For Klem’s, a general store in rural Massachusetts, each year has seemed more challenging than the last.
First, there was the pandemic, then a global supply chain breakdown that left the store short of lawn mowers and shoes. Next, a spate of inflation raided American pocketbooks. All along, Amazon continued to pull customers away from brick and mortar stores like Klem’s.
Now Jessica Bettencourt, Klem’s owner, says she is facing a new challenge that has left her wondering if the store — which was started by her grandparents in 1949 — will survive. The sweeping tariffs that President-elect Donald J. Trump has promised to impose could raise the price of foreign-made products and cut into her business’s already slim profits, she says.
“A huge tariff increase would potentially decimate us,” she said. “A retail store like mine has slim margins to begin with.” It wouldn’t take a whole lot before “all of a sudden, those slim little pennies that you might make are gone,” she said.
Mr. Trump comes into office having floated a wide variety of tariff plans. He has proposed a universal tariff on nearly all imports, plus levies ranging from 10 to 200 percent on products from China, Canada, Mexico, the European Union and elsewhere.
Mr. Trump has promised to use tariffs for multiple goals: cajoling companies to make their products in the United States, funding tax cuts, persuading other countries to stem the flows of drugs and migrants and even forcing Denmark to cede Greenland to the United States.
Everett Eissenstat, a former Trump administration official and a partner at the law firm Squire Patton Boggs, said Mr. Trump was intent on following through on his campaign promises, including some form of tariffs. “The president keeps saying, ‘I’m going to do this,’” Mr. Eissenstat said.
But it’s not clear precisely which tariff plans he will pursue and when, adding a huge amount of uncertainty and concern at a moment when some retailers are already seeing consumers pull back after years of high inflation.
While the U.S. economy remains strong, there are worries that further price increases from tariffs could drag on consumer spending and growth going forward.
At a retail conference in Manhattan this past week, 40,000 attendees from more than 120 countries shared insights on new products and services in the retail sector. Some commiserated about the uncertainty that the tariff plans had created for their businesses and the economy.
Speaking from the conference, Sarah Wolfe, a senior economist at Morgan Stanley, said tariffs were the “biggest wild card” for retailers.
While the fundamentals of the economy were healthy, “we have significant wild cards across tariff policy, inflation, deregulation,” she said. “The timing, the cadence, the magnitude of these policies are very unknown, so it leaves the door open to a lot of different possibilities.”
Tiffany Zarfas Williams, a third-generation owner of a luggage store in Lubbock, Texas, who was attending the conference, said that her store had been hit hard by the tariffs that Mr. Trump imposed on Chinese products during his first term and that she was bracing for more pain.
“I understand the need for strategic trade policy with China,” she said. “But at the same time, why does my industry have to have so much of an impact?”
Ms. Williams said she would stock up on more products ahead of any tariffs, but she wasn’t sure how strong future sales would be.
“How do you plan when you have so much uncertainty?” she added.
A tariff is a charge imposed on a foreign product when it is brought into the United States. By raising the cost of a foreign good, it is intended to make products produced in other places — whether in the United States or in countries not subject to tariffs — more attractive to buyers.
While Mr. Trump insists foreign countries pay tariffs, it’s actually the company importing the product that pays the tariff. And economists say that cost is often passed on to American consumers in the form of higher prices.
Some U.S. manufacturers support the tariffs. Zach Mottl, the president of Atlas Tool Works, a tool and die manufacturer in Lyons, Ill., said broad tariffs on imports from most of the world would help U.S. factories.
“President Trump’s universal tariff plan would deliver substantial benefits to our nation’s industrial capacity, spurring domestic job creation and expansion in critical sectors,” he said.
But tariffs would probably weigh on retailers like Ms. Bettencourt, who carries 75,000 items in her store, ranging from lawn mowers, chain saws, paint and barbecue sauce, to tropical fish, live reptiles, cookware and baby Carhartt overalls.
She said she tries to buy American-made products where she can, but that is not always feasible for her and her customers. For example, she sells U.S.-made work boots, but they retail for $350 to $400, compared with $150 to $250 for those made outside the United States.
Makers of lawn mowers and snow blowers, which are typically imported from China, have already told Ms. Bettencourt that they would pass on costs from tariffs, she said. Some suppliers said that no additional costs would be added to products ordered in January, but after that, all bets were off.
“None of us really know what’s going to happen,” Ms. Bettencourt said. “It’s really hard to try and prepare or plan for that big, giant unknown.”
Analysts say that some of Mr. Trump’s tariff threats could merely be a negotiating tactic, aimed at persuading foreign countries to make concessions, and that they may not actually go into effect.
But Mr. Trump also views tariffs as a powerful tool to change global trade patterns and a valuable source of revenue to offset the cost of tax cuts. Accomplishing those goals would require tariffs that are broad-based, potentially hitting many different products and causing broader pain for importers.
Business groups have been pleading with Mr. Trump to rethink his tariff plans. On Thursday, Suzanne P. Clark, the president of the U.S. Chamber of Commerce, said in a speech that “broad and indiscriminate use” of tariffs “would stifle growth at the worst possible time.”
“Blanket tariffs would worsen the cost-of-living crisis, forcing Americans to pay even more for daily essentials like groceries, gas, furniture, appliances and clothing, and retaliation by our trading partners will hit our farmers and manufacturers hard, with ripple effects across the economy,” Ms. Clark said.
In a post-election survey by the Conference Board, more than 40 percent of 1,722 corporate executives surveyed said trade wars were the geopolitical issue that most concerned them. A third said they were seeking to diversify their supply chains.
Economists and retail experts say that some businesses have been importing more products before any tariffs go into effect. But it’s costly for retailers to hold inventory in backrooms and warehouses, and higher interest rates have left businesses with less available capital to spare.
Beth Aberg, the owner of two home furnishing stores near Washington, D.C., said that retailers were “scrambling to place orders now” to avoid tariffs, but if they guessed wrong about what consumers would want to buy in the future, they could be stuck holding too much inventory.
“There’s only so much we can afford to be sitting on, without knowing where this is all going to go in general with this administration,” she said.
Some companies are looking at further moving supply chains out of China out of concern that Mr. Trump will once again hit Chinese goods with levies. In November, Steve Madden, the shoe brand, said it would slash its imports from China by as much as 45 percent next year in preparation for more tariffs.
But some retailers say that the industries that could easily move out of China have already done so, and that businesses that relocate their factories to other countries, like Vietnam and Mexico, could still find themselves vulnerable.
Michael Coleman, an executive at a fireworks retailer who was walking through the exhibit hall at the retail convention, said that many of the fireworks his company sold were only made in China.
“I would say the number of things you can only get from China is probably larger than most people think,” he said.
For now, he said, retailers were “just waiting” to see if the president’s tariffs materialized. If they did, retailers would deal with it, as they had with the many economic challenges of the past few years.
“We’re hopeful that it won’t come to fruition, but if it does, we’ll adapt with everybody else,” Mr. Coleman said.
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