‘Survival of the stubborn’: Businesses across Kendall County prepare for possible tariffs

While nations exchange tit-for-tat tariffs across international borders, local businesses across Kendall County agree the uncertainty going forward that concerns them most about navigating potentially turbulent markets.

Closer to home, there is uncertainty among business owners about how tariffs and President Donald Trump’s aggressive trade stance will impact their bottom line.

Nate DeMont has owned DeMont Guitars in Oswego, a custom-made guitar shop, since 2013. He said he’s closely watching how tariffs could affect prices of imported parts from countries like China and Japan.

“My goal is to make guitars locally from as many raw materials that we can manufacture here. At the same time, the tariffs could affect the parts we order from those countries,” DeMont said. “We CNC guitar bodies, parts, and wood and are working on refining down aluminum, brass, and copper from local scrap materials to make it into final product. ... If it suddenly becomes difficult to import materials, we want to be able to produce, sell, and have full control over it here.”

DeMont said his company does a lot of back-and-forth trading with Guyatone, Japan’s first electric guitar manufacturer. He said some parts they import are already too expensive, and tariffs could exacerbate the issue.

For small electric parts, like potentiometers, capacitors, and resistors, DeMont imports from China and Taiwan. Even an increase in guitar knobs could drive overall prices up.

“Some small order parts may not be tariffed, but it seems like a lot if it’s still up in the air,” DeMont said. “We also order some higher-quality parts from Germany. Prices are a little higher than the Chinese parts, but if the price is close enough after a tariff, maybe we will just order from Germany.”

DeMont said producing domestically is a little more pricey, but it may even out in costs if tariffs make importing materials more expensive.

“It will raise some prices if the imported items get tariffs, so we would definitely have to pass on some costs to customers by slowing marking-up our costs and services,” he said

Hammering out the details

Andrew Ayers has operated The Hammer Source in Yorkville for 25 years. His company sells about 1,200 different hammers domestically and internationally, working with materials like steel, copper, aluminum, wood, brass and alloys.

His business mostly imports raw materials from Germany and England, countries already containing inbound tariffs which may increase further if the trade war expands.

“My long-term plan is to stay in business and survive,” Ayers said. “When you have a small business, it’s survival of the most stubborn. If something doesn’t work, you just have to try something else.”

Ayers said while his company does ship to Canada and import from Europe, there is uncertainty predicting the future because it’s currently not clear if tariffs will reach down to affect his products.

“If my costs increase, then my products’ prices increase, it’s just as simple as that,” Ayers said.

He hopes certainty is brought to the markets in the long term as businesses find ways to adapt in the meantime.

“It seems like the tariffs that are being talked about are just a kind of scary negotiation tactic in large part,” Ayers said. “So, at least for now, I’m not really worried about it.”

Sawing down unfair competitive advantages

Dan Nicholson has owned Nicholson Logging and Lumber in Yorkville since 1986. While his business primarily produces hardwood lumber and provides timber improvement services domestically, he expects the tariffs to touch every facet of the market’s supply chain.

His company does not import timber from Canada directly, but remanufactures products that were originally exported from Canada.

“All costs are borne by the consumer, and as far as the products coming out of Canada, prices will go up on certain things,” Nicholson said. “I think there’s long-term benefits, let’s make it a level playing field with the subsidized Canadian lumber. I think then the free market will settle many things out. The role in government is not to create any profit in any industry, because it’s not sustainable.”

Nicholson said getting tough on tariffs is about changing the minds of consumers. He said American shoppers have become too reliant on cheap goods without contemplating the indirect consequences of their demand.

“If you buy cheap imported milk, it ultimately hurts you too, because that local farmer affects your area’s economy,” Nicholson said. “It may be indirect, but eventually that comes home to you. Everybody wants products cheaper, but at what price do our communities pay?”

Nicholson said he expects the countries facing tariffs to largely fall-in-line as American consumer habits evolve. In the past, he said, Trump has used pressure to bring somebody to the negotiating table.

“Canada needs us way more than we need them, the same with Mexico. We have a fair amount of leverage,” Nicholson said.

There’s always a ripple effect

Rich Kiefer, professor of political science and history at Waubonsee Community College, believes unexpected ripple effects throughout the economy will make changes born of tariffs hard to predict. He said the tariffs Trump put in place his first administration are an example of that.

“When he put tariffs on Chinese products, China retaliated by putting tariffs on our agricultural exports, like soybeans,” Kiefer said. “The U.S. government then decided to give subsidies to American farmers to offset that loss. There’s always a ripple effect.”

Kiefer said he worries the desire to eliminate unfair foreign competitive advantages might result in some American businesses facing the brunt.

“With the argument short-term pain for long-term benefit, there is some truth to that, we know that China subsidizes industries, as does the European Union on things like the Airbus aircraft,” Kiefer said. “But some of that short-term pain can’t go on indefinitely because companies can’t survive not being profitable. Long-term, you may want a more level playing field, but you have to be in a position to absorb that short-term pain.”

Kiefer said inspiring change in consumer habits or in production can be easier said than done.

“When consumers go to the store, they don’t always look at where products are coming from, and sometimes it’s hard to tell a product’s origins, especially with assembly products,” Kiefer said. “One of the industries they’re looking at is home construction, and if we rely heavily on timber imports from Canada, there’s not an automatic alternative to buy American timber at the same cost. Same with the steel industry. The U.S. has the capacity to fill that void, but not overnight.”

Kiefer said Trump seems to favor using tariffs to coerce policy concessions with our trading partners, unlike the more traditional route, like when he re-negotiated NAFTA with Canada and Mexico during his first administration.

“After Trump negotiated a new trading agreement with Mexico and Canada during his first term, they are now arguing he is violating this agreement,” Kiefer said. “When he recently threatened Mexico and Canada with tariffs, part of the goal was to get Mexico to increase troops on the border and for Canada to change some policies. Amongst our allies like Canada, Mexico, and the European Union, who are some of our biggest trading partners, it can create a climate of bad feelings and mistrust with each other.”