‘Things Have Ground to a Halt’:
Tariff Uncertainty Paralyzes Businesses
The Times heard from hundreds of
American companies, most of them small businesses, that face a reckoning
because of President Trump’s steep import taxes.
·
Ramper
Innovations, a manufacturer of airplane equipment based in Sitka, Alaska.
·
A
fold-up conveyor belt that unfurls in the belly of a plane to load and unload
cargo or luggage. He had an order from the U.S. Air Force that he was confident
would serve as a catalyst and bring in new customers from Asia and the Middle
East while luring potential investors.
·
Some
essential parts, such as motorized and static rollers from Japan, are only
available overseas.
·
Ramper
raised its price 17 percent — a ballpark estimate for how much the tariffs
would inflate its costs.
·
Businesses
are rushing to cancel factory orders or halt shipping containers before they
leave China, unable to afford the tariff when the ships arrive in America. They
are pausing capital investments and new hiring, and scaling back spending to
only the bare necessities. Future products are being scrapped, because they are
no longer financially viable.
·
Companies
will be forced to pay twice as much as they had budgeted to take delivery of
their products.
· Because May, June and July tend to be busy months for Chinese factories ramping up to churn out products to ship to the United States for the year-end shopping season.
Three
months ago, things were looking pretty good for Tim Fulton and Ramper
Innovations, a manufacturer of airplane equipment based in Sitka, Alaska.
Mr.
Fulton was spending his days inside his workshop doing what he loved: building
the company’s main product — a fold-up conveyor belt that unfurls in the belly
of a plane to load and unload cargo or luggage. He had an order from the U.S.
Air Force that he was confident would serve as a catalyst and bring in new
customers from Asia and the Middle East while luring potential investors.
Then,
the tariffs from President Trump struck.
The
New York Times heard from Mr. Fulton and hundreds of other American business
owners who said they have been stunned into paralysis by Mr. Trump’s barrage of
tariffs. They are reassessing their product lines and supply chains and even
putting their operations on hold.
Mr.
Fulton, 66, was floored at the size of the tariffs and how quickly and
chaotically they were applied. There were tariffs on Mexico and Canada and
steel and aluminum. Mr. Trump hit dozens of countries
with higher “reciprocal” tariffs he then put on hold when financial markets
crashed. China struck back and the import tariff on Chinese goods ratcheted up
to 145 percent.
Even
though Ramper makes its products in the United States and buys as much of its
components as possible from American companies, there is no getting around the
tariffs. Some essential parts, such as motorized and static rollers from Japan,
are only available overseas. The raw materials needed to build other critical
parts are also imported. Most of Ramper’s U.S. suppliers rely on imports for
some part of their supply chain.
Ramper
raised its price 17 percent — a ballpark estimate for how much the tariffs
would inflate its costs. Mr. Fulton also warned prospective customers that he
may need to increase his price further if tariffs pushed his costs up by more
than 5 percent. Prospective customers balked at the higher prices and the
uncertainty of what the final price might be.
After
years of refining and testing his foldable conveyor belt, a robust pipeline of
interested buyers disappeared overnight, Mr. Fulton said. Potential investors
turned gun-shy, afraid to plow money into a company
at the mercy of arbitrary tariff policies.
“I
feel like things have ground to a halt,” said Mr. Fulton, who started the
company in 2019 after working 38 years as a ramp agent, an airline ground crew
member who loads and unloads baggage.
With
no orders to fill, Mr. Fulton rented out his home in Alaska and temporarily
moved to Brazil, where his wife is from, because the cost of living is lower.
And instead of closing deals with investors to raise more money, he is
consulting a bankruptcy lawyer.
Businesses
are rushing to cancel factory orders or halt shipping containers before they
leave China, unable to afford the tariff when the ships arrive in America. They
are pausing capital investments and new hiring, and scaling back spending to
only the bare necessities. Future products are being scrapped, because they are
no longer financially viable.
