Blue Ridge Home Fashions Inc.’s problem is feathers. For Empire Today, it’s vinyl planks. At Jammy Inc., there’s a whole bunch of things, from tail lights to reflective tape.
All three companies are on the losing end of President Donald Trump’s trade war with China. Their supply chains have been disrupted, their planning and forecasting thrown into chaos. The whole experience has been, in the words of Jammy Chief Executive Officer Ralph Bradley, a “real kick in the ass.”
The next blow could come this week, with tariffs of as much as 25 percent hitting $200 billion in goods, including materials and parts these businesses buy in bulk. The Trump administration has avoided putting duties on finished products, like smartphones and sneakers, for fear of a consumer backlash at home as it aims to punish China. But as it turns out, the president who vowed to boost U.S. manufacturing is hammering some of the companies that managed to survive globalization and thrive.
Since Trump kicked off trade disputes with a big chunk of the world, these companies have been navigating to limit the financial pain -- and traverse the confusion. One day, a deal with Beijing seemed possible; the next, the president would vow to slap levies on everything the Asian nation sells to the U.S.
“They’ve thrown so many unknowns into it that it’s made it challenging to make any long-term strategic decisions,” Bradley said. “It’s a reason for loss of sleep.”
The first round of import duties on China hit $34 billion in products in July, the next on $16 billion worth in August. The $200 billion question has been hovering for weeks. It’s all made for “a lot of volatility here in tariff world,” said Carol Tome, chief financial officer of Home Depot Inc.
The smaller the enterprise, of course, the more difficult the challenge. They don’t have the economies of scale, the back-office staff, the lobbying forces or the deep pockets to roll with the punches as a Home Depot-size company can do.
Jammy, an auto-parts importer Bradley’s dad started almost half a century ago in Fort Worth, Texas, has 11 employees and recorded $12 million in revenue last year. It embraced globalization in the ’80s, forging a joint venture with a factory in Shaoxing, in eastern China, that makes the injection-molded plastic and bent tubular steel Jammy needs to fashion tail lights and other parts for everything from giant lawnmowers to combines made in the U.S.
“It’s impossible for a company like mine to just change their manufacturing location,” said Bradley, 39, who estimated Jammy has put $5 million into the Shaoxing plant. “I have too much invested over there.”
The tariffs that went into effect on Aug. 23 included reflective tape -- the kind that goes on the sides of tractor trailers -- so Bradley paid $7,500 to air-freight 1,700 rolls a few days before. That was about ten times the cost of shipping by boat, but he had orders to fill.