For nearly three months, Becky Oja has spent her days filing request after request with the Office of the U.S. Trade Representative, seeking relief from tariffs President Trump imposed on $200 billion worth of products from China.
So far, Oja, the controller of XCAD USA, a company that manufacturers irrigation components, has submitted nearly 250 requests with the Trump administration.
And she isn’t done yet.
“It’s primarily fallen on my shoulders. I haven’t hired anyone else to do this,” Oja said. “We couldn’t justify hiring someone to come in and fight it, because it’s inevitable, you have to pay it.”
XCAD is among the many businesses that has since the end of June submitted more than 17,000 requests for exclusions from tariffs the president slapped on Chinese imports in September 2018. The goods were first taxed at a rate of 10%, but Trump hiked the tariffs to 25% earlier this year and raised them for a third time, to 30%, beginning Oct. 15.
In the last three months of 2018, XCAD’s tariff and duty expenses quadrupled, Oja said, forcing the company to cut its labor force and employee hours, and raise its prices to cover the cost of the levies.
But XCAD is hoping its products — valves, irrigation canal gates, and gaskets — will soon be shielded from the tariffs, providing the company and others that sell the same products with relief until the fall of 2020.
“We’re just small potatoes over here in Idaho,” Oja said. “We’re a little guy, and this is hurting us.”
Many companies asking the Trump administration to shield their goods from tariffs have argued the U.S. lacks the manufacturers necessary to move their operations back home, as the president has suggested, while others have spent decades working with Chinese manufacturers to ensure their products can be produced to meet their specifications.
Others say it would cost them far more to make their goods in other countries and have had difficulty securing facilities outside of China, as those available have been gobbled up by larger companies with more capital.
“It would be like asking a supermarket to grow the food they sell when they don’t have a farm and don’t know farming,” John Hoge, co-owner of Sea Eagle Boats in Port Jefferson, New York, said of moving production out of China. “Even if there were a five- to 10-year plan, there doesn’t seem to be a 10-minute plan these days. It’s hard to invest not knowing what the political or economic landscape would be.”
Sea Eagle Boats was granted exclusions from the tariffs for its inflatable kayaks and paddles, but requests for exemptions for its other inflatable boats and pumps were denied.
For Hoge, the relief from the 25% tariffs has allowed him to maintain his staff of 28 people and leave employee benefits — Sea Eagle Boats covers 100% of its workers’ health insurance — untouched.
“We didn’t have to fire anyone, and that was an absolute certainty if we didn’t get the exemptions,” he said. “Good people that have worked for us for years, their jobs were on the line.”
The exclusions have also given him more time to set prices for the next season and develop new models.
“The trade war, it’s going to have devastating consequences,” Hoge said. “I’d much rather be designing new products or working on marketing campaigns than dealing with this issue. But we have to be thankful it’s at least for the moment delayed.”
The Trump administration granted an initial set of exclusions in August, and on Friday, it announced another round of exemptions from three different sets of levies, including the tariffs on $200 billion in Chinese goods.
Among the items that will no longer be taxed for now are dog harnesses and retractable leashes, single-speed bicycles, ink cartridges, and plastic straws.
The announcement was a victory for State Bicycle Co. in Tempe, Arizona, which asked the Trump administration in early July to remove single-speed bicycles from the list of products hit with the 25% tariffs.
The bikes, the company said, are made with more than 65 different components, of which fewer than 10 can be manufactured in the U.S.
“The biggest hurdle is the components,” Mehdi Farsi, co-founder of State Bicycle Co., said. “It’s more than just a frame. It’s the wheels, the chain, the tires, and domestically, it’s not something you can find.”
To cover the costs of the tariffs, State Bicycle Co. had to let one employee go and, after another worker left the company, left the position unfilled, Farsi said. For a business with less than 20 employees, it was a 10% reduction of its workforce.
The bike company also raised prices twice — once at the end of 2018 and again in the spring when the levies were hiked to 25% — and shifted production of its best-selling items to Taiwan.
For a “young business such as ours that’s trying to grow and has growth plans, it’s difficult to absorb,” Farsi said of the tariffs. “The initial thought was that we would try to weather the storm. We were hoping that it would be temporary, but obviously things got ratcheted up from there.”
Tariffs on all single-speed bicycles imported from China will be lifted until September 2020, giving companies like State Bicycle Co. an extended timeline to prepare should the duties remain in place and a trade deal between the U.S. and China not yet reached.
“Having a year without having to pay tariffs is going to allow us to focus on our growth plans,” Farsi said. The company’s plans for 2019, he added, “took a back seat because we had to re-engineer our supply chain.”
The Trump administration has been engaged in a protracted trade war with China for more than a year as the two sides work toward a trade deal.
But negotiations stalled in May, prompting the president to slap tariffs on $300 billion worth of Chinese goods, targeting all remaining imports that hadn’t yet been taxed, and leading China to stop buying agricultural products from the U.S.
But talks between Washington and Beijing resumed this month, and representatives from the world’s two largest economies are expected to meet for further negotiations in October.
