Businesses worry China tariffs could hurt economy
By: Daniel Munoz
NorthJersey.com
USA Today Network - New Jersey
..... Eddie Russnow says his business has been able to avoid the impact of President Donald Trump's new 10% tariffs on imported goods fro china - so far.
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Trump had been talking about imposing the tarries well before he took office, and Russnow's firm - Kearny-baxed [NJ] Mac Products, which makes electrical distribution and transmission prosecutes - stockpiled raw materials from China in between trump's November [2024] win and his January 20 [2025] inauguration.
..... In additions to the new tariffs on Chinese imports, Trump had also announced 2% tariffs on Canadian and Mexican imports which he has since delayed for 30 days as part of international negotiations. Mexico and Canada had previously vowed retaliatory tariffs on U.S. exports.
..... Even with the 30-day pause, clients in Mexico and Canada have become skittish, Russnow said.
..... "As a business person, how do you plan if the three largest trading partners of ours, Canada, Mexico and China - are almost being cut off from our ability to be able to plan?" he said. "It's stressful and it's very frustrating.
..... Tariffs are essentially a tax on foreign goods paid by businesses importing those raw materials and manufactured products.
..... Imports from China to New Jersey were valued at $13.6 billion in 2023, according to China's consult in New York. china ships the largest volume of goods by far to the Port of New York and New Jersey. It sent more than 1 million TEUs, or 20-foot equivalent units of products in 2023, well ahead of India's 320,000 TEU is the generic unit of cargo capacity, basically the size of a standard 20-foot-long shipping container.
..... Trump's tariffs between the U.S. and its trading partners Canada and Mexico are not off the table, they're only on hold for month.
..... That's why Jeffrey Otteau - managing partner and chief economist for the Otteau Group, a real estate consultant in Old Bridge [NJ] - figures that the tariffs with china could similarly be a negotiating tactic, albeit with higher stakes than Canada or Mexico given the nation's superpower status.
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"What's going on at the geopolitical level between the U.S. and China - there's a lot of things that are on the table that are all part of this conversation,." he told NorthJersey.com .
..... "The biggest wet blanket o any economy is uncertainty," said Robert Scott, an economist at Monmouth University in West Long Branch. [NJ]
..... That leads to an economic slowdown, as people pull back spending, worried about the possibility of rising prices, Scott added.
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"The economy is heavily tied to social psychology," he said.
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As a result of that uncertainly, businesses might not hire more workers, or they might cut costs, said Chris Emigholz, who heads government affairs for the New Jersey business I Industry Association.
..... "On one hand, it will increase prices for U.S. consumers of goods that come from China, and they are substantial," said Parul Jain, who teaches finance and economics at the Rutgers Business School in Newark. [NJ] "On the other hand, the retaliatory tariffs will be a headwind to business activity and employment here at home."
..... The Tax Foundation estimated that the combine tarries on Canada, Mexico and China, would amount to 4800 of addition expenses for U.S. households i 2025. Tariffs on china alone would increase household cost by$172, NPR reported.
..... But that assumes a worst-case scenario - that is, the entire 10% increase is passed on to consumes, Otteua said.
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A company might increase the price of a product 5% and eat the rest of the tariff increase, Otteau said.
..... And in a $10,000montly two-person budget, the most that tariffs would eat into the budget would be by about $200, or a 2% inflation increase, he said.
What times could be affected?
..... Common imports to the U.S. from China, according to Trading Economics and the U.S. Agriculture Apartment that could be affected by Trump's tariff plan include:
* Fish and crustaceans.
* Vegetable fats and oils.
* Vegetable (especially corn), fruit and nuts.
* Soaps, lubricants, waxes, candles and modeling pastes.
*
Cereal, flour, starch, wheat and milk products.
* Coffee,, tea and spices.
* Sugar.
* Cocoa
*
Dairy products, eggs, honey and edible products.
* Vinegar.
* Apple juice.
* Garlic.
Impact o Apple iPhone
..... One product - Apple iPhone - could participially be hit by the tariffs, CNBC reported. Apple received a waiver from the tariffs Trump imposed in 2018; this time Apple might pas any tariff cost on to consumers, CNBC said.
..... Higher tariffs could keep interest rates a t their current level, said Tom Bracken, who heads the New Jersey Chamber of Commerce.
..... The prospect of tariffs last weekend [02/01-02/2025] rattled markets, and Otteau said that will give the Federal Reserve pause about whether to lower interest rates in the near future.
..... "this is not positive news," Otteau said, but "the effect on households is likely to be relatively small."
..... This article contains material from USA Today.
Email: munozd@northjersey.com; X; @danielmunoz100 and Facebook.