As Trump continues to wage a trade war against China, American-run businesses continue to suffer the consequences. But now, thanks to a new set of proposed tariffs, entrepreneurs, consumers, and charitable organizations could be in real trouble.
Already, the administration has levied tariffs on over $50 billion worth of Chinese imports. And the effects are being felt. Recently, American motorcycle company Harley Davidson announced that it will be moving some of its manufacturing abroad in order to recuperate from the increased prices on Chinese goods. Since many of the raw materials used to construct the bikes come from China, the new tariffs caused a major increase in manufacturing costs. And like many American companies, Harley Davidson was faced with having to either push that cost increase to the consumer by raising prices or bear the brunt of these tariffs and risk possible financial ruin.
But as if this wasn’t bad enough on its own, the Trump administration just proposed another round of tariffs on an additional $200 billion worth of Chinese goods. This comes in addition to the second round that went into effect at the end of August. But unlike the other tariffs, which focused mostly on raw materials used to make cars or, in the case of Harley Davidson, motorcycles, the new tariffs are expected to deal a blow to an entirely new consumer market.
Tariffs and “Craftrepreneurs”
Of the 6,031 items on the new list of Chinese items to be taxed, over 500 of them are craft supplies sold in stores throughout the United States. Popsicle sticks and yarn might not seem like important items, but the craft industry is more lucrative and more important to the American economy than one might think. In fact, some might be shocked to learn that the craft supply industry accounted for over $44 billion of economic activity in 2016 alone. But there is something even more fascinating about this industry: its consumer base.
According to a testimony given last week by JOANN Fabric and Craft Stores CEO, Jill Soltau, 90 percent of the items purchased by consumers in its store are turned into other finished projects. This seems obvious enough given that it is a craft supply store. But what JOANN customers are doing with these finished products is where the story gets interesting.
For some of JOANN’s customers, these items are turned into finished craft projects that are then sold at farmers markets, local boutiques, or on sites like Etsy. If Trump’s new tariffs are put into place, many of these “craftrepreneurs” will be unable to afford the materials needed to construct their finished merchandise. And for those who depend on selling these crafts for their livelihood, this could mean major trouble.
Trump has repeatedly said that these tariffs have been imposed to teach China a lesson, but American businesses are the ones who are dealing with the negative consequences. And in addition to the entrepreneurs who sell crafts, these new tariffs also spell trouble for small craft supply stores as well.
While JOANN’s is a household name, most American craft supply retailers are independently run mom-and-pop stores. Many of which are in the heart of the Midwest and run by female business owners who cannot afford to pay more for their product. In order to make up for the increased costs of getting supplies from China, many of these business owners will be forced to lay off employees or increase the consumer prices. Additionally, this could ultimately lead to smaller businesses having to close their doors forever. Either way you look at it, these Tariffs are harming entrepreneurs, the very backbone of America.
Trade Wars Negatively Impact American Charities
But entrepreneurs aren’t the only ones caught in the crossfires of this escalating trade war. During her testimony, Soltau also explained the impact these tariffs will have on American charities.
“Approximately one out of three items made by JOANN’s customers is given away to military veterans, the hospitalized, the poor and the underprivileged. We know that 7 million fleece blankets and 10 million quilts are donated by our customers each year to Project Linus, church groups, veteran support groups and other charitable organizations.”
But once Trump’s new tariffs are enacted, the costs of the supplies needed to make quilts and blanket will be increased by around 25 percent, according to JOANN’s estimates. This means that many volunteers will be unable to afford to make as many blankets and quilts as they could before. One of the charities mentioned above, Project Linus, is a group who specialized in giving comforting, security blankets to sick, hospitalized children. But if the costs to make these items increase, this means fewer children receiving blankets that bring them a great deal of cheer.
Trade wars are nasty games where nobody wins and everybody loses. Trump should put a stop to this before more entrepreneurs, consumers, and charities suffer needlessly.