Tariffs causing heartburn for Michigan retailers, consumers

By: - September 18, 2019 5:31 am

Image by Ann San from Pixabay

Customers at Great Northern Trading Co. in quaint downtown Rockford haven’t seen any price increases due to the trade war yet. But owner Barb Stein says that could likely change after the holiday shopping season. 

With President Donald Trump expected to implement another $155 billion worth of tariffs on Chinese goods by mid-December, Stein says her 42-year-old gift and home decor store in northern Kent County will likely have to raise prices. She’s hopeful, however, that the broader retail community can spread the costs around to ease the pain for shoppers. 

“It’s like walking through Jello,” Stein said of the ever-shifting trade war with China, which has now gone through multiple rounds of retaliatory tariffs, which essentially become taxes on consumers. 

The heartburn tariffs are causing retailers — and Michigan farmers — comes amid increasing turbulence in the state’s auto-dependent economy, and as the global economy appears to be slowing.

Great Northern Trading Co., Rockford | Barb Stein photo

Stein told the Advance earlier this month that she’s sympathetic to the need for tariffs as a means of achieving a better trade agreement with China and she’s hopeful the impact to consumers will be minimal. 

“The solution [to the trade war] is probably going to be … all of us [retailers] absorbing the costs and a very small increase so that the consumer absorbs some too,” Stein said. “I don’t see any way around it. There’s nobody that’s going to be able to absorb the whole thing.” 

The latest tariffs will impact a wide variety of items, including shoes, clothing, food, baby items, cell phones and laptops. A JPMorgan Chase study released last month showed that tariffs could cost American households up to $1,000 per year. 

Barb Stein

Trump is a protectionist on trade, having run on bolstering American manufacturing and agriculture. He’s long blamed China and past presidents — who he’s deemed weak on trade — for trade imbalances. 

U.S. Sen. Pat Toomey (R-Pa.) is among the most outspoken GOP critics of Trump’s trade policies. Trump, however, has stood firm that the tariffs are bringing the Chinese government to the bargaining table. 

“So what does Pat Toomey want me to do? Does he want me to say let me put my hands up and let China continue to rip us off,” Trump asked in a radio interview late last month, according to CNN. “I think [the Chinese] want to make a deal. I sort of think they have to make a deal.”

A ‘tricky time’ 

There’s considerable evidence to suggest that tariffs are already hurting consumers. 

Data released on Tuesday by Tariffs Hurt the Heartland, a national conglomerate of business and agriculture trade associations, determined that Michigan consumers have paid $1.4 billion through July because of tariffs. Trade exports from Michigan have dropped 6.6% year-to-date, according to the group’s data. 

Charley Ballard

“I think that the tariffs have already had a negative impact on the U.S. economy,” said Charley Ballard, a professor of economics at Michigan State University. 

“We’ve seen the U.S. economy slow down,” Ballard said. “I don’t believe anybody believes the U.S. is in a recession just yet, but it has had a negative effect. It’s a tricky time for the U.S. economy.” 

If things are “tricky” in the U.S., Michigan is looking increasingly fraught. Aside from damage and ongoing uncertainty from tariffs, Michigan’s auto-dependent economy is going through upheaval on multiple fronts. 

Among those is a strike that began this week for roughly 48,000 unionized workers at General Motors plants nationwide. 

Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research (CAR), an independent automotive research organization in Ann Arbor, needs almost all 10 fingers to list off the struggles Michigan’s automotive companies are facing. 

UAW wants GM jobs returned to Michigan from overseas, ready for long strike

Beyond tariffs on steel, which car companies are paying, Dziczek cites changing fuel emissions standards, shifting consumer preferences away from small sedans and the notion that in the not-so-distant future as autonomous vehicles take hold, car ownership may become a relic of the past. 

“Everything about their business is big, expensive and risky, and nothing is certain,” Dziczek said.

Stein, the owner of Great Northern Trading Co. in West Michigan, may just have a single store, but she says she’s feeling the same pressures of the global supply chain. 

One vendor on the West Coast has already increased prices by 10% as a result of past tariffs and she expects more increases. But Stein says she’s hopeful that tariffs pay off in the end. 

Trump’s trade war with China hits home in Michigan

But whether they’re achieving Trump’s stated goals of achieving a better footing on trade with China is something experts, economists and pundits vary greatly on. 

“I think we need to have a better trade agreement with China that keeps them from stealing our intellectual secrets and things like that,” Stein said. I don’t know whether this is the right way to do it.”

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Nick Manes
Nick Manes

Nick Manes is a former Michigan Advance reporter, covering West Michigan, business and labor, health care and the safety net. He previously spent six years as a reporter at MiBiz covering commercial real estate, economic development and all manner of public policy at the local and state levels.