A Minnesota farmer is deeply concerned about the rising cost of fertilizer due to recent trade policies. In San Diego, a business owner faces unexpected expenses involved in restaurant renovations, while a metal fabricator in the Midwest is apprehensive about increased aluminum prices. These worries stem from the new tariffs implemented by the U.S. on its major trading partners starting Tuesday, affecting businesses of all sizes.
Initially, many companies hoped for a delay in these tariffs, as the unpredictable nature of past decisions led to a previous 30-day postponement for Canada and Mexico. However, this time, the implementation proceeded as planned. As of midnight Tuesday, the U.S. imposed 25% tariffs on goods from Canada and Mexico, initiating a trade conflict with close neighbors and allies. Moreover, tariffs on Chinese imports were doubled, bringing U.S. tariffs to their highest since the 1940s. In a slight relief, Canadian energy was taxed at a lower rate of 10%.
In response, Canada, Mexico, and China announced their own retaliatory tariffs. Commerce Secretary Howard Lutnick mentioned the possibility of the U.S. reaching a midpoint agreement with Canada and Mexico, with an announcement expected soon. Despite this, the tariffs remain in effect, putting businesses in a tough spot as they must decide whether to absorb these costs or pass them onto consumers. If this situation persists for a year, economic analyst Kathy Bostjancic forecasts a potential decline in U.S. economic growth by over one percentage point and an increase in inflation by 0.6 percentage points.
Manuel Sotelo, who oversees a Mexican trucking fleet transporting goods across the U.S. border, was surprised by the administration’s gamble with significant trade partnerships. Sotelo expressed disappointment, anticipating that the administration might have reversed its stance. In an effort to address issues like drug trafficking and immigration, Mexico has already mobilized 10,000 troops to the border.
Business owners like David Spatafore in San Diego, facing price hikes in eggs and dairy, are feeling the added impact of the tariffs. With ongoing restaurant renovations now costing more due to tariffs on lumber and steel from Canada, Spatafore finds it challenging to manage the increased expenses without impacting the business’s thin margins. Mission Produce in Oxnard, California, dealing in avocados and mangos, foresees significant cost changes if the situation persists beyond 10 days, especially with smaller retailers likely to raise prices sooner.
Meanwhile, in Wyoming Machine in Minnesota, co-president Traci Tapani is wary of the immediate repercussions on their business with Canadian aluminum. She emphasized the difficulty these tariffs create for small businesses in making informed decisions and achieving growth. Farmer Danny Lundell in Cannon Falls, Minnesota, is particularly troubled by the potential rise in fertilizer costs, crucial for crop health.
Minnesota’s Democratic governor, Tim Walz, criticized the trade policies, warning of the risks to vital trading relationships. The uncertainty accompanying the trade wars is another significant concern, with businesses wary of investing or finalizing deals amid unpredictability. As trade tensions ramped up in Trump’s first term, business investments slowed, prompting the Federal Reserve to cut interest rates to stimulate the economy.
Adding to the apprehension are plans for additional tariffs, including possible actions against the European Union, India, and various industries. Antonio Rivera, an expert in international trade, highlights the broader uncertainty affecting businesses. Additionally, American patrons visiting a gift shop in Windsor, Ontario, have expressed regret over their country’s trade actions towards Canada, with some Canadians reconsidering their travel plans to the U.S. amidst this tension.
