Executives at Columbia Sportswear in Portland, Ore., were in a high-level meeting last Friday to wrap up their response to the Trump administration’s latest round of tariffs on Chinese imports when the presidentook to Twitter.
American companies, President Trump posted not long after Columbia’s session had started, were “hereby ordered to immediately start looking for an alternative to China.” Hours later, Mr. Trump said he was raising tariffs even higher.
The plan under discussion by Columbia, which makes a variety of outdoor goods in China, like jackets and hiking shoes, had taken thousands of hours to draft, and it included shifting product lines to other countries and raising prices on others when the tariffs took effect in September.
“We had a solution, where we’re going to raise prices, where we’re going to move stuff,” said Tim Boyle, Columbia’s chief executive, who had called into the meeting from a vacation in Canada. “And then, an hour later, we learn he’s going to raise tariffs even further. It’s insane.”
“I considered staying” in Canada, Mr. Boyle joked.
Business leaders and economists have long said that certainty breeds economic growth. In order to invest and hire, companies need to know what tax rates to pay, what regulations to heed and how those “rules of the road” could plausibly change in the years ahead.
With this trade war, Mr. Trump has upended that principle, embracing uncertainty and unpredictability instead.
Over a matter of three days last week, the president escalated the conflict with China, sounded conciliatory tones and found ways to ratchet up the tensions all over again.ast Friday, angered by retaliatory tariffs levied by China, Mr. Trump directed American companies to find alternatives to their Chinese supply chains and increased the rate of existing and upcoming tariffs, including on the next wave set to hit this weekend. By Monday, Mr. Trump hinted that the two countries were closer to producing an
agreement.
“Sorry. It’s the way I negotiate,” he told reporters at a news conference at the Group of 7 summit when asked about the mixed messages. “It’s done very well for me over the years, and it’s doing even better for the country.”
The gyrations have rippled across corporate America, prompting manufacturers, retailers and others that rely on imports for their businesses to try to adjust their strategies based on the president’s latest whim. Here is how four companies reacted.
The tariffs set to take effect on Sunday will hit a wide range of products that Columbia Sportswear imports from China, including a popularent, the lightest down jacket it produces and a specialized women’s hiking shoe. All are made in specific Chinese factories that cannot easily be moved elsewhere.
Columbia’s preparations for dealing with those tariffs had roped in parts of its manufacturing, finance and legal divisions, along with supply chain managers, company officials said.
Just over 10 percent of the company’s products come from China, and Columbia officials consider the Chinese market their biggest single opportunity for global sales growth right now.
Mr. Boyle said the company was considering moving some production out of China and to Ethiopia. And executives have postponed planned investments in distribution centers in Oregon, Kentucky and Florida.
“We move stuff around to take advantage of inexpensive labor. That’s why we’re in Bangladesh. That’s why we’re looking at Africa,”r. Boyle said. “We’re putting investment capital to work,o get a return for our shareholders.
“So when we make a wager on investment, this is not Vegas. We have to have a reasonable expectation we can get a return. That’s predicated on the rule of law: Where can we expect the laws will be enforced, and for the foreseeable future, the rules will be in place? That’s what America used to be.”
For as long as he could, Timiklaucicad put off what he knew would be some difficult conversations. But when Mr. Trump said the rate on the next round of products to face tariffs would go to 15 percent from 10 percent, Mr. Miklaucic could not wait any longer.
All told, the tax would mean an extra $100,000 in monthly expenses for his company, Cordoba Music Group, which makes guitars in China and other countries.
“We can’t absorb that,” Mr. Miklaucic said.
Each month, China supplies $650,000 worth of guitars sold under the Cordoba and Guild labels. “I also make products in Indonesia, Spain, South Korea and the U.S., but I can’t move my production quickly,” he said. “These are highly skilled laborers that took years to train.”
Mr. Miklaucic called his director of Asian operations in Guangzhou on Saturday with a message for suppliers: We need your help. “I told him to tell them what we were facing,” Mr. Miklaucic said. “All I could do is work with them and ask for their support.”
He also began sending out emails. “Please let me know if you are willing to work with us to get through these next few months,” he said in one. “All of us hope that this will be temporary and that the trade war will be settled soon.”
About half of Cordoba’s Chinese suppliers said they would consider reducing prices enough to cover about 50 percent of the cost of the tariffs, at least temporarily.
Beginning Monday, Mr. Miklaucic told his buyers — which include online retailers like Amazon and Sweetwater, chains like Sam Ash and Guitar Center, as well as smaller stores — that there was no way his costs could increase this much while prices stayed the same.
Some retailers were wary of paying more for his guitars; a few agreed to consider higher prices, which they would pass on to customers in the fourth quarter.
“Retailers don’t want to see price increases during the peak Christmas shopping season,” he said. “They want to see discounts.”
Lance Ruttenberg, the chief executive of American Textile Company just outside Pittsburgh, was preparing a summary of his plan to cope with Mr. Trump’s tariffs, to present to his board, when word came that the tariff rates had climbed again. He was on the road that day, and his phone lit up with emails and text messages bearing bad news.
American Textile makes utility bedding products such as pillows, bed pads and comforters that it sells to stores and hotels. It has factories in Pennsylvania, Utah, Texas and Georgia, but imports many of its components and parts from China and has “millions of dollars of exposure” in the country.
The tariffs have been a major complication for Mr. Ruttenberg’s company, but the order by Mr. Trump that American businesses must sever ties with China was of particular concern. His company has worked to diversify its relationship so that it can source products from places like Vietnam and India, but those types of transitions cannot happen overnight.
Thus far, American Textile has been able to avoid passing higher import costs to its customers, but that may no longer be an option. Mr. Ruttenberg said it seemed inevitable that he would have to tell retailers that prices were going up.
In the meantime, plans for future investment are postponed until the Trump administration provides some clarity about its strategy.
“I would say we’re in wait-and-see mode,” Mr. Ruttenberg said.
Last Friday, emails about Mr. Trump’s latest trade war escalation began flooding the inbox ofon Romero, owner of Schaefer’s TV and Appliance Center in Lincoln, Neb.
Mr. Romero had given up convening emergency tariff meetings when the president’s trade pronouncements had become such a moving target. After the latest spasm, he decided that he would hold his breath until manufacturers told him that higher prices for the products he sold were on the way.
Manufacturers tend to give 30 to 90 days’ notice before raising prices, he said. There was no telling what Mr. Trump could do in that time.
Prices of some appliances at Schaefer’s have already increased by as much as 7 percent, Mr. Romero said. Some appliances that he imports have components that are made in China, and some, such as televisions, are made there and exported to the United States.
Consumers are changing their buying habits accordingly. Mr. Romero said shoppers in the market for refrigerators were forgoing costlier units and opting to buy a $1,000 refrigerator rather than one that sold for $1,250, crimping profits.
“I am disappointed in the way this is going back and forth and not coming to some kind of solution here,” Mr. Romero said, referring to Mr. Trump’s negotiating style. “I’m just hoping that with the election coming, that he will make a decision one way or another and move on.”