Businesses and consumers in Arizona are bracing for Trump tariffs
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President Trump's massive tariffs threaten to hit Arizonans' pocketbooks and increase the cost of doing business in the state.
The big picture: The reciprocal tariffs, which target vital trading partners with massive levies, could raise consumer prices, interrupt business activity and upend global trade, Axios' Courtenay Brown and Neil Irwin write.
- Major stock indices continued to drop Monday, and Trump threatened an additional 50% tariff on China if it doesn't lift the retaliatory duties imposed on the U.S. last week.
Zoom in: Arizona has substantially grown its manufacturing sector in recent years, but so many of the components that manufacturers use to build cars, electronics and other products are made in other countries, Danny Seiden, president and CEO of the Arizona Chamber of Commerce and Industry, told Axios.
- Companies in the state are having ongoing internal discussions about what the tariffs mean for production costs, he said.
- "I don't know who benefits. Have you heard anyone out there who runs a business celebrating … saying, 'Now I can go sell my goods to Vietnam without a tariff,'" Seiden said.
- And consumers will pay more for the goods they buy, many of which are imported, he added.
Between the lines: Chris Camacho, president and CEO of the Greater Phoenix Economic Council, told Axios it's too early to tell what the full implications will be.
- But if Trump's plan is to use the tariffs as a negotiating tool, Camacho said he hopes the administration does so quickly "because if this continues with the retaliatory tariffs in foreign markets, that's just going to create even further global concern and uncertainty."
Meanwhile, it's not just companies that import goods expected to feel the pinch. Seiden said businesses that export materials like raw ores are concerned that retaliatory tariffs from other countries will lead international customers to seek other, cheaper sources.
- Arizona exported $32.2 billion in goods last year, an 11.6% increase from 2023, per the Arizona Commerce Authority.
- The state was particularly active in exporting metal ores, semiconductors and other electronic components, computer equipment, and aerospace products.
Goods from Canada and Mexico are exempted from the tariffs as long as they comply with the free trade agreement Trump negotiated in his first term.
- Seiden said that could lessen the effect of the tariffs.
- But the United States-Mexico-Canada Agreement won't completely mitigate the increased costs, he said.
Zoom out: Trump is coming under increasing pressure from American business leaders, some of whom backed him in the election.
- Billionaire investor Bill Ackman, an outspoken Trump supporter, warned of "economic nuclear winter" if the tariffs were not paused immediately.
The bottom line: Trump quickly reversed some of his earlier tariffs when they shook the markets, and he could do the same again.
- Markets swung wildly Monday after a false report that he would pause the tariffs for 90 days.