From holding back investments to considering moving abroad, businesses in the US are bracing for more economic turbulence as the presidential campaign kicks into high gear — with fresh tariffs rolled out and promises of more.
Republican candidate Donald Trump has proposed at least a 10 percent tariff on imports and up to 60 percent on Chinese goods, intensifying levies he previously imposed on Beijing and others.
US Vice President and Democratic nominee Kamala Harris, meanwhile, serves an administration that largely maintained Trump’s tariffs and last month finalized further hikes on US$18 billion of Chinese products.
Photo: David Ryder, Bloomber
For Robert Actis, whose manufacturing business has been caught in the tariff maelstrom, the future has looked “clouded” over the past five years.
Under Trump, he faced tariffs on steel and aluminum and has struggled to find alternative suppliers for raw materials not produced in the country.
Fresh measures on the materials by US President Joe Biden’s administration have added to his woes.
“I would be very happy to buy from a US producer,” said Actis, who imports wires to make stucco netting used in construction, “but there’s no one willing to do it.”
He has previously been granted tariff exemptions, but the annual applications are not always successful.
Additional costs are gradually being passed to homebuilders, he said.
US tariffs weigh on many industries. The American Apparel & Footwear Association (AAFA) estimates retail prices have risen five percent to 10 percent annually since 2020.
“Initially, our members tried to eat some of those costs by eating into their profits,” AAFA senior vice president for policy Nate Herman said.
But this has been tough.
It is unclear that tariffs on China have returned production to the US, as Trump argues, and at least 14 US textile mills have closed in recent years, Herman told AFP.
Products like certain acrylic sweaters are not produced domestically either, requiring new machinery and trained workers, he said.
“The average age in domestic factories has gone into the 50s because we just can’t find workers willing to work in those factories,” Herman said.
“For a small company like us, it’s millions of dollars” in added costs, said Ray Sharrah, CEO of lighting products maker Streamlight Inc.
“We pay for it, our exporter helps, and ultimately the consumer (pays),” he said. “This is the problem with any tariff.”
Uncertainty looms as the US presidential election approaches, but businesses prefer predictability.
A survey last month involving the Richmond and Atlanta Federal Reserve banks found that 30 percent of firms reported postponing, scaling down, delaying or canceling investment plans due to election uncertainty.
“It stops you from action. It stops you from investment, and it just generally creates a dampening effect on all economic development,” Sharrah said.
With business partners, he has been trying to bring production of a major component back into the country — but to no avail.
“When we spend time reshuffling the supply chain deck, that’s time we don’t spend growing our business,” he said.
AAFA’s Herman added that companies have been trying to find alternative sources but “with mixed results.”
He believes businesses will ramp up imports ahead of expected tariff hikes, as happened in 2018 when Trump engaged in a trade war with Beijing.
“But again, if there’s a global tariff imposed, then where do you go?” Herman said.
Businesses expect tariffs to stay no matter who wins the election.
“If anything, it’s probably going to go up,” Actis said, adding that he has considered moving his business abroad.
But he believes it is hard to predict what a candidate like Trump might do, saying, “A lot of it is bombast.”
Colonial Metal Products Inc president Will Thomas said there is little businesses can do besides importing from diverse sources.
“It seems that the presidential candidates want to say things that invoke emotion,” he said.
“However, if all these products aren’t there, and you keep increasing the cost of the products, what happens? The costs go up, it’s inflation.”
At auto accessories importer Trim Illusion Inc, president Colby McLaughlin is considering scaling up his business to boost margins.
As a voter, he is torn between perspectives as a business owner and a citizen.
“I’m not against a tariff, as long as there is a plan or support to help these companies bring the manufacturing back,” he said.
“For me, that’s the piece that I haven’t heard.”
EARLY TALKS: Measures under consideration include convincing allies to match US curbs, further restricting exports of AI chips or GPUs, and blocking Chinese investments US President Donald Trump’s administration is sketching out tougher versions of US semiconductor curbs and pressuring key allies to escalate their restrictions on China’s chip industry, an early indication the new US president plans to expand efforts that began under former US president Joe Biden to limit Beijing’s technological prowess. Trump officials recently met with their Japanese and Dutch counterparts about restricting Tokyo Electron Ltd and ASML Holding NV engineers from maintaining semiconductor gear in China, people familiar with the matter said. The aim, which was also a priority for Biden, is to see key allies match China curbs the US
The popular Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) arbitrage trade might soon see a change in dynamics that could affect the trading of the US listing versus the local one. And for anyone who wants to monetize the elevated premium, Goldman Sachs Group Inc highlights potential trades. A note from the bank’s sales desk published on Friday said that demand for TSMC’s Taipei-traded stock could rise as Taiwan’s regulator is considering an amendment to local exchange-traded funds’ (ETFs) ownership. The changes, which could come in the first half of this year, could push up the current 30 percent single-stock weight limit
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
‘SACRED MOUNTAIN’: The chipmaker can form joint ventures abroad, except in China, but like other firms, it needs government approval for large investments Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) needs government permission for any overseas joint ventures (JVs), but there are no restrictions on making the most advanced chips overseas other than for China, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. US media have said that TSMC, the world’s largest contract chipmaker and a major supplier to companies such as Apple Inc and Nvidia Corp, has been in talks for a stake in Intel Corp. Neither company has confirmed the talks, but US President Donald Trump has accused Taiwan of taking away the US’ semiconductor business and said he wants the industry back
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