Title : THE PLIGHT OF INDUSTRIES FACING TRUMP'S TARIFFS
link : THE PLIGHT OF INDUSTRIES FACING TRUMP'S TARIFFS
THE PLIGHT OF INDUSTRIES FACING TRUMP'S TARIFFS
I employ hundreds of
American workers. I’d hire
more if not for Trump’s
tariffs.
By: Arnold Kamler
The Washington Post
8 May 2019
American workers. I’d hire
more if not for Trump’s
tariffs.
By: Arnold Kamler
The Washington Post
8 May 2019
My family has been in the bicycle business since 1907, when my grandfather opened a bicycle-repair shop on New York’s Lower East Side. Eventually, in the 1950s, my father started a bicycle and bike accessories wholesaler, and today Kent International, Inc. is one of the largest suppliers of imported and American-made bicycles in the country. Over the generations, we’ve weathered all kinds of turns in the industry. But we’ve never dealt with anything like this: heavy tariffs on key commodities, announced with barely any notice.
Though the bulk of my business comes from imported bikes, I also own and operate a factory in Manning, S.C., which produces one of our lines, BCA Bikes. When we opened our doors in 2014, initially hiring 47 employees, we were bucking a trend: More than 95 percent of all bicycles sold in the United States are manufactured in China. But with high employee turnover and labor costs there rising, we decided to make an investment in our long-term growth. Today, our factory is responsible for more than half of the roughly 500,000 bicycles produced in the United States each year. Before President Trump’s trade war, we had plans to grow even further.
Almost all of our parts are made in China: Saving money on their manufacture has enabled us to hire American workers and offer them good wages and excellent health benefits. We were already paying duties of 4 to 10 percent when the Trump administration announced in June 2018 that it would impose an additional 10 percent tariff on $200 billion worth of Chinese goods. We couldn’t simply shift and buy from makers in other countries. Our Chinese partners have decades of experience making the parts we need. We source very carefully, and we can’t afford to gamble on quality or safety.
My company specializes in providing affordable bicycles, retailing for between $80 and $200 at outlets including Walmart, Amazon, and Academy Sports and Outdoors. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.) The new tariff raised our overall costs by 7.5 percent, which we were forced to pass on to our customers and, ultimately, to American consumers. Because it typically takes several months for large retailers to accept a price increase, we couldn’t offset our extra costs for much of our busiest shipping season, in late fall. When the holidays arrived, consumers were put off by the higher prices. Sales dropped, ending up 5 to 10 percent lower than our projections.
The administration’s abrupt policy shifts alone have caused damage. When Trump first threatened in September to increase tariffs to 25 percent, everyone — including our competitors — wanted to get their products to the United States before the levies took effect. Ocean freight companies lifted their prices dramatically. The administration eventually backed off, but we’d absorbed more than $1.5 million in additional freight costs, which we couldn’t recoup. Running a business requires adapting to adversity; these sudden changes came like a punch to the gut.
Then, last Sunday, Trump renewed his threat to increase tariffs to 25 percent in five days — a ridiculously short time frame that left us little time to react. The higher tariffs went into effect on Friday, after a last round of talks failed on Thursday night. I don’t belong to either political party, and I’ve voted for candidates from both. I understand very well that China has been cheating in all kinds of trade situations, from state subsidiesto cybertheft. But when the government levies tariffs, we Americans are the ones who end up paying. In fact, the U.S. economy suffered a net loss of $7.8 billion last year because of the trade war, according to a recent National Bureau of Economic Research study. Workers in Republican counties have shouldered most of those costs, mostly in the form of retaliatory tariffs against the agricultural sector.
The volatility caused by the trade war has thrown a wrench in my company’s domestic ambitions. Ever since our factory opened, I had planned to bring more phases of the manufacturing process home. We’d start by importing steel tubes and welding the bike frames ourselves; from there, we’d buy American steel and make the tubes. Our factory employs 125 people, but that could grow to 300, I thought: Eventually, we could build 1 million bicycles, right here in the United States. But Trump’s protectionist measures are getting in our way. We don’t plan to lay anyone off, but until the situation stabilizes and we have some clarity about our future, we’ll just continue buying bike frames from China.
The tariffs could last for a few months or take hold permanently. Trump could be dead serious, or this could be a heavy-handed negotiating ploy from which he’ll have to back down. There’s no way for us to know — we’ll just have to endure the upheaval. My company has created hundreds of good, steady jobs in South Carolina and at our headquarters in New Jersey, but, despite the president’s promises that he would help American companies grow, his sanctions are hurting us badly. These measures punish American businesses that have done nothing wrong. We play by the rules. Why does this administration keep changing them?
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