Trump's China tariffs are having a ‘massive impact' on small business
The drop in tariffs this month to 30 percent from 145 percent on most Chinese goods was a relief but in the way that a flood is better than a tsunami. 'Six weeks ago, 30 percent would have shocked the world and been appalling and hard to deal with — and it is now,' Ringer said.
Get Starting Point
A guide through the most important stories of the morning, delivered Monday through Friday.
Enter Email
Sign Up
The duties on Bivo's bottles are higher than 30 percent because of the material they're made from and how they are classified by trade officials. Bivo bottles that are not insulated are subject to tariffs that add up to 47 percent, and the rate for insulated bottles is 37 percent.
Advertisement
Trump has frequently said that foreign businesses that ship products to the United States pay the tariffs. But, in reality, importers like Bivo pay the duties to the federal government when goods arrive at a US port.
'It's still a massive impact to the cash, and it still requires reworking a whole new strategy,' Ringer said.
Advertisement
Bivo now estimated sales to be 30 percent lower than it had previously expected, in large part because many retailers, which buy around two-thirds of its bottles, are buying less outdoor gear as they try to navigate their way through economic uncertainty.
Trump's tariffs are weighing on businesses of all sizes. Walmart's CEO said this month that the giant retailer probably would not be able to 'absorb all the pressure' from the tariffs.
Bivo displayed their bottles from China in Richmond, Vt.
HILARY SWIFT/NYT
Tariffs pose even bigger risks to small businesses. They typically don't have the deep financial reserves needed to weather economic problems, the heft to demand lower prices from suppliers and the sway to lobby the government for exemptions from tariffs, said Ebehi Iyoha, an assistant professor at Harvard Business School.
'We should generally expect small businesses to be more vulnerable to trade shocks than large businesses,' Iyoha said.
The National Federation of Independent Business, an association that represents small businesses, regularly surveys its members about how their businesses are doing. In April, its members' expectations for future sales declined for the fourth month in a row. In a note accompanying the survey results, the federation said that millions of small businesses 'acquire imported goods as inputs to their operations and those supply chains are currently at risk.'
The United States imported goods worth $439 billion from China last year, and many businesses — including Bivo — say they cannot get their products anywhere else any time soon.
Things might have been a lot worse for Hamel and Ringer, who are married and live a few doors from Bivo's offices in Richmond, a trailhead town on the Winooski River.
Advertisement
Expecting strong demand for their bottles, they had imported roughly 50,000 from China days before Trump first imposed his tariffs this year. 'Dumb luck,' Ringer said.
But when tariffs climbed to 145 percent, Bivo had to effectively stop importing because it did not have the cash to pay the duties. But it had committed to buying 30,000 more bottles from Haers, its supplier in Yongkang, China.
Hamel, Ringer, and their six full-time employees snapped into survival mode.
Hamel went to Europe to see if the company could sell its bottles there, but she realized it would take too long to quickly sell many bottles there. During the trip, Hamel was at her lowest point since the tariffs were introduced. 'I still feel super optimistic we can make it through this,' she said from England, 'but I think it's going to be really freaking hard.'
Sam Noel received product from China in Richmond, Vt.
HILARY SWIFT/NYT
She did make some inroads. A German outdoor gear retailer said it would start selling Bivo's bottles, and Hamel found a warehouse in the Netherlands where the company could ship its bottles from China for distribution in Europe.
After Hamel returned home, Ringer went to China to plead for better terms from Haers. Though the supplier would not cut the cost of the bottles, it did give Ringer more time to pay for them, offering Bivo some financial breathing room.
Haers did not respond to a request for comment.
When he was in China, Ringer asked to see Bivo's products in the warehouse, which is something he has done before to check manufacturing quality. But this time, he had to clamber over pallets in the aisles to see the bottles. The warehouse was crammed full of goods that customers had delayed shipping to avoid paying the 145 percent tariffs.
Advertisement
On May 12, when Trump reduced tariffs on China for 90 days, Hamel and Ringer concluded that they could now afford to pay the tariffs on a small shipment — 7,624 of the 30,000 bottles they had promised to buy. They will pay $24,436 in duties on the shipment, compared with an estimated $3,645 at the rates that existed before Trump took office, according to their calculations.
Hamel and Ringer said they were not planning to increase prices on the bottles, which sell for $34 to $54. Bivo pays roughly $8 per bottle, before tariffs, and sells them to wholesalers for around $20.
Critics of tariffs say they hurt entrepreneurs such as Hamel and Ringer. The two had come up with the idea for a stainless-steel bottle for athletes in 2019 while cross-country skiing on Mount Hood in Oregon, after noticing most sports water bottles were invariably plastic. They have put $500,000 in personal savings into Bivo and used their house as collateral for a line of credit for the business.
Supporters of the tariffs, however, say China has subsidized many industries, including steel and aluminum mills, giving the country's manufacturers an unfair advantage over businesses elsewhere. Trump and his aides have exhorted American businesses to move production to the United States.
