Small US firms forced into shutdown by shifting tariffs
Tariffs Turn Cambodia‑Made Chairs Into a “Wheel of Misfortune”
When President Donald Trump announced a sweeping tariff increase on almost every trading partner on April 2, Ben Knepler—owner of the Pennsylvania‑based outdoor‑furniture company True Places—received a chilling phone call from the Cambodian factory that had been manufacturing his chairs.
“Stop production,” Knepler demanded, to which the factory replied that it could no longer compete at the proposed 49‑percent duty for Cambodian exports.
From Zero to 49 Percent in Four Months
Knepler’s experience echoes the fate of many U.S. manufacturers who have offshored everything from yo‑yos to clothing. The repeated tariff changes have created a “wheel of misfortune”, raising the duty on Cambodian exports from 0% to 49%, then to 10%, 36%, and finally 19%—all within four months.
Business Strategies in a Tariff‑Storm
- Pass-through surcharges – Some firms hike prices for customers.
- Import stop‑gap – Others halt imports when duties become prohibitive, hoping for bilateral agreements.
- Debt‑borne relocation – Knepler moved costly equipment to Cambodia to escape 25% Chinese tariffs, which now forces him to finance a new 19% duty.
Cost of the Tariff Payment
“We make the tariff payment when the product comes into the U.S., before we sell it,” Knepler stressed. He now worries whether his company will survive the hundreds of thousands of dollar debt incurred when relocating production.
Economists Warn of Inflation and Growth Drag
EY chief economist Gregory Daco noted that only 17.6% of U.S. imports will now face tariffs, a jump from 2.8% at the beginning of the year— the highest level since the early 1930s.
Trump touted the tariffs as generating tens of billions in revenue, but experts argue that tariffs require time to filter through to consumers, and many of Trump’s levies face legal challenges over the use of emergency economic powers.
Price Hikes Beyond Cambodia
Barton O’Brien, a Maryland‑based veteran who sells dog harnesses and other accessories, accelerated production and borrowed money to build up inventory before Trump’s tariffs took effect. He raised his own dog life jackets in the bathroom, noting that domestic production would cost nearly six times the retail price.
O’Brien also produces some items in India and Vietnam, where tariffs are 25% and 20% respectively. Under Trump’s 60‑percent tariff on Chinese imports (now reduced to 30%), competitors are forced to raise prices universally.
“If you look at the brands I compete with, we’re all made in the same countries,” O’Brien said. “We’re all going to have to raise prices together.”
