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Apple, other US companies say Trump’s tariffs will make products pricier

The latest round of proposed tariffs would affect the Apple Watch, AirPods and Apple Pencil, the company said in a letter to the government. (Photo credit/CNBC)

President Donald Trump could levy tariffs of up to 25% on $200 billion worth of Chinese imports any day now, leaving many U.S. businesses worried about increasing competition, potential layoffs, and price increases for consumers.

Should these tariffs go into effect, everyday products from baby wipes to bicycles could be caught in the fray.

In recent weeks, nearly 3,000 comments, including requests to testify, have been filed with the U.S. Trade Representative’s Office, urging the Trump administration not to go through with the tariffs. But the effort seems a long shot for them. The deadline for public comments was Sept. 6, and Bloomberg reported the tariffs could go into effect very soon. In the last round of tariffs, only five products were removed from the original list of 284 goods.

Here is what some big multinationals and small businesses have to say about the tariffs.

(David Foster/ Yahoo Finance)

Apple

Caught in the escalated trade tension between Washington and Beijing, Apple (AAPL) spoke out to oppose the tariffs, which cover a wide range of Apple products, from Apple Watch, Air Pods to Apple adapters, cables and chargers. In the comment, the world’s most valuable publicly traded company emphasizes it’s the largest U.S. corporate taxpayer to the U.S. Treasury, and warns the imposition of tariffs could result in lower U.S. growth and competitiveness and higher prices for U.S. consumers.

“Because all tariffs ultimately show up as a tax on U.S. consumers, they will increase the cost of Apple products that our customers have come to rely on in their daily lives,” the company said in the comment filed on Sept. 5.

President Trump, who recently dined with Apple CEO Tim Cook, reacted to Apple’s comment by urging them to make products in the U.S., instead of China.

It’s worth noting that Apple’s major manufacturer Foxconn broke ground on its plant in Wisconsin this June. While the Trump administration is making final touches on tariffs on the $200 billion worth of Chinese goods, Apple is scheduled to unveil the next version of iPhone on Sept. 12. Apple stock slipped 0.8% at market close Friday.

Samsonite

Luggage behemoth Samsonite — whose subsidiary brands include Tumi, American Tourister, Hartmann, High Sierra, Gregory, Lipault, Speck and eBags — sources more than 80% of its products from China. In an industry heavily dependent on imports, it already faces high duties and would have to pass additional costs from tariffs on to customers.

“Over 99% of the bags and travel goods sold in the U.S. market today are imported. These products are not made in the U.S. There is no reason to impose a tariff on a good that is not made here, will not be made here and cannot be made here for several years due to the lack of a supply chain for all the necessary components parts,” Samsonite said in a comment filed to USTR. “The only impact this tariff will have is on the consumer.”

The luggage giant Samsonite sources 80% of products from China. (AP Photo/Kin Cheung)

What’s more, it’s not feasible for the company to shift production to another country because “it would take years to identify a supplier of the quality and quantity we are currently importing,” the company wrote. “Our products are not high-technology goods with inherent intellectual property vulnerabilities and we are limited in the countries where we can source our products. Although we have explored sourcing from other countries, there are few viable alternatives available due to the large capacity production and quality available in China.” In addition, in order to shift production, it would take years to identify a supplier of the quality and quantity we are currently importing,” the company wrote.

Vera Bradley

Subject to the same category of tariffs as Samsonite, Vera Bradley (VRA), the Indiana-based backpack maker said imposing tariffs could harm its improving business and erase all of its savings from the tax reform bill. Meanwhile, it has been making efforts to reduce its dependence on China. Between 2014 and 2019, Vera Bradley expects to lower its China-based production from 95% to under 50%.

But the company said it doesn’t have enough time to react to the looming tariffs. “Our supply chain cannot react quickly and the increase in tariff will have a material negative affect on our operating results or be passed on to our customers,” wrote Vera Bradley in a comment.

Rebecca Minkoff

Handbag designer Rebecca Minkoff has testified testify at hearings before the United States trade representative.

Fashion designer Rebecca Minkoff submitted a letter to U.S. Trade Representative Robert Lighthizer to testify regarding the proposed tariffs, noting that these duties would have unintended consequences by opening the field for trademark squatters in China.  

“While we agree with — and are grateful for — the administration’s efforts to change unfair trade practices as they relate to intellectual property, we believe that tariffs are a suboptimal approach in our industry,” Minkoff wrote. “Placing tariffs on products like ours (in particular handbags) that are not at risk for intellectual property theft in manufacturing, are not related the the China 2025 plan, will only ennoble the bad actors in the Chinese economy who pose a genuine threat to our business via bath faith registrations of our recognized trademarks.”

The Honest Company

Jessica Alba’s the Honest Company says the tariffs on baby wipes will increase its costs.

The Honest Company, the household products startup founded by actress Jessica Alba, said that 14% of its total sales come from baby wipes and tariffs would crush its business.