Bivo has considered making bottles in the United States but determined that would push up the cost of manufacturing to at least $50 each. Hamel and Ringer said that, without significant government support, many businesses would not be able to shift production to the United States.
Advertisement
'It's not laid out to set up US manufacturing,' Ringer said about Trump's tariff policy. 'It is only laid out to, in theory, punish China, when it's really also punishing US businesses.'
This article originally appeared in
.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNN
29 minutes ago
- CNN
US and China set to kick off fresh round of trade talks in London over intractable issues
A new round of trade negotiations between the United States and China is set to begin Monday in London as both sides try to preserve a fragile truce brokered last month. The fresh talks were announced last week after a long-anticipated phone call between US President Donald Trump and Chinese leader Xi Jinping, which appeared to ease tensions that erupted over the past month following a surprise agreement in Geneva. In May, the two sides agreed to drastically roll back tariffs on each other's goods for an initial 90-day period. The mood was upbeat. However, sentiment soured quickly over two major sticking points: China's control over so-called rare earths minerals and its access to semiconductor technology originating from the US. Beijing's exports of rare earths and their related magnets are expected to take center stage at the London meeting. But experts say Beijing is unlikely to give up its strategic grip over the essential minerals, which are needed in a wide range of electronics, vehicles and defense systems. 'China's control over rare earth supply has become a calibrated yet assertive tool for strategic influence,' Robin Xing, Morgan Stanley's chief China economist, wrote in a Monday research note. 'Its near-monopoly of the supply chain means rare earths will remain a significant bargaining chip in trade negotiations.' Since the talks in Geneva, Trump has accused Beijing of effectively blocking the export of rare earths, announcing additional chip curbs and threatening to revoke the US visas of Chinese students. The moves have provoked backlash from China, which views Washington's decisions as reneging on its trade promises. All eyes will be on whether both sides can come to a consensus in London on issues of fundamental importance. US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will meet a Chinese delegation led by Vice Premier He Lifeng. On Saturday, Beijing appeared to send conciliatory signals. A spokesperson for China's Commerce Ministry, which oversees the export controls, said it had 'approved a certain number of compliant applications.' 'China is willing to further enhance communication and dialogue with relevant countries regarding export controls to facilitate compliant trade,' the spokesperson said. Kevin Hassett, head of the National Economic Council at the White House, told CBS's Face the Nation on Sunday that the US side would be looking to restore the flow of rare earth minerals. 'Those exports of critical minerals have been getting released at a rate that is higher than it was, but not as high as we believe we agreed to in Geneva,' he said, adding that he is 'very comfortable' with a trade deal being made after the talks. In April, as tit-for-tat trade tension between the two countries escalated, China imposed a new licensing regime on seven rare earth minerals and several magnets, requiring exporters to seek approvals for each shipment and submit documentation to verify the intended end use of these materials. Following the trade truce negotiated in Geneva, the Trump administration expected China to lift restrictions on those minerals. But Beijing's apparent slow-walking of approvals triggered deep frustration within the White House, CNN reported last month. Rare earths are a group of 17 elements that are more abundant than gold and can be found in many countries, including the United States. But they're difficult, costly and environmentally polluting to extract and process. China controls 90% of global rare earth processing. Experts say it's possible that Beijing may seek to use its leverage over rare earths to get Washington to ease its own export controls aimed at blocking China's access to advanced US semiconductors and related technologies. The American Chamber of Commerce in China said on Friday that some Chinese suppliers of American companies have received six-month export licenses. Reuters also reported that suppliers of major American carmakers – including General Motors, Ford and Jeep-maker Stellantis – were granted temporary export licenses for a period of up to six months. While China may step up the pace of license approvals to cool the diplomatic temperature, global access to Chinese rare earth minerals will likely remain more restricted than it was before April, according to a Friday research note by Leah Fahy, a China economist and other experts at Capital Economics, a London-based consultancy. 'Beijing had become more assertive in its use of export controls as tools to protect and cement its global position in strategic sectors, even before Trump hiked China tariffs this year,' the note said. As China tackles a tariff war with the US head on, it's clear that it is continuing to cause economic pain at home. Trade data released Monday painted a gloomy picture for the country's export-reliant economy. Its overall overseas shipments rose by just 4.8% in May compared to the same month a year earlier, according to data released by China's General Administration of Customs. It was a sharp slowdown from the 8.1% recorded in April, and lower than the estimate of 5.0% export growth from a Reuters poll of economists. Its exports to the US suffered a steep decline of 34.5%. The sharp monthly fall widened from a 21% drop in April and came despite the trade truce announced on May 12 that brought American tariffs on Chinese goods down from 145% to 30%. Still, Lü Daliang, a spokesperson for the customs department, talked up China's economic strength, telling the state-run media Xinhua that China's goods trade has demonstrated 'resilience in the face of external challenges.' Meanwhile, deflationary pressures continue to stalk the world's second-largest economy, according to data released separately on Monday by the National Bureau of Statistics (NBS). In May, China's Consumer Price Index (CPI), a benchmark for measuring inflation, dropped 0.1% compared to the same month last year. Factory-gate deflation, measured by the Producer Price Index (PPI), worsened with a 3.3% decrease in May from a year earlier. Last month's drop marks the sharpest year-on-year contraction in 22 months, according to NBS data. Dong Lijuan, chief statistician at the NBS, attributed the decline in producer prices, which measures the average change in prices received by producers of goods and services, to a drop in global oil and gas prices, as well as the decrease in prices for coal and other raw materials due to low cyclical demand. The high base of last year was cited as another reason for the decline, Dong said in a statement. CNN's Hassan Tayir, Simone McCarthy, Fred He contributed reporting.
