[Source/Observer Network Xiong Chaoyi] While US President Trump's "tariff stick" is being wielded indiscriminately against many trading partners, National Public Radio (NPR) reported on April 7 that many American shopkeepers are also becoming collateral damage in the global trade war. Between tariffs and survival, these business owners are calculating a grim economic equation.

One business owner stated that since Trump returned to the White House on January 20th of this year, her goods have been hit by two rounds of 10% tariff increases, resulting in an additional $15,000 in costs. As "reciprocal tariffs" have raised total US tariffs on Chinese imports to 54%, her business is facing a crisis, and her company may go bankrupt.

Although Trump claims that tariffs can revitalize American manufacturing and encourage more companies to bring procurement back to the United States, many business owners use their personal experiences to point out that they have already tried, but it simply doesn't work—American manufacturers cannot meet the order volumes of these stores, and raw materials still depend on imports from China.

A business owner who sells double-click hair clips admitted that she has tried to produce in the U.S. for eight years, but all American manufacturers told her she should continue producing in China because production costs are three to four times higher domestically. Faced with current heavy tariffs, another store owner lamented, small business owners like to make their own decisions and bear their own profits and losses, but Trump's tariff war has taken away this autonomy.

Small business owners across the United States are calculating how to handle the higher costs brought by import tariffs. NPR

Trump's two rounds of tariffs against China have made her pay an extra $15,000 this year.

Sarah Wells (Sarah Wells) has been in the baby product sales business for 13 years. Under Trump's new tariffs on all imported goods, she is considering how to operate her business.

This year alone, Wells' company has faced two rounds of tariff impacts, and both rounds took effect when her goods were being shipped from China to the United States.

In February, when Trump raised the tariff on Chinese imports by 10%, her bulk orders were already at the port. When the cargo ships docked in March, the tariff increased by another 10%. To get customs clearance, Wells had to pay an additional $15,000.

Now, with Trump issuing another round of "reciprocal tariffs," the total tariff on US imports from China has risen to 54%. This not only erodes Wells' profits but also makes her business falter. Therefore, she may have to raise prices, but how much would be acceptable without alienating customers and stopping purchases? She plans to scale down operations—reduce orders, freeze hiring, stop developing new products.

"Even if we pass some of the cost onto consumers, we can't pass it all on," said Wells, who runs her business in Virginia. "So I really think the reality is that businesses will fail."

Merchants are cutting back on business expansion, transitioning into "survival mode."

Currently, it remains unclear how much consumer spending will decrease or how quickly people will start cutting back due to tariffs. The National Retail Federation once predicted that US retail sales would grow this year—although growth would slow compared to recent years, it would be closer to pre-pandemic levels, with an increase between 2.7% and 3.7%.

However, this prediction was released before the details of the "reciprocal tariffs" were clear. Now, the trade organization says, "We cannot predict... the extent to which (tariffs) will affect prices and consumer spending."

Saleswoman Wells, specializing in baby products, NPR

In addition to price hikes, there is also a reduction in business. Like Wells, many business owners are considering scaling down their operations, including reducing inventory selection to lower transportation costs, freezing hiring, pausing advertising or new product development, halting expansion, and transitioning into "survival mode."

The Klem grocery store in Massachusetts, owned by its current operator Jessica Bettencourt's grandfather 75 years ago, sells various items such as hardware, pet food, and clothing. Bettencourt said: "It's time to immediately distinguish between necessary and unnecessary expenses... I think now is the time to start."

"Production should continue in China; costs here are three to four times higher."

To make the tariff increase seem reasonable, Trump's key "argument" was that it would revitalize American manufacturing and force more companies to source domestically.

However, numerous business veterans like Wells and Bettencourt have found one fact—they have already tried...

Wells said that when she investigated producing or assembling backpacks and handbags domestically, she discovered that American manufacturers could not meet her order volumes. More importantly, these manufacturers clearly informed her that raw materials ultimately still had to be imported from China.

Rosalyn Goodwin (Rozalynn Goodwin), a business owner from South Carolina, also encountered similar challenges.

"For the past eight years, we've been trying to produce in the U.S.," said Goodwin, who runs the GaBBY Bows brand with her daughter, mainly selling double-click hair clips.

"Every American manufacturer we contacted told us, 'You need to keep producing in China; it costs three to four times more here,'" Goodwin said. "Our customers absolutely won't pay an extra $8 or $10 for this product."

On March 22nd, Business Insider website also published an article introducing Michael King, an American vending machine operator. King's business relies heavily on steel-made boxes. He had also tried working with American manufacturers but eventually chose Chinese ones due to communication issues.

Biden's administration had imposed a 25% tariff on Chinese steel and aluminum products, and after Trump returned to the White House, he not only imposed a 20% tariff on China but also levied a 25% tariff on all imported steel and aluminum. King calculated that if he still ordered steel products from China now, he would face a 70% tariff. A box originally priced at $250 would now cost $425, and upon customs clearance, the price would reach $825.

Nevertheless, King stated that even higher tariffs couldn't stop him from ordering from China because he might have to spend up to $1200 domestically for such a box. King emphasized that China, as the "world's factory," has established a complete system around it, something the U.S. cannot match. Besides the manufacturing process, China also leads the U.S. in subsequent logistics, making clients feel very reassured.

"Even if the price in China goes up by hundreds of dollars, I might still order from China because it's so convenient," King frankly stated. The Chinese are not afraid to face problems; they might just scratch their heads and propose solutions within a week, while American companies either create more obstacles for his design requirements or charge higher fees indirectly, often leaving customers to deal with these troubles themselves.

Michael King and his vending machine sales points, Business Insider

Producing in the U.S. is not only costly but also relies on imports for raw materials.

NPR pointed out that for many common goods, such as clothing, shoes, toys, and electronics, the U.S. has not mass-produced them for a long time. Even small-scale production costs significantly more, twice or three times the cost of overseas production, and raw materials usually depend on imports. As Wells found out.

Bettencourt used a pair of work boots as an example, saying that her store does sell domestically produced boots priced at $400 each, while imported alternatives cost half of that.

"Not everyone can afford work boots that cost $400," she said. "Although I always prioritize American-made products, I must also provide my customers with affordable options."

The report mentioned that as another store owner put it—small business owners like to make their own decisions and bear their own profits and losses, but the comprehensive tariffs now have deprived them of this autonomy.

According to previous reports by Reuters and CNBC, amid the ongoing fluctuations in the U.S. stock market, on April 7th local time, there were rumors that "Trump is considering suspending taxes on the world for 90 days." Upon this news, the stock market surged. However, later, the White House called the report "fake news," and Trump personally denied it, causing the U.S. stock market to crash again.

On April 8th, a spokesperson for China's Ministry of Commerce stated that China noted that on April 7th Eastern Time, the U.S. threatened to further impose a 50% tariff on China. China firmly opposes this. If the U.S. escalates its tariff measures, China will resolutely take countermeasures to safeguard its own rights and interests.

The U.S. imposing so-called "reciprocal tariffs" on China lacks justification and is a typical act of unilateral bullying. China's countermeasures are aimed at defending its sovereignty, security, and development interests and maintaining normal international trade order. These are entirely justified actions. The U.S. escalating tariffs on China is a further mistake, exposing its extortionate nature. China will not accept it. If the U.S. persists, China will see it through to the end.

This article is an exclusive piece by Observer Network and cannot be reprinted without permission.

Original Source: https://www.toutiao.com/article/7490920808076804620/

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