Small business, consumers brace for the pain of US tariffs

KWINDARIUS SAPP

Kwindarius Sapp, owner of Q's Culinary Cart in Charlotte, is braced for the impact of import taxes on the economy and his business. "First of all, I am hoping that the products don't get too out of hand as far as the pricing," he said. "We have kind of already dealt with inflation during the Covid-19 time period, so we have been seeing a lot of those prices get back to normal."

The impact of tariffs on imported goods will be felt by Americans sooner or later.

Small businesses that usually operate with tight budgets and narrow margins are bracing for economic changes with President Donald Trump’s self-imposed taxes on goods coming from other countries. As a result, it can affect day-to-day operations, and their customers by extension.

Kwindarius Sapp, owner of Q’s Culinary Cart in Charlotte, said while he hasn’t felt the impact yet, he hopes it won’t impair business.

“First of all, I am hoping that the products don’t get too out of hand as far as the pricing,” he said. “We have kind of already dealt with inflation during the Covid-19 time period, so we have been seeing a lot of those prices get back to normal. It is closer to normal now than back then. The hope is that the tariffs won’t reverse that and make things skyrocket again.”

Trump has scaled back some tariffs, but there is still a 10% tax on all imports. And while the goal is to return manufacturing to the United States, Matthew Metzgar, a professor in the Belk College of Business at UNC Charlotte, says it will likely make products more expensive.

“The bad news is no matter what happens with all these other tariffs… Trump did institute that 10% baseline tariff on, at least, from what I can tell, almost all goods coming in,” he said. “I think there are very few exceptions, and he doesn't seem to be budging on that one or pulling back. Just that one alone is, unfortunately, going to raise the cost of doing business for small businesses, because anything you import, covering probably 90% of the different imports, is going to be hit by that 10% tariff.”

Sapp said he hasn’t thought much about price changes that could be coming. He related it to 2020 during the pandemic, which sparked supply chain disruptions and inflation. He believes if tariffs start making an impact it will have consequences similar to the Covid crisis. 

“I know personally I haven’t thought about price increases yet,” Sapp said. “I know back during Covid, our hotdogs were the biggest price increase that we saw. The ground beef went up some, but it wasn’t as drastic as our hotdogs. Hopefully our core menu items won’t be affected that much. I know when Covid hit, our [chicken] wings went up to almost triple what they used to cost. That is why I had them as a special item and never added them to my full menu. If they go up in price again, we can just not offer them.”

Former Vice President Mike Pence, who served in the first Trump administration, told business owners in Raleigh this month he opposed additional taxes on imports, which ultimately are passed on to U.S. consumers.

“The reality is that ultimately the American consumers will pay the price when these tariffs take effect,” he said. “And, it will impact jobs and employment… Tariffs have unexpected downsides, no matter the motive… The better path for American growth is to lower taxes, roll back regulations, unleash American energy and focus on the policies that we advance in our four years.”

Sapp said his business is small enough that no matter the severity of tariffs, he won’t have to cut staff or make layoffs.

“Thankfully with the size of the operation I have going, everybody that works with me also has their own full-time job,” he said. “So, when they are working here with me it is just for extra money. I only have one person working full time with me and so that is kind of already built in, where he can’t go anywhere if we want to keep this thing anchored. So, in my situation, we would be able to keep it going even if the tariffs raise prices.”

One of the major repercussions of tariffs is on the supply chain and the potential for product shortages. 

“I was talking to a supply chain employee, and he was saying that because of all the unknowns they’re not going to make aggressive moves in terms of some of their buying and things like that, because they don’t want to get stuck to agree to a year's worth of this supply, and then all of a sudden it gets tariffed,” Metzgar said. “So, there is a lot of hesitation, and I think over time, that’s going to creep up and cause a lot of, unfortunately, higher prices.

As those disruptions happen, as less goods are coming in, then slowly, those prices are just naturally going to rise.”

Trump said on social media Friday there may be a new 50% tariff on the European Union, which could be just as drastic as duties on products from China, the U.S.’s largest trade partner.

“I'll give you an example with the EU,” Metzgar said. “Trump also said he wants iPhones to be made in the U.S., or he'd hit Apple with a tariff. … So, they estimated that now an Apple iPhone, instead of costing $1,200, it is going to cost $1,500, $2,000 or even $3,000. He can get it made here, but the price will go up. And now consumers are worse off because they’re spending more money for the same good, and now they’re going to have less to spend on other goods.”

Comments