With the American trade war with China starting a while back, tariffs were only implemented in goods that do not directly affect average customers. However, the recent hike will affect essential products that customers consume such as craft beer, musical instruments, and books. Starting the 1st of September, the tariff will rise from 10% to 15% as a countermeasure on the taxes imposed by China on around $75 billion worth of goods manufactured from the U.S. Both small and medium business companies are considering cutting back costs through delaying their openings, freezing their hiring seasons, and increasing their prices.
While there is diversity among the industries, many of them rely on the goods imported from China when it comes to the production of their product or for the raw materials. With this, medium and small scale business is anxious about the recently imposed tariffs brought by the trade war that has reached a new level last Friday.
Some industries will not be affected by the hike until the 15th of December during the peak of holiday shopping. However, there are still industries that will experience it once September rolls around before Labor Day.
On Friday, Trump advised U.S. companies that they should start looking for an alternative to the Chinese goods that they import. He suggested that they make their products in the country instead.
As a response to China imposing taxes on approximately $75 billion worth of goods, the American president raised the tariff on about $300 billion worth of Chinese goods by about 5%.
Because of this, many medium and small businesses are adjusting their plans to avoid having to declare bankruptcy.
Tariffs and Unjustified Taxation
Adam Sawczuk, a decade-old home brewer of hand-crafted beer, has opened a brewery with his spouse, Dara. He saw it fit because of his love for beer. With his wife, Adam has been coming up with a plan for more than a year now. Naming the place Tidal Creek, they are aiming to become a 10-barrel operation that will serve the tourists and locals from Myrtle Beach, South Carolina hand-crafted that will be made in-house.
The pair had already leased a place in 2018. They are now in the process of acquiring contracts and filing permits. They also planned on purchasing a $300,000 worth of equipment for beer brewing that will be imported from China. With Trump’s order of raising the tariff, the machine they are about to order will be affected, along with many other categorial goods. This made the couple’s plan to be paused because a 5% raise on the current tariff is massive for a starting business.
In his mind, Sawczuk believed that the tariff money is essentially unjustified tax.
While they have considered ordering the needed equipment locally, there are only a few local manufacturers that offer the same machine at a reasonable price. Additionally, Sawczuk also predicted that it would create a problem within the supplies if all the breweries in America decided to buy their equipment locally.
To cope with the hike, Sawczuk is now planning to only order a small amount of equipment. Sawczuk is also planning to delay the opening of the brewery from Fall 2019 to early 2020 since it seems more feasible. Aside from that, he also planned on cutting the staff count from the original 15 people to a few employees.
Adam believed that he had to make sacrifices and absorb the tariff costs through some way to be able to open his brewery.
The way he sees it, his choices are paying their employees less, charging their customers more, or receiving less profit.