Michigan business owners say Trump's tariffs have 'mucked up the works'
Washington — Craig Carrel's company, which makes components for the auto industry, has been hit hard by President Donald Trump's expanding tariffs.
The president and owner of Team 1 Plastics in Albion said his products are frequently taxed multiple times as assemblies are shipped back and forth across borders before reaching carmakers.
“When we see a 15-20% increase in cost, there’s not enough margin for us to absorb that," said Carrel, who now tacks on a 20% tariff estimate in quotes for certain goods “because we got burned at one time with that."
As the Trump administration imposes duties on everything from foreign steel and aluminum, to thousands of Chinese products and materials, it has created an uncertain trade environment for small manufacturers in Michigan, who are concerned about the impact on their bottom lines.
"It has mucked up the works," said Tom Zimmerman, president of Spectrum Automation in Livonia, which builds parts-feeding and material-handling machines that are used by carmakers and other industries.
Trump has tried to calm fears about the trade war taking a toll on the U.S. economy, even as he moved last week to delay until Dec. 15 additional 10% tariffs on certain goods from China, including video game consoles, laptops, toys, shoes and clothing.
“We’re doing (it) just for Christmas season, just in case some of the tariffs could have an impact,” the president said Sunday.
He said he could make the stock market rise if he made a bad deal with China “but it wouldn’t be the right thing to do.”
“I’m just not ready to make a deal yet,” Trump said. “China would like to make a deal. I’m not ready.”
All the belly-bumping between the two nations has led to a new level of uncertainty, Carrel said.
"Being a business owner, you live with some uncertainty anyway, particularly in the auto industry," he said. "But some of these tariffs have been implemented fairly quickly, so you don’t have a year to adjust. It adds another level of complexity in an already complex environment.”
Zimmerman said the initial shock of the first round of steel and aluminum tariffs has worn off a bit for most of the business community, but he says the levies still affect his company a year later.
"I remember when the president first announced his tariffs, our main steel supplier sent out a notice of a 7% increase," he said.
Zimmerman said he is wary of further tariffs, but he has learned the importance of being nimble.
"As a small-business owner all you've got to do is stay flexible," he said. "There's a lot of activity going on. I can't tell how much of it is attributable to the president, but I definitely see things slowing down. It definitely keeps everyone on their toes."
Emily Carlson, a spokeswoman for the National Federation of Independent Business, which advocates for small and independent business owners, said the Trump administration should be wary of putting too much pressure on small businesses with additional tariffs.
"As the debate continues," she said, "it is important for leaders to recognize that if a policy won’t work for small businesses, it won’t work for the broader economy."
Carlson cited a June survey of NFIB members showing 30% of small-business owners reported that recent changes in China trading policy were hurting their businesses. She said that in June, the number of small businesses that reported raising their selling prices rose seven points to 17%. In July, it fell one point to 16%.
Charlie Chesbrough, senior economist and senior director of industry insights for Cox Automotive, said the auto industry got "a little bit of a reprieve" with the president's announcement that he is delaying some China tariffs until December.
But, he added, "the auto industry is still waiting on pins and needles" to see if the White House decides to impose 25% tariffs on imported cars and parts from Japan and the European Union. The U.S. has trade deals that could protect imports from Canada, Mexico and South Korea, but Trump is scheduled to make a decision on imported models from other places in November.
"It's very possible the president will say in November that he's going to give it another six months, or maybe he will impose a 25% tariffs on imports," Chesbrough said.
He said carmakers have already been feeling the pinch from steel and aluminum tariffs. "It's added a couple of hundred dollars to the cost of a vehicle," he said, "and none of that is good for consumers."
Kristin Dziczek, vice president of the Center for Automotive Research, a nonprofit research organization, said the threat of import tariffs far outweighs any relief automakers will get from Trump's recent delay in Chinese tariffs. The Trump administration is using a section of federal law — Section 232 of the Trade Expansion Act of 1962 — to justify tariffs on imported cars by classifying them as national security threats. That same law was used to levy taxes on foreign steel and aluminum.
"If you thought steel and aluminum were bad, 232 is potentially worse," she said. "The industry is bracing for higher cost overall, and they're dealing with the threat of a recession. You're going to see higher cost across the board, no matter what."