And
the logistics firms, marketing agencies and others in the ecosystem of
companies that support small businesses are feeling the sting as the wheels of
commerce slow down.
“Everything
is stuck and no one knows what to do,” said Kristina Anisimova, who owns SinoImport USA, a supply chain management firm based in
Mooresville, N. C.
Ms.
Anisimova said one-third of her customers, most of whom work primarily with Chinese
factories, are suspending shipping orders, hoping that the tariffs are
eventually eased.
She
said the unluckiest companies are the ones whose shipments are already in
transit, because they no longer have the option of delaying or stopping an
order. When their goods arrive in the United States, some of those companies
will be forced to pay twice as much as they had budgeted to take delivery of
their products.
“When
you consider a project, you can see what you have to pay. But in this
situation, you cannot predict anything,” said Ms. Anisimova. “And now
everything is on pause.”
She
said the timing is also bad because May, June and July tend to be busy months
for Chinese factories ramping up to churn out products to ship to the United
States for the year-end shopping season.
Robb
Stilnovich, owner of Premier Columbaria, a supplier
of cremation memorials based in Centralia, Wash., said coming off a record year
in 2024, his company was considering remodeling its
warehouse to store more inventory and buying a new forklift. But those plans
are now on hold.
Premier
Columbaria’s modular granite memorials manufactured in China are now carrying
an import tax of 174 percent, compared to 29 percent last year. He ships 80 to
100 containers a year from China.
Without
any certainty in what projects might end up costing, his cemetery customers are
choosing to wait and see how things shake out. His future orders were down 97
percent compared to a year ago.
He
said one prospective customer had agreed to place an order with a 150 percent
markup. Mr. Stilnovich came up with that number based
on what his shipping company had estimated weeks ago was the maximum tariff
that could be applied. But when the actual rate surged even higher, the
customer canceled.
“Everybody
just hit pause, and they’re saying ‘Let’s see what happens in six months,’”
said Mr. Stilnovich, 53. “If I am down 97 percent
compared to last year, I can’t stay in business too long.”
He
is also worried about how the pause will affect his longtime Chinese factory
partner, who has worked with his company for two decades and has specialized
equipment and know-how critical to producing his products. Mr. Stilnovich said he was on his way to Xiamen, in
southeastern China, to help manage layoffs at that partner’s factory.
Mr.
Stilnovich said he has three containers in transit.
He expects to be taxed at 50 percent for two of those containers because they
shipped before the latest escalation in tariffs. For the last one, he expects
the shipment to carry a 174 percent tariff, requiring him to pay $80,000 at the
port.
He
said exposure to such unforeseen costs is “devastating” to his company, a
family-run operation of 20-plus years. Mr. Stilnovich’s
wife takes care of the back office and his brother handles sales. He said they
have inventory and projects lined up until August, but then things “drop off a
cliff.”
Any
pause is especially harsh for small businesses with limited cash flow. They are
usually working without much cushion to weather a sudden interruption, and they
have less negotiating power to persuade suppliers to hold orders for an
extended period of time.
For
Mr. Fulton of Ramper Innovations, the priority has become working on deals to
maintain some momentum for his company even if the baggage-loading product is
no longer made in the United States. He has an agreement with an Italian
company that will license his product and make it in Europe for sale in
European, Middle Eastern and African markets. He is looking into a similar deal
with potential partners in Thailand or India.
It’s
not what he envisioned when he invested his retirement funds into the company.
He wanted to manufacture in America. Specifically he
wanted to prove wrong the naysayers who said making a product in Alaska was
crazy.
While
Mr. Fulton said he is trying to remain positive and optimistic, he said he is
not sure how the company is going to make it.
“It
puts a lump in my heart when I allow myself to think about what’s coming down,”
he said. “There are these places where I might be able to get a finger hold,
but it doesn’t feel like I’m going to be able to pull myself up.”