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ABC News
3 days ago
- Business
- ABC News
Three months on from 'Liberation Day', Donald Trump's trade war is punishing US businesses
Farmer John Ashe's dealt with drought. He's dealt with hurricanes. But what he saw the US president announce on TV left him speechless. "I just shook my head. My wife was shaking her head, and I was thinking, what's next?" he says. Almost 90 days ago, Donald Trump shocked the world when he announced his so-called reciprocal tariffs on more than 180 countries and territories. Designed to punish foreign nations who ran trade deficits with the US, the tariffs have instead put much of Trump's heartland in the crosshairs. In Austin, Texas, toy manufacturer Molson Hart, watched as President Trump brandished a game show-like list of tariffed countries. "When I first saw that sign, I wasn't sure if it was real. It was just unbelievable. People weren't expecting those kinds of numbers," he says. Since President Trump's inauguration he has announced more than 50 new or revised tariffs, including pauses, backdowns, escalations and de-escalations. Business owners and workers across the US are reeling from the chaos and confusion unleashed by Trump's trade policy. And with only days to go until a temporary pause on the highest "reciprocal" tariffs is due to be lifted, there are fears about what comes next. John Ashe's family has been farming in North Carolina across four generations. "Not many families can say this, Black families that is, but we've been here for over a hundred years. "My great-grandfather, my grandfather on both sides, and my father, were all farmers." Mr Ashe, who exports around 40-45 per cent of his soybean crop to China, watched on in horror as the president lit the fuse on a trade war that saw the US impose 145 per cent tariffs on Chinese imports and China retaliate with 125 per cent tariffs. "Honestly, I cannot understand it. I have not heard anybody from that administration that could tell me anything that makes any sense of what he's causing," Mr Ashe says. "You cannot take a chainsaw and do surgery." When Four Corners visited Mr Ashe's farm, the trade war was at its peak, and he was planting his first soybean crop of the season. "I'm going to plant about 50 per cent less than I would normally because I don't know what the price is going to be. I don't want to take the risk of putting even more out there," he says. US soybean exports to China are worth around $US13 billion ($19.9 billion) a year. After Donald Trump brought in tariffs on China during his first term, and China retaliated, Brazil overtook the US as the world's largest soy producer. Mr Ashe is worried these lucrative markets for US farmers will continue to evaporate. "I'm concerned that they're going find other places around the world that can fulfil their needs," he says. "Sometimes, you find another grocery store you like, and you don't go to your old grocery store anymore." Mr Ashe has watched over the last few months as the tariffs have gone up and down. US tariffs on China are currently at 30 per cent, while Chinese tariffs on US imports sit at 10 per cent. The uncertainty makes it difficult to plan what crops to sow. "I've never seen anything like this before. It just seems like it changes from lunchtime to the six o'clock news," he says. When Donald Trump ignited his trade war with China, Molson Hart started scrambling. He needed to find factories outside of China to make toys before he ran out of stock. "It's enormously difficult," he says. "It takes six months to a year to properly move production depending on what you're making. In some cases, it's not even possible to do." The 38-year-old's company, Viahart, makes plush animals and a construction toy called Brain Flakes. When the highest tariffs on China were paused, Mr Hart was able to re-order more stock for his Texas warehouse, but he is still looking to shift production to South-East Asia. Mr Hart says the ongoing uncertainty around Trump's trade policy has eroded business confidence across the country. "We don't know if it will be high tariffs, low tariffs or something in between," he says. "All these importers need to get that extra money to pay the tariffs and when there's less money to go around for things, confidence in business in general declines." The US Toy Association says nearly 80 per cent of toys sold in the US are made in China, and the industry is predicting price rises, supply shortages and bankruptcies. Mr Hart described Trump's trade policy as "probably the worst economic policy I've ever seen" and says he does not think it will meet its stated aim of bringing back American manufacturing. "We need to have a plan. For example, if our goal is to make things in America, 'This is what the timeline is, and this is how we're going to achieve it, and we're going to be doing it in these industries'. Mr Hart understands trade with China better than most. He has worked in Chinese factories and his products are made there. He speaks Mandarin and has been in the manufacturing industry for 15 years. He says even if the policies managed to bring manufacturing back to the US, it's unclear if the labour force is there to do the work. "I work with some fantastic people in the United States, but it will take some training and some time and possibly some sort of mental adjustment period for Americans to start doing some of the jobs that are done in China. They're really hard," he says. Dan Turner has voted Republican since the Reagan years and supports Donald