Wednesday, July 9, is supposed to be the day tariffs are reimposed after a 90-day pause. Trading partners have started getting letters from the White House — including Japan and South Korea, where a new 25% tariff on goods from those countries will begin next month. But as has happened time and again during this tariff back and forth, Wednesday is no longer necessarily the date to get a definitive understanding of how tariffs will shake out. Trump officials are signaling that August 1st is, possibly, the new deadline.
One might think, ‘Well, that’s a relief. At least there’s more room for negotiation.’ But for business owners, the uncertainty is starting to have a real impact.
Back in May, shoe company Deer Stags had to stop a shipment of $1 million worth of men’s boots and dress shoes because President Trump had raised tariffs on Chinese goods to 145%. For Deer Stags, that meant lost sales.
“We didn’t have the inventory we needed to make sales. So our sales in April, May, June were depressed,” said the company’s president Rick Muskat.
He eventually got the shoes with a lower tax of 30%. But between the loss in sales and higher costs, Muskat has had to pull back on business investments, including the launch of a new branding strategy.
“We cut back spending on advertising and marketing. We paused any capital investment in software systems we were considering because we had to preserve cash,” he said.
Businesses have been operating with uncertainty for months now. They’ve been in a holding pattern. And now the pain is starting to show up.
“Delayed investment can first become non-investment. Those are dollars not being injected in the real economy,” said Scott Lincicome, vice president of economics and trade at the Cato Institute.
Less advertising, less hiring, and less building and construction.
“You know, companies don’t grow,” Lincicome said.
Nicole Panettieri, who owns The Brass Owl and The Tiny Owl in New York City, is less worried about not growing and more worried about shrinking. Her women’s and kids’ boutiques had a terrible June. She thinks customers are hunkering down.
“We saw about a 20% decrease in June, which I’ve never seen. In the 11 years I’ve been in business, I’ve never seen a drop like that,” she said.
If the sales slump continues, Panettieri has some hard decisions to make.
“I don’t know what the future holds and because there’s so much uncertainty we’re pulling back hours and possibly staffing for the fall,” she said.
She said she may have to close one of her stores to reduce expenses.
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