“Increases in Honest’s product costs by as much as 25% from the proposed tariff would impede Honest’s ability to competitively market and price its baby wipes in an industry dominated by large, established companies,” the company wrote in a letter. “As a not-yet-profitable, start-up company, Honest would be unable to efficiently take on the costs of additional duties that its larger, more established competitors are more easily able to absorb. The proposed modification would also require Honest to increase its prices, potentially reducing the availability of core baby necessities in the U.S., thereby negatively impacting U.S. consumers.”

Trek Bicycle Corporation

Wisconsin-based Trek Bicycle Corporation, one of the largest in the U.S. with nearly $500 million in domestic sales, estimates that it would pay an additional $30 million in tariffs if the 25% rate is approved.

“Trek will be forced to pass these costs on to the consumer, raising prices on adult bicycles, kids bicycles, components, and key bicycle-safety equipment like helmets,” the company wrote.

Furniture and bedding

Trump’s tariffs on China not only target equipment used by hobbyists, but also household items, including furnishings and home decor.

For instance, more than 80% of the world’s feather and down filling used in pillows and comforters comes from China, according to American Down and Feather Council.

“Tariffs on feather and down filling materials hurt American manufacturers of pillows and comforters, and affect THOUSANDS OF AMERICAN JOBS,” Royal Slide Sales Co., a zipper seller in Garfield, N.J., wrote. “At the same time, because there are no tariffs on pre-filled, made-in-CHINA pillows and comforters, this new tariff would help [CHINESE] pillow and comforter factories be more competitive with their finished products.”

The Dump, a furniture outlet operated by Haynes Furniture, even used potential tariffs as a promotional tool in its commercials aired in August, urging customers to buy before the 25% tariffs come into effect. StyleCraft Home Collection, a home goods store in Southaven, Mississippi, said it has purchased in China for the past 35 years.

“The products are only available from China and are created by highly skilled artisans who have decades of experience,” Ron Armstrong, executive vice president of StyleCraft wrote. “There is no way to build the products in the USA as the cost of labor, facilities and EPA restrictions wouldn’t allow it as the costs would be too prohibitive and would take decades to implement.”

Ning He, the CEO of Blue Ridge Home Fashions, echoed that sentiment, adding that the 25% tariff would have a “devastating effect” on business.

Something like decorative backsplash tiles might also be hurt by tariffs, according to Tao Wu, the founder of Houston, Texas-based WS Tiles.

“If tariffs are imposed on our industry, consumers will be given less choice to decorate and renovate their homes,” said Wu. “As well as this, some customers need affordable access to our products. Using our home city as an example, Houston is a victim of regular flooding due to hurricanes and our low sea level. Many consumers in the city prefer to install porcelain floor tiles because if their home is flooded, they won’t need to replace the floor every time (carpets and wooden flooring always need replacing after water damage). Tariffs would be giving consumers a horrible choice between paying an additional 25% to help flood-proof their home, or install a cheaper wood or carpet solution that could be a ticking financial time-bomb.”

The United Dance Merchants of America

Your kids’ dancing costumes may see a price hike, warns The United Dance Merchants of America (UDMA). The group said tariffs would result in more expensive costumes and dancewear, making it hard for many families to participate in the recreational activity.

“Dance is an expensive commitment for a family. Studio fees, costumes, travel, competition fees are a significant use of family discretionary income,” the UDMA wrote. “As prices rise, lower income families will not be able to afford to have their child(ren) participate in dance.”

Small businesses take a hit

Small businesses decry tariffs, which could shut their mom-and-pop stores down. (Photo Credit/CNBC)

While big multinationals worry the proposed tariffs may eat into their bottom lines, to many mom and pop businesses, it has become a matter of survival. More than 50 quilt shop owners across the country have spoken out against the extra duty on imported cotton and fabric, saying it could be the last straw to push them out of business.

“If tariffs on cotton fabric go into effect, I will be out of business. My patrons cannot afford expensive fabric for their hobbies,” wrote Karen Bates, who runs Sew Creative, a quilt shop in Ashland, Oregon.

In small towns, small businesses are the key supporters of the local community. In Seymour, Connecticut, the Yankee Quilter shop warns the tariffs could drastically increase the costs of goods and push the woman-owned small business to shut down, a loss for the local community.

“This is not just about the business, but employees’ mortgages that this business helps support, the community it builds when like-minded people gather,” said the Yankee Quilter shop. “The crafting industry is in jeopardy of disappearing with these tariffs.”

Jerry Proulx, who runs The Caner’s Choice, a furniture restoration service in South Burlington, Vermont, voiced his concerns after his supplier of rattan warned him that there are plans to impose tariffs on its products, which are made in China.

“I am one of those Americans who have faithfully paid their taxes every year. I work hard for my money and make an OK living — not wealthy by any means but enjoy my craft as an antique restorer, specifically chairs,” Proulx wrote. “Any imposed tariffs will definitely affect my bottom line and could likely drive me out of business altogether. I am just one of many furniture repairers out there — mom and pop businesses trying to make a living.”

How will the tariffs impact your business and life? Write to Krystal Hu via krystalh@yahoofinance.com or follow her on Twitter. Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter. Send tips to laroche@oath.com.

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