Washington – Craig Carrel’s company, which manufactures components for the auto industry, has been hit hard by President Donald Trump’s tariff increases.
The president and owner of Team 1 Plastics in Albion said his products were frequently taxed multiple times as assemblies crossed borders before reaching automakers.
âWhen we see a 15-20% cost increase, we don’t have enough headroom to absorb that,â said Carrel, who now adds a 20% price estimate in quotes for some products âbecause we have been burned at one point with this. ”
As the Trump administration imposes tariffs on everything from foreign steel and aluminum to thousands of Chinese products and materials, it has created an uncertain business environment for small Michigan manufacturers, who worry about the impact on their results.
“It ruined the job,” said Tom Zimmerman, president of Spectrum Automation in Livonia, which builds parts feeding and handling machines used by automakers and other industries.
Trump tried to allay fears that the trade war could wreak havoc on the US economy, even as he decided last week to defer additional tariffs of 10% on certain products until December 15. from China, including video game consoles, laptops, toys, shoes and clothing.
“We are only doing this for the Christmas season, just in case some tariffs might have an impact,” the president said on Sunday.
He said he could push the stock market up if he struck a bad deal with China “but it wouldn’t be the right thing to do.”
âI’m just not ready to make a deal just yet,â Trump said. âChina would like to make a deal. I’m not ready.”
All the blows between the two nations have led to a new level of uncertainty, Carrel said.
âAs a business owner you live with some uncertainty anyway, especially in the auto industry,â he said. âBut some of these tariffs were implemented quite quickly, so you don’t have a year to adjust. This adds another level of complexity in an already complex environment. ”
Zimmerman said the initial shock from the first round of steel and aluminum tariffs had dissipated somewhat for most companies, but said the levies still affected his business a year later.
âI remember when the president first announced his tariffs, our main steel supplier sent a notice of the 7% increase,â he said.
Zimmerman said he was wary of additional fares, but learned the importance of being nimble.
âAs a small business owner, all you have to do is stay flexible,â he said. “There’s a lot of activity going on. I can’t say how much of that is attributable to the president, but I really see it slowing down. It definitely keeps everyone on their toes.”
Emily Carlson, spokeswoman for the National Federation of Independent Businesses, which advocates for owners of independent small businesses, said the Trump administration should be careful not to put too much pressure on small businesses with additional tariffs.
“As the debate continues,” she said, “it is important for leaders to recognize that while a policy won’t work for small businesses, it won’t work for the economy in general.”
Carlson cited a June survey of NFIB members showing that 30% of small business owners said recent changes in China’s trade policy were hurting their businesses. She said that in June, the number of small businesses that said they had raised their selling prices increased by seven points to 17%. In July, it fell by one point to 16%.
Charlie Chesbrough, senior economist and senior director of industry analysis for Cox Automotive, said the auto industry had “a bit of a hiatus” with the president’s announcement that he was delaying some Chinese tariffs until December.
But, he added, “the auto industry is still waiting for pins and needles” to see if the White House decides to impose 25% tariffs on cars and parts imported from Japan and China. the European Union. The United States has made trade deals that could protect imports from Canada, Mexico and South Korea, but Trump is expected to make a decision on models imported from other places in November.
“It is very possible that the president will say in November that he will give him another six months, or maybe he will impose tariffs of 25% on imports,” said Chesbrough.
He said automakers were already feeling the effects of tariffs on steel and aluminum. âIt adds a few hundred dollars to the cost of a vehicle,â he said, âand none of it is good for consumers.â
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 uses a section of federal law – Section 232 of the Trade Expansion Act of 1962 – to justify tariffs on imported cars by classifying them as threats to national security. This same law was used to levy taxes on foreign steel and aluminum.
âIf you thought steel and aluminum were bad, the 232 is potentially worse,â she said. “The industry is bracing for higher costs overall, and they face the threat of a recession. You’re going to see higher costs across the board no matter what.”