More tariffs, more problems: $325B increase may be on the way
May 8, 2019
Another month, another round of tariffs. President Trump recently tweeted that these tariffs have been good for the US economy. So, there may be more to come. In the tweet, President Trump mentioned the addition of another 10%-25% tariff on China, adding another $325B to the already existing tariff load.
The President also made a point to mention the lack of impact on cost of goods for consumers, and loss of profits for US businesses resulting from tariffs, tweeting that “The Tariffs paid to the USA have had little impact on product cost, mostly borne by China.” Regardless of the validity of the President’s words, the recent announcement had an immediate impact on the stock market. After the tweet, the DOW plummeted 1.29%, and has since fallen 500 points, citing “tariff whiplash.”
According to the Wall Street Journal, “shares of companies exposed to China [are] among the biggest decliners” in the recent stock market fall.
Despite the economic and market impact, tariffs are throwing small business owners into uncertainty, regardless of the President’s thoughts on the matter. According to articles by CNN and NBC, tariffs aren’t just hurting the US economy largely, but are actively affecting business operations for people working with China.
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As well, the National Association for Business Economics recently held a survey that found about 75% of goods-producing businesses said that tariffs hurt their business. Of course, that’s not all businesses, and the effect on the price of goods for US consumers is difficult to measure. However, there’s a bigger story here that we’ve been following: the uncertainty fuelling small business’ worries and possible decline.
The effects of US-China tariffs are all but proven. Data here and there points to what the effect of rising tariffs should be, but the shoe has yet to drop for many. Some call this a good thing, and President Trump seems chief among them. No change is good, right? Wrong. The uncertainty surrounding tariff rise and the always-impending trade war with China has left small businesses scrambling, but not to fix what’s broken.
Instead, business owners are spending their precious time preparing themselves, their employees, and their firms for what could be, not what is. To be clear, this isn’t the same thing as sales or market projections. Looking to the future to figure out what you should be doing now is a good thing. It’s proactive, and the most successful companies do it. The problem is that this tariff planning isn’t proactive, it’s reactionary. Worse, businesses are reacting to something that hasn’t even happened yet.
They’re looking for ways to save, finding new markets and new vendors to work with, and in some cases, are moving operations out of the US entirely, according to The Heritage Foundation. Even keeping jobs in the US may cost consumers. According to the Washington Post, steel tariffs imposed on China cost consumers $900,000 for every job created.
Uncertainty is the bane of any business’ existence. No one can see the future, but traditionally, savvy businesses and their teams have tried and succeeded at planning for it. With the President’s impending trade war and tariffs going the way they are, that seems impossible.
The situation is similar to the Brexit debacle, where businesses remain uncertain of what is really going to happen come October.
Business uncertainty is a growing global phenomenon. The less business owners know, the more help they need. These are trends we need to follow, and act on to improve the present, and plan for the future.
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