Yahoo
31 minutes ago
- Yahoo
NATO chief Rutte calls for 400% increase in the alliance's air and missile defense
LONDON (AP) — NATO members need to increase their air and missile defenses by 400% to counter the threat from Russia, the head of the military alliance plans to say on Monday. Secretary-General Mark Rutte will say during a visit to London that NATO must take a 'quantum leap in our collective defense' to face growing instability and threats, according to extracts released by NATO before Rutte's speech. Rutte is due to meet U.K. Prime Minister Keir Starmer at 10 Downing St. ahead of a NATO summit in the Netherlands where the 32-nation alliance is likely to commit to a big hike in military spending. Like other NATO members, the U.K. has been reassessing its defense spending since Russia's full-scale invasion of Ukraine in February 2022. Starmer has pledged to increase British defense spending to 2.5% of gross domestic product by 2027 and to 3% by 2034. Rutte has proposed a target of 3.5% of economic output on military spending and another 1.5% on 'defense-related expenditure' such as roads, bridges, airfields and sea ports. He said last week he is confident the alliance will agree to the target at its summit in The Hague on June 24-25. At the moment, 22 of the 32 member countries meet or exceed NATO's current 2% target. The new target would meet a demand by President Donald Trump that member states spend 5% of gross domestic product on defense. Trump has long questioned the value of NATO and complained that the U.S. provides security to European countries that don't contribute enough. Rutte plans to say in a speech at the Chatham House think tank in London that NATO needs thousands more armored vehicles and millions more artillery shells, as well as a 400% increase in air and missile defense. 'We see in Ukraine how Russia delivers terror from above, so we will strengthen the shield that protects our skies,' he plans to say. 'Wishful thinking will not keep us safe. We cannot dream away the danger. Hope is not a strategy. So NATO has to become a stronger, fairer and more lethal alliance.' European NATO members, led by the U.K. and France, have scrambled to coordinate their defense posture as Trump transforms American foreign policy, seemingly sidelining Europe as he looks to end the war in Ukraine. Last week the U.K. government said it would build new nuclear-powered attack submarines, prepare its army to fight a war in Europe and become 'a battle-ready, armor-clad nation.' The plans represent the most sweeping changes to British defenses since the collapse of the Soviet Union more than three decades ago.
Yahoo
31 minutes ago
- Yahoo
China wants slimmer pigs
By Ella Cao and Lewis Jackson BEIJING (Reuters) -Chinese farmers and small firms have increasingly bought market-ready pigs from larger breeders and fattened them in a bet on higher prices, but the government is cracking down on the speculative practice to slim down hogs and stabilise the market. For small breeders, "refattening" or buying adult hogs from big producers and feeding them for an extra few months until they put on an extra 40-50kg is a way to gamble on pork prices rising. But analysts say regulators are concerned the bets fuel big price swings and squander feed, in the latter case clashing with a national push to cut grain use in livestock, especially as the trade war with the U.S. underscores a long-standing goal to reduce dependence on food imports. "It can lead to short-term shortages followed by a glut, driving big price swings and unsettling the market," said Pan Chenjun, senior animal protein analyst at Rabobank. "The government seems intent on stabilising pork prices, which remain weak, while protecting small farmers from losses and curbing speculative behaviour," Pan added. Muyuan Foods, China's top pig breeder, told state-run Beijing News in late May that it had halted sales to refatteners, after rumours of a policy meeting targeting the practice boosted pig firm stocks. A crackdown is already underway, according to a source directly familiar with the matter and two briefed by others involved, one of whom said Guangdong province in southern China is a particularly strict enforcer. The National Development and Reform Commission and Muyuan did not respond to Reuters' requests for comment. China, the world's biggest pork consumer, is grappling with weak demand and oversupply that have eroded margins. Cash hog prices have hovered around 14 yuan per kg since February, down from a peak of 21 yuan last August, according to MySteel data. Refattening boosts pork supply when the pigs hit the market and worsens price drops when the market is already falling, said Lin Guofa, senior analyst at Bric Agriculture Group, a consultancy. A 150-kg pig yields about 142% of the pork produced by a 115-kg pig, Lin added. Feed efficiency is also a concern as China looks to cut grain use in animal feed, especially with the trade war speeding its move away from the U.S. soybeans that mostly go into animal feed. Pigs are most efficient at around 120 kg - beyond that, they eat more but grow less, Pan said.
