Scott Olson/Getty Images President Donald Trump
- President Donald Trump is waging a trade war on many fronts, with tariffs on steel, aluminum, Chinese goods, and more.
- While Trump argues the tariffs will make the US economy stronger, so far the duties are leading to layoffs.
- Small businesses across the US are grappling with the increased cost of goods, and some of them are resorting to layoffs to save money.
President Donald Trump's tariffs on imports of steel, aluminum, and some Chinese products have started pushing up prices for many US companies that rely on those items to create final products, forcing many firms to make tough decisions about where to cut costs.
Many large companies have for now decided to pass on those costs to consumers or absorb the losses into their profit margins. But some smaller US businesses have been forced to cut labor costs to offset the higher amounts they're paying for parts.
From Wisconsin to South Carolina, small businesses are starting to lay off employees, citing Trump's tariffs. Many firms have warned that the worst is yet to come.
Some examples:
- Mid-Continental Nail, the largest US nail producer, laid off 130 workers after steel prices jumped. One of its plant managers says the entire business could shut down over the next few months.
- Element Electronics, a TV manufacturer, plans to lay off 127 workers from its South Carolina factory as "a result of the new tariffs that were recently and unexpectedly imposed on many goods imported from China."
- Brinly-Hardy, an Indiana-based maker of lawn care equipment, laid off 75 workers. "We are collateral damage in this effort," Jane Hardy, the company's CEO, told The Washington Post.
- The Tampa Bay Times said in April that it was forced to lay off 50 people due to a tariff on Canadian newsprint. Other newspapers in small communities, such as House Speaker Paul Ryan's hometown paper in Janesville, Wisconsin, have also been forced to lay off staff.
Some businesses, such as Moog Music, which manufactures electronic musical instruments, have not taken action but have warned that the tariffs could eventually lead to layoffs. Other small businesses have furloughed workers or paused expansion plans while they wait and see how the trade fights play out. Small operators in industries from lobster fishing to metal shapers have curtailed workers' hours.
While the tariffs are causing acute pain for some companies, more widespread labor market issues have not yet appeared. Trump's tariffs apply to only a concentrated number of industrial goods, and the total amount of US imports hit with tariffs remains low.
The July jobs report showed a steady increase in employment and a strong labor market, but economists have warned that business concerns about tariffs could start to weigh on hiring growth if the trade battles continue to escalate.
According to a study by the Trade Partnership, a free-trade industry group, Trump's steel and aluminum tariffs will result in a net loss of over 400,000 US jobs. Other estimates of the job losses are somewhat smaller.
Even more effects on jobs could come if Trump follows through on his threat to impose tariffs on imported cars and auto parts:
- Volvo warned the administration that it could scrap 4,000 planned jobs in South Carolina if the tariff goes into place.
- Other foreign manufacturers with plants in South Carolina, such as BMW, say they could also be forced to make layoffs.
A study by the Peterson Institute for International Economics found that a 25% auto tariff would lead to the loss of 195,000 US jobs over a three-year period.