Lets start at the beginning, what is a tariff? A tariff is a tax that a government places on goods imported from other countries. The goal is often to make imported goods more expensive, encouraging people to buy products made domestically. However, the cost of these tariffs is usually passed on to consumers, who end up paying higher prices for items at the store. Tariffs can also affect businesses by increasing the cost of materials they need, making it more expensive to produce goods.
Late Monday, Donald Trump made waves in the business and political world. The incoming president announced plans to impose a 25% tariff on goods from Mexico and Canada and additional tariffs on China starting his first day in office.
“This Tariff will remain in effect until Drugs, especially Fentanyl, and Illegal Aliens stop this Invasion of our Country!” Trump wrote on Truth Social.
For people like Scott Harris, co-owner of Catoctin Creek distillery in Virginia, this news feels all too familiar. Eight years ago, Harris and his wife, Becky, were growing their whiskey sales in Europe. Then, Trump’s trade war began, with steep tariffs on steel and aluminum leading to Europe imposing a 25% tariff on American whiskey. Their European sales went from 11% of their business to nothing.
Though those tariffs were later removed, the damage was done. “We don’t have meaningful business in Europe anymore,” Harris said. Now, with Trump’s return, businesses are bracing for a possible new trade war. Manufacturers warn the costs may hit their customers, too.
The Case for Tariffs
Trump and supporters like his commerce secretary pick, Howard Lutnick, argue that tariffs will boost U.S. manufacturing and reduce the trade deficit, where the U.S. imports far more than it exports. Trump even called “tariff” the “most beautiful word in the dictionary.” But many Americans are worried about rising prices, and companies warn the approach could hurt more than help.
Nate Herman, from the American Apparel & Footwear Association, says tariffs often backfire. He points to the Smoot-Hawley Tariff Act of 1930, which increased costs for consumers but didn’t save industries. Today, 97% of clothes and shoes sold in the U.S. are imported, and domestic factories struggle to find workers or materials. “If we’re going to make things here, we still have to import the parts to do it,” Herman explained.
Even Ken Griffin, a Republican billionaire and Trump supporter, warns tariffs might lead to “crony capitalism,” where businesses rely on protection rather than competing globally. Tariffs may give industries a quick boost, but Griffin says they could ultimately make companies weaker.
Real-World Impact
When Trump’s first tariffs hit, companies scrambled. Prevelo, a California-based kids’ bicycle maker, had to move production from China to Taiwan, Cambodia, and Thailand to avoid high costs. Its founder, Jacob Rheuban, is now worried about a repeat. Moving production is expensive and takes time—something businesses don’t always have. Rheuban said, “Tariffs alone won’t bring manufacturing back without other initiatives.”
Herman from the AAFA warned that Trump’s new tariffs could cause even more inflation. Prices for clothes and shoes have already risen 2-4% annually due to trade tensions and the pandemic. “This could lead to much higher inflation—two, three, even five times what we’ve seen,” he said. If Trump follows through, it could hurt the economy and even trigger a recession.
Others in the food and drink industries share similar concerns. Errico Auricchio, president of BelGioioso Cheese in Wisconsin, says tariffs “damage the economy” by raising costs without actually helping U.S. businesses thrive. “Stopping imports doesn’t automatically mean we make more here,” he explained.
The Bigger Picture
Scott Harris of Catoctin Creek warns that tariffs would drive up prices on items Americans don’t even realize are imported, from electronics to food. “We could see costs for all kinds of goods skyrocket,” he said. While some hope public backlash might make Trump reconsider, Harris isn’t optimistic. “We’ve been here before,” he said.
A Wait-and-See Approach
Some business leaders, like Auricchio, believe Trump’s threats might not turn into reality. “Election-time promises are often exaggerated,” he said. “I don’t think Trump wants to disrupt global trade completely.”
Still, the uncertainty is unsettling for businesses, which thrive on predictability. “Even bad news is better than no news,” said Harris. For companies like Prevelo, planning supply chain changes could take 18 months or more. The lack of clarity makes it harder to prepare.
As the new administration takes shape, businesses like Catoctin Creek are left hoping for clear policies—so they can focus on what they do best, whether that’s making whiskey, cheese, or bikes. But for now, the uncertainty looms large.