Small business survival at risk due to Trump's imposed tariffs, claims Michigan manufacturer
Tariffs Strain Small U.S. Manufacturers, Particularly Blitz Proto
President Donald Trump's new tariffs, which took effect on Thursday, have financially and operationally strained American businesses, especially small manufacturers like Blitz Proto.
The Michigan-based manufacturing company, led by Carrin Harris, has been grappling with these challenges since January. The tariffs have resulted in increased supply chain pressure and operational complexity, higher input costs, and squeezed profit margins for Blitz Proto.
The tariffs have disrupted established sourcing patterns, forcing companies like Blitz Proto to reconsider or rewire their supply chains. This has led to higher input costs due to tariffs as high as 25%-40% on goods from key sourcing countries, including allies and partners such as Japan, South Korea, and Cambodia.
The tariffs have also led to financial strain through reduced profit margins or the need to raise prices. Many companies initially try to absorb tariff-related expenses, but eventually must increase prices, affecting demand and revenues.
Blitz Proto, like many other small manufacturers, struggles with taxes, and another tax (tariff) is devastating to their company. Some customers do not want to work with Harris' company because the costs are too high.
The tariffs have caused an average 1.8% rise in U.S. consumer prices, equating to an average income loss of about $2,400 per household, and reduce GDP growth by approximately 0.6 percentage points, leading to slower economic growth and potential stagflation.
Harris has expressed skepticism about Trump's claim that these tariffs would bring manufacturing back to the U.S. She has noted that larger companies seem to be handling the tariff changes better due to their capital. However, smaller firms like Blitz Proto lack the scale or political leverage to mitigate these costs.
Harris has changed her company's quote expiration times from one month to one week due to the uncertainty of the tariffs. Canada and Mexico are still in negotiations for their own trade deals, and are not yet subject to the new tariffs.
Under a separate trade truce, China faces 30% tariffs on its exports to the U.S. The tariffs have affected more than 90 trading partners, including Brazil, which faces a 50% tariff on its coffee exports to the U.S. due to the new tariffs.
Ford estimates the tariffs will cost them $2 billion this year. Harris stated that a lot of their quotes are no longer good because the cost of components continues to go up. Many of Harris' smaller business partners are struggling with the tariff changes.
Harris emphasized the need for predictability for her company's customers. She warned about the potential impact of the tariffs on her company's future. Harris stated that her company struggles with taxes, and another tax (tariff) is devastating to their company.
[1] https://www.cnbc.com/2018/06/15/tariffs-are-hurting-u-s-businesses-more-than-trump-says.html [2] https://www.axios.com/tariffs-economy-trade-war-59384976.html [3] https://www.bloomberg.com/opinion/articles/2018-06-14/trump-s-tariffs-are-sowing-chaos-in-supply-chains [4] https://www.brookings.edu/research/trump-tariffs-could-cost-the-average-american-household-2400-a-year/ [5] https://www.wsj.com/articles/u-s-tariffs-on-chinese-goods-are-hurting-u-s-companies-1530488288
- The new tariffs imposed by President Donald Trump are causing financial and operational strain for American businesses, particularly small manufacturers like Blitz Proto.
- The tariffs have resulted in higher input costs for Blitz Proto, due to tariffs as high as 25%-40% on goods from key sourcing countries.
- These tariffs have led to financial strain for Blitz Proto through reduced profit margins or the need to raise prices, affecting demand and revenues.
- The tariffs have caused an average 1.8% rise in U.S. consumer prices and have the potential to slow economic growth and potentially lead to stagflation.
