How Tariffs Are Hurting My Business – And Your Wallet
Tuesday, August 27, 2019
From National Retail Federation member and Top Furniture president Donna Goodrich.
New Hampshire is a state proud of its independent, small business culture. That’s because small businesses are not only economic engines and job creators, they are community partners who often serve our smaller, more out-of-the-way communities. This includes my store, Top Furniture, in Gorham up in the north country.
We are an appliance and furniture store retail operation that strives every day to serve our communities of about 11,000 people. We are a third-generation, family-owned business that was started in 1950 by my grandparents. For almost 70 years we have been serving the county with the lowest population density, as well as the oldest population. We are proud to be able to support this area.
Over our 70 years in business, we’ve weathered our share of recessions and ups and downs in the economy. But right now, there is a bigger threat to my business. It is one of the toughest challenges our store has faced in all of our years. It is a threat that comes from right here in America.
I’m talking about tariffs.
Not everyone realizes this, but when a tariff is imposed on imported goods, that’s not some fee paid by a foreign country. Instead, it’s a tax on American businesses that import goods to sell in U.S. stores. That means tariffs are actually an American business and consumer tax – even those like mine that buy American made products such as GE and Whirlpool. That’s because GE and Whirlpool still have to get products from overseas to make their machines, like steel and aluminum, which have been the target of some of president Donald Trump's tariffs.
The effects of these tariffs are already being felt right here in the Granite State. At Top Furniture, we have seen a 7 to 10% increase in the cost of washing machines we buy, and an up to 20% increase in the cost of refrigerators, which amounts to a $100 increase on most refrigerator models. These tariffs are hurting American companies the most.
On the furniture side of things, we have seen an average of an 8% increase in costs. One of our suppliers has informed us that they are seeing this with all of their buyers – costs are going up and furniture stores are feeling the heat.
As you can see, this has raised the cost of our overall inventory in our store, something that we cannot sustain on an ongoing basis.
Overall, we have already seen two price increases on furniture in 2019 on products we buy, and fear of a third increase could come by the end of 2019. So many price hikes in such a short period of time like this is unheard of in our industry. We’re now down to just 19 employees, and two of those employees are part-time. Like most small businesses, we base our wages on our sales and profits, so when sales are down, no raises or bonuses are given out, and hiring slows. In other words, tariffs have cost our employees money.
Tariffs have caused uncertainty in the prices we will need to pay for our inventory, meaning we can’t guarantee customers that we will have their desired product in our store or guarantee them a price on certain products we need to order. They have also caused extreme uncertainty in our supply chain, and therefore, uncertainty in our business. It’s a cycle that harms our business from the beginning of the process to the end.
I’ll leave you with an anecdote from one of our customers. We recently had a customer come into our store who was in the process of building a new home. The home was far from completion, and he was not going to be in need of his home appliances for some time. But he had been paying attention, and he knew that if he waited until he really needed his appliances, he would likely be paying much higher prices for them. So he bought his new appliances months before he needed them because the cost of storing them would be cheaper than paying the higher prices months later when tariffs pushed the cost of appliances up again.
The National Retail Federation, the world’s largest retail trade association, passionately advocates for the people, brands, policies, and ideas that help retail thrive. From its headquarters in Washington, D.C., NRF empowers the industry that powers the economy. Retail is the nation’s largest private-sector employer, contributing $2.6 trillion to annual GDP and supporting one in four U.S. jobs – 42 million working Americans. For over a century, NRF has been a voice for every retailer and every retail job, educating, inspiring, and communicating the powerful impact retail has on local communities and global economies.