More China Tariffs? Why Some Business Owners Say Bring Them On

The escalating trade war between the U.S. and China has many detractors–the loudest among them being the business owners and CEOs who fear the tit-for-tat tariffs will imperil their companies’ competitiveness. Nearly 360 executives are expected to testify by the time the six days of hearings on Capitol Hill wrap up August 27. While the vast majority are planning to argue against a proposed additional 25 percent tariff on $200 billion worth of Chinese imports, you’d be wrong to think all businesses are against them.

Some business owners–particularly those whose products are made in the U.S.A.–welcome the effort as they hope it will lead to a renaissance in U.S. manufacturing, bolster job creation, and elevate the American brand worldwide. Inc. spoke to several such owners who, although they won’t be making their case at the hearings, see the tariffs as a win for their industries.  

“Nobody makes anything start to finish anymore, I find that it’s a little scary,” says Laurel Murphy, co-owner of Handknitting.com, a Jackson, Wyoming-based online yarn and knitting supplies store founded in 1996. “There used to be a wool industry in this country, and there is not anymore.” 

Murphy is one of many entrepreneurs who lament the loss of U.S. manufacturing strength, which has indeed plunged. By way of example: manufacturing jobs numbered 11.5 million in 2009, down from 17 million a decade earlier, according to data from the Bureau of Labor Statistics. The loss follows the uptick in the U.S.-China trade deficit, which ballooned to $375 billion in 2017 from $83 billion in 2001.

To be sure, many of these jobs were not so much lost but rather moved from manufacturing to other industries such as construction and commerce, explains Brad DeLong, an economics professor from the University of California, in this thoroughly illustrative piece from May 2017. 

Even so, recent reports suggest that the Trump administration’s strategy may achieve its goal. Economists surveyed by Bloomberg reckon the ongoing trade battle will effectively reduce China’s economic growth–albeit only by an expected 0.2 percentage point this year and 0.3 percentage point in 2019. The most populous nation’s economy, before the tariffs, was on track to grow 6.6 percent this year and 6.3 percent in 2019. The trade war also will slow the U.S. economy, which last quarter’s data had put on track to grow 4.1 percent this year. Economists peg next year’s growth at less than half that rate. 

Greg Owens, the co-founder and CEO of Sherrill Manufacturing is fine with the short-term ding to the American economy if it means China will cease unfair trade practices like devaluing its currency to keep prices artificially low or subsidizing certain industries. “What [the administration is] trying to do is force China to change its behavior, [and] they’re using tariffs to get them to the negotiation table,” says Owens whose Sherrill, New Yorkbased company makes Liberty Tabletop, the last American-made flatware brand. (It’s worth noting that the U.S. also awards subsidies to American companies in various industries.)

Similarly, Larry Homsher, co-owner of Llads Ventures, a Quarryville, Pennsylvania-based business that buys and sells tire casings for trucks, thinks the trade dispute will be a win for the U.S. Today, he says, people choose to buy new “cheap Chinese tires” rather than retreaded, or repaired, ones like the kind his clients sell. That, he adds, reduces opportunities for his buyers. One of his customers, a Virginia-based company that repairs used tires, has seen a 50 percent drop in sales in the last year, Homsher says, from 9,000 retreaded tires per month to about 5,000.

The trade tactics follow Trump’s other so-called business-improvement measures, such as the massive tax cuts passed earlier this year and a bid to reduce regulations curbing coal production in the U.S. Homsher says that Llads Ventures, which he runs with his two brothers, is experiencing its best epoch since their father started the business in 1948. While it is true that some customers are suffering, Homsher says he managed to expand its customer pool in part thanks to President Trump re-igniting the coal industry in West Virginia. The company recently added four new hires, growing the team to 21 employees, as a result of strong sales.

As for the critique that tariffs will cause American consumers to shell out more for everything furniture to smartphones, Handknitting.com’s Murphy, for one, is unmoved. “If the tariffs will encourage more people in this country to participate in the economy and [produce] things, then I think it’s a good thing in the overall long-term view.”