More tariffs may be coming under Trump

Rick Muskat, president of footwear brand Deer Stags, woke up with tariffs on his mind: “Well, we started that conversation first thing this morning.”

It’s one he’s had on and off since 2016 — his company makes most of its shoes in China.

If Trump’s last Oval Office stint is any indication, his upcoming term is likely to include tariffs. Last time around, he targeted steel, aluminum and goods from China. This time, Trump has proposed as much as a 20% tariff on all imports and a 60% tariff on Chinese goods.

Tariffs or not, Muskat said, manufacturing will stay in China.

“It’s very costly to move production from one country to another. There’s a lot of investment in equipment. The molds, the patterns, the cutting dyes,” he said.

Tariffs are supposed to encourage U.S. companies to diversify their supply chains. Erica York at the Tax Foundation said this did happen in some cases during Trump’s last term. 

“Imports from Taiwan, from Mexico, from the European Union increased. We also saw some substitution toward domestic suppliers,” she said. American steel, for instance, got a boost.

But tariffs come with a price. Scott Lincicome at the Cato Institute said the 2018 steel tariffs affected makers of beer kegs, cars and cutlery.

“Those companies were extremely hard hit because a huge chunk of their costs just got suddenly more expensive,” he said.

Lincicome said some companies ate those costs. Many passed them on to consumers. 

That’s what Muskat at Deer Stags said he’ll do. Trump’s proposed 60% tariff would add something like $25 onto the sticker price of his shoes.

There is one other option: “If I don’t pass the costs on ultimately to the consumer, then I have to reduce my business so that I can stay in business,” he said.

He said that would mean cutting staff.