompted backlash from foreign leaders and concern from American businesses.
– Small businesses, like Prevelo bikes, fear the tariffs could affect their operations and ultimately increase prices for consumers.
– Critiques suggest the tariffs act more like a tax on American families rather than foreign companies.
Trump’s Tariffs Worry American Entrepreneurs
President-elect Donald Trump is set to implement substantial tariffs on imports from Canada, Mexico, and China in line with his campaign promises. His proposed course of action, however, is raising eyebrows as worried American company owners consider the potential fallout.
Tariffs Spark International Backlash
Trump’s announcement of a 25% tariff on goods coming in from Canada and Mexico, and a 10% tariff on Chinese imports has triggered global ire. Claudia Sheinbaum, the Mexican President, warns of possible retaliatory tariffs on US imports. This tug-of-war on tariffs stands to affect a multitude of industries. One prominent example is the auto industry, where many US-based manufacturers rely on parts from these countries.
Canadian Prime Minister Justin Trudeau is also planning an emergency meeting to discuss how these tariffs could potentially harm their local economies. Until the flow of undocumented immigrants and illegal drugs ceases across the U.S. borders, Trump insists these tariffs will stay in place.
Tariffs Translates to Higher Prices for Consumers
These tariffs will likely hit American businesses and consumers the hardest, says Jacob Rheuban, founder of Prevelo Bikes. Big corporations, like Walmart with a majority of inventory imported from China, suggest these tariffs would lead to price hikes for consumers. Rheuban agrees and worries as his company does not have enough cushion in their operating budget to absorb this financial hit.
Prevelo Bikes – Impacted by Tariffs
This California-based biking company, despite its domestically focused sales, recognizes the inevitable impact of these tariffs. They rely on Asia for raw materials like tires and brakes – a common supply chain pattern in the bicycle manufacturing industry. Rheuban admits if Trump’s tariffs aim to encourage domestic sourcing of raw materials, it would be a mammoth task involving years of planning.
Prevelo, founded in 2016, has weathered tariff-related crises before during Trump’s first term. When imported steel and aluminum saw tariffs of 25% and 10%, respectively, small businesses like Prevelo were caught by surprise. This rushed move left many scrambling to place orders before the tariff kicked in, causing havoc in the global supply chain.
Rheuban points to the need for a reevaluation of the de minimis exemption as a priority. This exemption allows products valued $800 or less to be imported duty-free, a loophole that Chinese companies have capitalized on. Rheuban argues that this creates inequality, placing American businesses at a disadvantage as Chinese companies can flood the market with cheap goods.
Trump’s Tariffs – A Hidden Tax on American Families
There is widespread agreement among economists that the tariffs are not a foreign tax but rather a tax on the American people. Vice President Kamala Harris predicts that these proposed measures would cost every American family nearly $4,000 extra annually. Despite this glaring issue, Trump continues to promote his tariffs as part of his plan to protect American interests.
There is growing concern among businesses and consumers about the potential fallout of the imposed tariffs. The impact can resonate through multiple industries, hit small businesses hard, and eventually create a financial strain on American families. As the world watches how this policy unfolds, American consumers and businesses hope for a balanced and fair approach to international trade.