Trump's goal of reviving the US manufacturing industry. "It's really a staple of civilisation. I think that we need to make things," he says. In his workshop in Carlilse, Pennsylvania, Mr Turner employs around 40 staff who design, install and repair hydraulic components. Turner Hydraulics began in the backyard of his parents' home in 1978 when around 20 per cent of American workers were employed in manufacturing. That figure has now plummeted to around 8 per cent. "I like seeing my employees being able to get ahead. I believe in that and that's why I think small business is the backbone of America," he says. But so far, Donald Trump's tariffs have done no favours to Turner Hydraulics. In January, before the tariffs were introduced Mr Turner ordered a hydraulic component from China worth $US48,000. By the time the product was on the water heading to the US, Mr Trump's tariffs meant the part would cost him around $US130,000. "The tariff total was going to be 170 per cent, which was around $US82,000 up from the $US12,000 that we had planned on. Like many other small business owners relying on parts from China, Mr Turner would have preferred a transition period rather than the chaotic announcement and escalation, particularly given he works in the industry President Trump says he's seeking to protect. "As a manufacturer, it would've been nice to have been told that here's the sequence of events and you have this many months before tariffs are going to increase. "I know I'm just a small part of this whole puzzle. There are companies that are potentially getting hit with millions of dollars of tariffs," he says. Ed Brzytwa is the vice president of international trade at the Consumer Technology Association (CTA) which represents over 1,200 technology and innovation companies in North America. He says small businesses are disproportionately impacted by tariffs. "When you put tariffs on imports, whether it's on the finished goods or on the raw material or on the input, all you're doing is disrupting supply chains and making things more expensive," Mr Brzytwa says. "Printed circuit boards are one input that you need to make certain finished goods in the United States, and that component is almost entirely made in China. "[CTA members] are reliant on international trade to survive. If you want to make an innovative product for the very competitive US marketplace, you need to have access to affordable inputs. In mid-May the chaos of Trump's trade policy suddenly improved things for Dan Turner's business. "We just found out this morning that the tariff will be 55 per cent, which is a lot better than 170 per cent," he says. It meant that the tariff he would pay on his $US48,000 component had fallen to around $US27,000 — far less than the estimated $US82,000 he had been expecting. Had the part arrived just two days earlier, he would have been stung with the 170 per cent tariff. Despite the changes, Mr Turner remains nervous about ordering any more parts from China. "We are on hold with ordering anything from China and with investing in finding alternative routes. We will research it, but we won't be making any investment into it," he says. So how long will this uncertainty hover over his business for? "Maybe another three and a half years?" he laughs. Trump's trade war with China has deeply impacted the industries built around the nation's once thriving ports. Mark Nieves is truck driver who transports goods from the docks of New York, New Jersey and Philadelphia. "I am a third-generation trucker, what we call a pier rat. I love this industry, it runs in my blood," he says. As supply lines from China have dried up, truck drivers like Mark have watched their pay-packets diminish. "The tariffs have caused me to work one day a week, two days a week, robbing from Peter to pay Paul," Mr Nieves says. Mr Nieves has worked in transport for more than 40 years, including in safety, supply chain, operations management and truck driving. He is the president and founder of the United Drayage Drivers Association. He says deregulation has already made the industry tough and the tariffs have made it even worse. As Four Corners rode in his truck near the port of New York in mid-May, he pointed to rows and rows of empty containers. "These are empties that have come back to the port without a destination. Usually you see a full pier, full of containers and now you see a full yard, full of empties side by side," he says. There are more than 3.5 million truck drivers in the US and many of them voted for Donald Trump in the 2024 election. Mr Nieves was unimpressed by the US president's response when he was asked about the impact his tariffs had on dock workers and truck drivers at a media conference. "I saw his interview with the news media and how they asked him, 'Hey, truckers in the ports are really struggling, right?' And his response was 'good, at least China's not stealing from us'. Mr Nieves is running as a Republican candidate for the Union County Commission in New Jersey and hopes to be a voice for truck drivers struggling to make ends meet. In the meantime, he wants Trump to start listening to the people who have been hit the hardest by his tariffs. "The country has spoken, and he is our president, and I support him a hundred per cent. However, I think he could have handled it much better," he says. "He should have gotten the consultation of real people who, live this industry, who know this industry." Watch Four Corners' full investigation, Trading in Chaos, tonight from 8:30pm on ABC TV and ABC iview.
