A new story in Reuters details how President Trump’s tariffs are hurting hundreds of small and large American businesses that are fighting for survival during the coronavirus pandemic.
Tariffs are taxes that American businesses pay to the federal government. Companies that were struggling to pay the President’s tariffs before the health crisis hit explain why these tariff payments are even harder to make now:
“Dan Digre, head of MISCO Speakers, was on edge before the coronavirus outbreak hit the global economy. Payment of hundreds of thousands of dollars in Chinese tariffs had wiped out the profit and dwindled the cash balance of the Minnesota-based loudspeaker maker. Now Digre is grappling with dropping sales and payment delays. With cash ever harder to come by, he must cough up the money for President Donald Trump’s 25% tariffs…”
Many retailers are being forced to continue making tariff payments even though government mandates are keeping their doors closed:
As AFT spokesman Jonathan Gold said, “Companies are paying taxes on goods that they can’t sell right now for the stay-at-home orders.”
The unprecedented economic challenges created by the coronavirus outbreak and the President’s tariffs are forcing some businesses to temporarily cease operations or consider closing.
“San Diego-based athleisure maker Vivacity Sportswear has been paying a 25% tariff on one-third of its raw materials that are sourced from China, leading to a 15% drop in profit last year, CEO Vivian Sayward said. In the past two months, the company’s revenue has dropped 80% and inventory has increased by 60%. Shrinking profit margins and depressed demand have compelled it to temporarily halt all manufacturing.”
The data is clear: the Trump Administration could free up billions of dollars for struggling U.S. companies by suspending or delaying tariffs. This much-needed cash could help revenue-starved businesses pay employees, suppliers, and other critical bills. Until then, American companies, workers, and consumers will continue to pay the price for President Trump’s trade war.