Washington (AP), Rick Waldenberg, thought he had invented a plan for a sure fire to protect his educational toys company in the Chicago area from the huge new taxes of President Donald Trump on Chinese imports.
“When he announced a 20% tariff, I made a plan to survive 40% and decided I was very smart,” says Waldenberg, CEO of Learning Resources, a third -generation family business in China for four decades. “I had developed that for a very modest increase in prices, I could withstand 40% tariffs, which was an unthinkable increase in costs.”
His worst scenario was not the worst enough. It’s not even close.
The US president quickly raised Anteto with China by raising the fee to 54%to compensate for what he said were China’s disloyal commercial practices. Then, angry, when China avenges his own tariffs, he raised the lesions to a shocking 145%.
Waldenberg believes he will push the tariff account of $ 2.3 million in the course last year to $ 100.2 million in 2025. “I wish I had $ 100 million,” he said. “Honestly to God, without exaggeration: it feels like the end of the days.”
“Addicted” to Chinese goods at low prices
This may at least be the end of the era of cheap consumer goods in America. For four decades, and especially after China joined the 2001 World Trade Organization, Americans rely on Chinese factories for everything from smartphones to Christmas ornaments.
As the tension between the two largest economies in the world – and geopolitical rivals – have increased in the last decade, Mexico and Canada have replaced China as the best source of imported goods and services in America. But China is still # 3 – and second behind Mexico only in goods – and continues to dominate many categories.
China produces 97% of imported baby carriage in America, 96% of its artificial flowers and umbrellas, 95% of its fireworks, 93% of children’s coloring books and 90% of its combs, according to a Macquarie Investment Bank report.
Over the years, US companies have been creating supply chains that depend on thousands of Chinese factories. Low tariffs have reduced the system. Recently, in January 2018, US tariffs for China average just over 3%, according to Chad Bone of the Institute for Peterson International Economy.
“US users have created China,” says Joe Yurken, founder of ABC Group in Milwaukee, who helps US businesses manage supply chains in Asia. “US buyers, consumers, are addicted to cheap prices. Both brands and retailers are addicted to the ease of purchase from China.”
More slow growth and higher prices
Now Trump requires manufacturers to return production in America, they are swinging with the tariff hammer of US importers and Chinese factories they rely on.
“The consequences of tariffs on this scale can be apocalyptic on many levels,” said David French, Senior Vice President of Government Affairs at the National Retail Trade Foundation.
The University of Yale’s budget laboratory estimates that Trump’s rates announced globally as taking office will reduce the US economic growth by 1.1 percentage points in 2025.
Tariffs are also likely to increase prices. A Michigan University study for Consumer sentiment on Friday found that Americans were expecting long -term inflation to reach 4.4%, compared to 4.1% last month.
“Inflation is rising to the United States,” said Stephen Roach, former chairman of Morgan Stanley Asia, and now in the Chinese Faculty of Law at Yale. “Consumers also invented this.”
“No business can work with uncertainty”
This is not just the size of Trump’s tariffs, which has confused and shaking business; This is the speed and unpredictability with which the president unfolds them.
On Wednesday, the White House said the tariffs for China would reach 125%. A day later, she corrects that: No, the rates will be 145%, including previously announced 20% of pressure on China to do more to stop fentanyl flow in the United States.
China, in turn, imposed a 125% tariff for the American effective Saturday.
“There is so much uncertainty,” says Isaac Larian, the founder of MGA Entertainment, who makes dolls lol and Bratz, among other toys. “And no business can work with uncertainty.”
His company receives 65% of its product from Chinese factories, and a share that tries to win up to 40% by the end of the year. MGA also produces in India, Vietnam and Cambodia, but Trump threatens to impose heavy tariffs for these countries after slowing them down for 90 days.
Larian estimates that the price of Bratz dolls can go from $ 15 to $ 40, and Lol Dolls’s one can double up to $ 20 to this year’s holiday season.
Even his small Tikes brand, which is made in Ohio, is not immunized. Small ticks depend on screws and other parts of China. Larian determines the price of his toy cars can increase up to $ 90 from a proposed retail price of $ 65.
He said MGA is likely to reduce orders for the fourth quarter, as it worries that higher prices will scare consumers.
Calling the production plans for China
Mark Rosenberg, founder and CEO of The Edge Desk in Deerfield, Illinois, invests millions of dollars from his own money to develop Ergonomic chairs of $ 1,000 that had to start production in China next month.
He now slows down production while exploring markets outside the US, including Germany and Italy, where his chairs will not face Trump’s triple tariffs. He said he wanted to see how the situation was playing.
He had sought ways to make chairs in the United States and discussions with potential suppliers in Michigan, but the costs would be 25% to 30% higher.
“They did not have a qualified workforce to do these things and did not want to do it,” Rosenberg said.
To make the Chinese imports to go “Caput”
Waldenberg’s company in Vernon Hills, Illinois, has been in the family since 1916. It has been created by his grandfather as a laboratory supply company and has been developing over the years in study resources.
The company specializes in educational toys such as Botley: The Coding Robot and Brainteaser Kanoodle. It employs about 500 people – 90% in the United States – and makes about 2400 products in China.
Waldenberg tries the size and suddenness of Trump’s tariffs.
“The products I do in China, about 60% of what I do, become economically non -viable overnight,” he said. “In a moment, clicking your finger, they are a caput.”
He described the call of Trump factories to return to the United States as a “joke”.
“I have been looking for American manufacturers for a long time … and I invented zero companies to partner with,” he said.
Tariffs, unless they are reduced or eliminated, will delete thousands of small Chinese suppliers, Waldenberg predicts.
This would record a disaster for companies like his, which installed expensive tools and shapes in Chinese factories, he said. The persistence of losing not only their production base, but also possibly their instruments, which could be fascinated in bankruptcies in China.
Learning resources have about 10,000 forms, weighing more than £ 5 million in China.
“It’s not like you just put a canvas bag, zip it up and go out,” Waldenberg said. “There is no empty production center, standing fully equipped, full of engineers and qualified people, who are waiting for me to show up with 10,000 forms to make 2000 products.”
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This story replaces the 25th paragraph to clarify that Rosenberg slows production rather than excludes production
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D’Anocenzio reported from New York.