Yahoo
23-05-2025
- Business
- Yahoo
Here's How Much Tech Products Made in the US Cost Compared To Mexico, Canada and China
For decades, American tech companies have built and assembled their devices in emerging markets while concentrating their domestic efforts on product design and software development — because, according to CNN, the profit margins are much higher than for knocking together phones and computers in factories. President Donald Trump aims to disrupt that dynamic with tariffs that turn cheap foreign goods into expensive imports to spur domestic manufacturing — including the tech gadgets that define our modern lives. But it costs much more to make tech products in the U.S. than in places like China, Mexico and even Canada. Here's what you need to know. Check Out: Read Next: Many factors contribute to the high cost of making tech products in America compared to lower-cost manufacturing countries — but none is more consequential than the cost of labor. According to Trading Economics, the average manufacturing wage in the United States is $28.80 an hour. According to Trading Economics, the average manufacturing wage in Canada is the equivalent of $22.56 an hour. According to the Apollo Academy, the average Chinese manufacturing employee makes 20% of what an American makes doing the same job, which works out to $5.76 an hour. According to North American Production Sharing, the average manufacturing wage in Mexico is $4.50 an hour. Learn More: Labor is the biggest factor, but not the only one by a long shot. It's challenging to say definitively what tech products would cost if they were made in one country or another because of variables like: The type of tech products — different countries are much better at making some kinds of devices cost-effectively than others. Proximity to the destination country. For example, according to logistics and supply chain firm Visigistics, it costs $5,000 to ship a 53-foot container from China to Los Angeles, but only $600 from Tijuana, Mexico. Energy costs. Institutional knowledge. For example, Molson Hart, founder and CEO of consumer products company Viahart and legal tech company Edison, writes that Taiwan dominates the world's semiconductor chips market because no other country has been able to compete at making these crucial tech components better, faster or cheaper, much less all three. Manufacturing infrastructure. Automation. Governmental regulations. The decades-long trend of outsourcing American tech manufacturing has been so near-total that there's very little U.S. tech production left to compare to places like China. One of the last exhaustive analyses came from PCMag in 2023, which found that the tiny remaining number of domestic tech manufacturers dealt mostly in high-end, high-quality, high-performance and high-cost consumer electronics, audio equipment, PCs and e-bikes designed for ultra-luxury consumers — and even most of those contain many foreign components. Therefore, the only real comparison can be hypothetical, so why not hypothesize using the most familiar and iconic American-designed, Chinese-built gadget in the world, the iPhone? According to CNBC, analysts believe labor costs alone would push up the price of an American-made iPhone 16 Pro by 25% from $1,199 to $1,500. When including the myriad other factors, the price per phone could triple to $3,500 as Apple would have to spend three years and $30 billion re-shoring just 10% of its supply chain to the U.S. A comprehensive report from Mexican manufacturer Novalink determined that 'it is cheaper to manufacture in Mexico than in China' because of the dramatic savings in shipping, labor, currency exchange rates, energy costs and the cost of warehousing and factory rentals. However, China has vast, purpose-built infrastructure that Mexico does not and immediate proximity to the supply chains that iPhone production depends on. In the end, a Mexico-built iPhone would probably be comparable or slightly more expensive than those currently made in China. If Apple moved to Canada, it would face all of the disadvantages of being made in America, but with slightly cheaper labor costs. More From GOBankingRates 5 Luxury Cars That Will Have Massive Price Drops in Spring 2025 6 Hybrid Vehicles To Stay Away From in Retirement 7 Luxury SUVs That Will Become Affordable in 2025 This article originally appeared on Here's How Much Tech Products Made in the US Cost Compared To Mexico, Canada and China Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Boston Globe
03-05-2025
- Business
- Boston Globe
A tumultuous wave of change is headed for the economy
Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up The number of massive container ships carrying metal boxes of toys, furniture, and other products departing China for the United States tumbled by about one-third in April. Advertisement The reason consumers haven't felt many of the effects yet is because it takes 20 to 40 days for a container ship to travel across the Pacific Ocean. It then takes another one to 10 days for Chinese goods to make their way by train or truck to various cities around the country, economists at Apollo Global Management wrote in a recent report. That means that the higher tariffs on China that went into effect at the beginning of April are just starting to result in a drop in the number of ships arriving at American ports, a trend that should intensify. Advertisement By late May or early June, consumers could start to see some empty shelves, and layoffs could occur for retailers and logistics industries. The major effects on the US economy of shutting down trade with China will start to become apparent in the summer, when the United States might slip into a recession, said Torsten Slok, an economist at Apollo. 