After months of delays, President Donald Trump’s “Liberation Day” tariffs went into effect this month. Americans have been bracing for increased prices on imported goods, while business owners are making tough decisions on where to source inventory, or to stop carrying items all together.
Facing uncertainty, economists are looking to history to clarify the picture of what’s to come. In a recent blog post, Max Dvorkin of the Federal Reserve Bank-St. Louis analyzed the impact of U.S. tariff increases on Chinese imports in 2018 and 2019.
In that case, the tariffs made a difference in both the budgets of consumers and business owners’ bottom line.
“There were different sets of Chinese goods. Some were machines used by businesses like aerospatial components. But then eventually came consumer goods, and the increases in tariffs were in the order of 25%,” he said. “The level of tariffs on some of these Chinese goods were low — 3% or so on average before [2018] and it affected roughly 50% of the imports from China at the time.”
Dvorkin told St. Louis on the Air that the Trump administration’s tariffs on imported goods have been more significant than years past.
“Here in the U.S. we source many different things from all over the world. For many years we enjoyed a level of tariffs that were very low. Firms, big and small, got used to and adjusted their suppliers to that reality. Now, things have changed,” he said. “Even for businesses that were not so directly exposed to the rest of the world, they may start being a bit more affected. For example, if you are a small business and have a fleet of trucks to deliver your products, if you need to buy or replace your trucks [then the cost] will be impacted.”
Shayn Prapaislip, chief operating officer for Global Foods Group, has been watching the prices of goods for his international grocery stores and restaurants since the reciprocal tariffs were announced in April. Now that some of those agreements have to fruition, he said he has a better idea of what’s to come for his businesses.
“We have some concrete numbers with our largest markets. It will be 15% for the EU, 19% for large blocks of Southeast Asia and 15% for Korea and Japan. That at least gives us something to work off of,” Prapaisilp said. “Before we were really just shooting in the dark about how much merchandise to carry. With the way [tariffs have] been handled, we’re not sure if this will change tomorrow or in six months. The big overarching question is China. We hope the parties can come to an agreement that will smooth things over and still make a lot of businesses still be able to operate.”
The Trump administration maintains that the tariffs bolster American products and manufacturing. But the business owners like Jade Moore are already facing difficult decisions. She said that she’s changing distributors and vendors for many of the products she sells in her metaphysics store, Sincerely, the Craft.
“We’re here to serve community and ensure that we’re not layering on the prices of tariffs [on customers]. 76% of what we sell come from small, indie businesses. About 20% of that was coming from local [vendors] and now it’s moved up to about 40%,” Moore said. “We’re intaking more local vendors and businesses… However, as much as I’d like to, I can't get Brazilian amethyst from Idaho. So, we’re going to have to import those types of things.”
For more on how St. Louis businesses are adjusting to reciprocal tariffs, listen to St. Louis on the Air on Apple Podcasts, Spotify, YouTube or click the play button below.
“St. Louis on the Air” brings you the stories of St. Louis and the people who live, work and create in our region. The show is produced by Miya Norfleet, Emily Woodbury, Danny Wicentowski, Elaine Cha and Alex Heuer. Darrious Varner is our production assistant. The audio engineer is Aaron Doerr.
