Tariffs' toll: How Trump's proposed import levy could weigh on North Carolina
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Corporations in North Carolina are bracing for the potential wave of tariffs on imported goods the incoming Trump administration is promising.
Why it matters: Economists warn that the tariffs will be a drag on the economy, especially if companies have to pass the higher costs on to customers.
The latest: On Monday night, President-elect Trump said he would impose additional tariffs on China, Mexico and Canada after taking office, tying them to the flow of migrants and drugs into the U.S., Axios' Ben Berkowitz reported.
- A tariff of 25% on all goods coming from Canada and Mexico would take effect on Jan. 20, he said on Truth Social. Imports from China would face a 10% tariff "above any additional Tariffs," he wrote.
- A representative from Trump's team did not respond to Axios' request for comment.
Between the lines: At Mooresville-based Lowe's, roughly 40% of products are imported, CEO Marvin Ellison recently told reporters. He noted that the Biden administration didn't remove any of the tariffs imposed by the previous Trump administration.
- "We built an incredibly robust function to manage costs and to do this in a constructive way."
- It's too early, Ellison said, to get into specifics about managing higher costs, but the home improvement retailer is working with its suppliers on "scenario planning."
What they're saying: "Obviously we won't be alone in the management of this process. It'll impact every company that imports goods, specifically from Asia. We'll be able to manage this as well as any retailer in the world," Ellison told Axios.
State of play: The creation of a new 10% to 20% tariff on all imported goods as well as a 60% to 100% tariff on Chinese imports could cost American consumers from $46 billion to $78 billion in spending power each year, according to a study from the National Retail Federation.
Zoom out: Jonathan Gold, NRF's vice president of supply chain and customs policy, said there has been a lack of clarity on what the tariffs will ultimately look like or when they will be put in place.
- That has kept businesses from being able to prepare for how to take on the additional costs or how much inventory to keep.
- "In general, it is important to understand the tariff is a tax that is paid by the U.S. importer. It is a cost to the U.S. business. Companies will not be able to absorb the costs," Gold told Axios.
By the numbers: Gold said studies show that the average consumer would pay somewhere $2,600 or more per year if tariffs are implemented.
- The NRF study gave some examples of what a tariff price hike might look like. A $40 toaster oven, for example, could increase to $48 to $52 after tariffs. And a $2,000 mattress and box spring set could rise to $2,128 to $2,190.
What they're saying: Art Pope, the CEO of Variety Wholesalers, which owns the North Carolina-based discount retailer Rose's, said he believes new tariffs would put a larger burden on lower-income customers who are still adjusting to the inflation of the last four years.
- "I am very concerned about what the proposed tariffs by President-elect Trump would do to the economy and to the consumers," Pope told Axios.
- "For the lower-income customers — and I am proud that we have primarily bring great value to lower-income customers — they don't have that discretionary money" when prices go up, he added.
Zoom in: Furniture industry executives in North Carolina have also expressed concerns after many of them shifted their supply chains away from China and to countries like Vietnam during Trump's last administration.
- Andy Counts, CEO of the American Home Furnishings Alliance in High Point, told NPR that tariffs could help companies that make and sell in the United States. But "it would have a huge impact if Trump were to ... take those tariffs into Vietnam and other countries as a result of those supply chains being moved," he added.
The bottom line: This election was "certainly about affordability," and voters are worried about rising prices. Gold told Axios. "Across-the-board tariffs will lead to higher prices, because [companies] won't be able to absorb the costs. Small and medium-sized companies, especially, won't be able to do that and will pass it along to customers."
Editor's note: This story has been updated to reflect corrected numbers from Lowe's that about 40% of its products are imported (not 45%).
- It has also been updated with the latest information from President-elect Trump on his proposed tariffs.