'US consumers will within a few weeks see empty shelves in clothing stores, toy stores, hardware stores, and retail drugstores, and higher prices of the goods that still are on the shelves,' he said. Molson Hart, CEO of Viahart, a toy company, wrote on the social platform X: 'It's almost like we're speeding towards a brick wall but the driver of the car doesn't see it yet. By the time he does, it'll be too late to hit the brakes.' The decline in Chinese imports was amplified Friday, when the United States eliminated so-called de minimis treatment for Chinese goods. The rule had allowed products up to $800 to avoid tariffs as long as they are shipped directly to consumers. It has boosted the business model of companies such as Temu and Shein, and it has resulted in a surge of individually addressed packages to the United States, many of which are shipped by air. Advertisement Supporters of the change say that this tariff loophole has given Chinese shippers an unfair advantage and hurt American businesses. But the decision to get rid of it is already resulting in higher prices for consumers. And the change is expected to weigh on airlines and private carriers like FedEx, which have steady business delivering small-dollar goods. Port workers and logistics companies have been expecting their own disruptions. At the port of Los Angeles, the main entry point for Chinese products arriving in the United States, imports surged in recent months as businesses and consumers tried to stock up on goods in advance of the tariffs coming into effect. But that activity has now started to decline. The number of containers arriving at the Port of Los Angeles is expected to drop more than 35 percent this coming week compared with the same period last year, port data show. Gene Seroka, the port's executive director, said that a quarter of the ships that had been scheduled for May had canceled because of light volume. As of about three weeks ago, goods coming into the port from China have been 'very few and far between,' Seroka said. Data show that sales of heavy trucks have fallen sharply, too, suggesting that companies in the logistics space expect to be moving fewer goods in the future. Trade experts say that companies have stockpiled enough inventory in recent months that, if the White House reverses course soon and significantly drops tariffs on China, much of the pain for the economy and consumers can be avoided. Data from the Institute for Supply Management show that US inventories are at their highest level in more than two years. Advertisement Gabriel Wildau, a managing director at Teneo, who advises companies on doing business with China, said that the Chinese goods that US retailers had stockpiled in the first three months of the year would give stores some time before they would need to raise prices. But if the situation is not changed quickly, American consumers will feel the impact of trade changes unfold over the next three to six months, he said. 'We're going to have higher prices and, in some cases, empty shelves,' he said. Trump officials have admitted that there could be some disruptions for consumers. The president seemed to acknowledge Wednesday that his trade changes could lead to fewer goods and higher prices. 'You know, somebody said, 'Oh, the shelves are going to be open,'' Trump said from the White House. 'Well, maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally.' But administration officials have said any pain will be minimal. At a White House briefing Tuesday, Treasury Secretary Scott Bessent said that he did not expect to see supply chain shocks from tariffs on China. 'I think retailers have managed their inventory in front of this,' he said. Some firms, however, that are in a more fragile financial position have not been able to stockpile and are rapidly being forced out of business. Even if the Trump administration finds a way to reduce its tariffs on China, it's not clear that the levies will fall enough to meaningfully restart trade. Many companies say that tariffs above 50 percent on Chinese imports are enough to stop trade entirely. With tariffs now at a minimum of 145 percent, and in some cases much higher, that would mean that the Trump administration may have to drop its China tariffs by at least 100 percentage points to meaningfully restart the flow of goods. Advertisement Ryan Petersen, CEO of Flexport, a supply chain company, said that, even before the president hiked tariffs on China to 145 percent in April, the tariffs the Trump administration had put on China were high, at a minimum of 54 percent. 'The reality is that 54 percent was already an incredibly high tariff rate,' Petersen said. 'It depends on how far they walk it back. If they walk it back to 25 percent, maybe this all becomes a non-event.' With so much unclear about where global trade is headed, companies are freezing their plans for expansion and halting new orders. Data show that new orders from manufacturers have turned down sharply this year, while companies have trimmed back their plans for capital expenditures. Some major companies have stopped issuing guidance for their sales and profits. Mercedes-Benz on Wednesday suspended its financial forecasts for 2025, as did Stellantis, which makes the Chrysler, Dodge and Jeep brands. It's not clear how quickly the current supply chain challenges could be resolved. But during the pandemic, supply chains disruptions took much longer to work their way through the economy than most forecasters had anticipated. This article originally appeared in
