Trump’s tariff: Entrepreneurs talk about “late days” and that manufacturing in the United States is a “joke” | economy

Rick Woldenberg believed that he had made an unimaginable plan to protect his company from Chicago’s educational games from President Donald Trump’s new prices on Chinese imports.

“When an average of 20 % was announced, I developed a 40 % survival plan, and I thought I was very smart,” said Woldenburg, CEO of Resources Learning, a third family company manufactured in China four decades ago. “I thought that with a very modest increase in prices, we can afford 40 %, which has already been unimaginable in costs.”

But the worst scenario was not bad enough. Not to conclude.

The US President quickly increased the bet with China, raising the rate to 54 % to compensate for what he said is unfair commercial practices in China. Then, angry when the Asian country took revenge on its own tariff, increased rates to 145 % impressive.

Walldenberg estimates that this will make learning account resources from $ 2.3 million last year to $ 100.2 million by 2025. “I wanted to get $ 100 million.” “I swear to God, without exaggeration: it seems to be the end of days.”

Addicted to low -cost Chinese products

It may be, at least, the end of the era of cheap consumer goods in the United States. For four decades – especially since China joined the World Trade Organization in 2001 – Americans relied on Chinese factories to everything from smartphones to Christmas ornaments.

With the increasing tensions between the largest economy – and geopolitical competitors – in the world in the past decade, Mexico and Canada have overcome China as major sources of goods and services imported in the United States. But China is still No. 3 – and the second, behind Mexico only, when it comes to commodities only – and continues to control many categories.

China produces 97 % of children imported from the United States, 96 % of flowers and artificial umbrellas, 95 % of fireworks, 93 % of children’s coloring books and 90 % of combs, according to the Macquarie Investment Bank report.

Over the years, American companies have created supply chains that depend on thousands of Chinese factories. Low prices facilitated the operation of the system. Until January 2018, the US tariff for Chinese products reached a little more than 3 %, according to Chad Bonn from the Peterson International Economy Institute.

“American consumers have created China,” said Joe Gurken, founder of the ABC Group in Milwoki, who helps us to manage supply chains in Asia. “American buyers, and consumers were addicted to low prices. Brands and retailers were addicted to ease of purchase from China.”

Slower growth and higher prices

Now, Trump, manufacturers’ demand to reproduce to the United States exercise a hammer from definitions against American importers and Chinese factories on which they are relied upon.

“The consequences of definitions on this scale can be horrific at many levels,” said David French, First Vice President of Government Affairs at the National Retamentable Corporation.

The Yale University budget laboratory estimates that Trump’s prices have announced worldwide to take office to reduce US economic growth by 1.1 percentage points by 2025.

Definitions will make prices rise. Consumer morale research at the University of Michigan, which was released on Friday, showed that the Americans expect the long -term inflation to reach 4.4 %, compared to 4.1 % last month.

“The inflation is rising in the United States,” said Stephen Roche, former Murghan Stanley’s former president and center at Yale Law Center. “Consumers have already realized this.”

No work can work with uncertainty

On Wednesday, the White House said that the customs duties revolving around China would reach 125 %. The next day, it was corrected: No, the definitions will be 145 %, including 20 % previously announced to pressure China to do more to contain the American fentian flow.

China, in turn, imposed a 125 % tariff on the United States, starting on Saturday, 12.

“There is a lot of uncertainty,” said Ishaq Larian, founder of MGA Entertainment, who makes LOL and Bratz dolls. “No work can work with uncertainty.”

Your company gets 65 % of its Chinese factories – a slide that tries to reduce it to 40 % by the end of the year. MGA also manufactures India, Vietnam and Indonesia, but Trump threatens to impose a heavy tariff on these countries as well, after postponing 90 days.

Larayan estimates that the price of Bratz dolls can rise from $ 15 to $ 40, and the value of LOL dolls can double, and up to $ 20, until the concert season for this year.

Even your small brand, which is manufactured in Ohio, is not immune. Little TIKES depends on screws and other pieces of China. Larayan estimates that the price of gaming carts can rise to $ 90 compared to the current proposed price of $ 65.

He said that MGA is likely to reduce the fourth quarter requests, because it fears the highest prices to pay consumers to pay consumers.

Cancel production plans in China

Mark Rosenberg, founder and director of EDGE Desk in Derfield, Illinois, has invested millions of his own pockets to develop comfortable chairs worth $ 1,000, whose production will start in China next month.

Now it is postponing production while exploring the markets outside the United States – including Germany and Italy – where his chairs have not faced three tariffs by Trump. He said he wants to notice how the situation will be revealed.

It even brought ways to make chairs in the United States and held talks with potential suppliers in Michigan, but the costs will be 25 % higher to 30 %.

“They had no skilled work to do this kind of things, and they did not want to do this,” said Rosenberg.

Chinese imports become useless

Woldenberg in Vernon Hills, Illinois in the family since 1916. His grandfather was established as a laboratory supplier, and over the years it has evolved until it became educational resources.

The company specializes in educational games, such as Botley: The Coding Robot and Kanoodle Pubishing. It employs about 500 people – 90 % in the United States – and manufacture about 2,400 products in China.

Woldenberg is surprised by the size and speed of the Trump tariff.

“The products I do in China, about 60 % of what I have produced, are not overnight,” he said. “In a moment, in a group of fingers, it is destroyed.”

He described Trump’s attractiveness to factories to return to the United States as a “joke”.

“I was looking for American manufacturers for a long time … and I did not find any company it could.”

The definitions, unless they were reduced or eliminated, were subjected to thousands of Chinese suppliers, and expected Woldenberg.

He said this means a catastrophe for companies like him, which has installed expensive tools and templates on Chinese factories. They risk losing the base of production not only, but also their tools, which may end in bankruptcy in China.

Learning resources have about 10,000 molds, with a total weight of more than 2.2 thousand tons in China.

“It is not as if I had arrived in a back bag, and closed the zipper and walking,” Woldenberg said. “There is no inactive industrial axis, fully equipped, full of engineers and qualified people, in the hope that I will appear with 10,000 molds to manufacture 2000 products.”