By Reuvain Borchardt

 

The tariffs are on.

The tariffs are off.

Tariffs on Canada and Mexico.

Canada retaliates.

Trump retaliates in turn.

Canada backs off.

Trump backs off.

“April 2, Liberation Day”

Tariffs back off, except on China.

Tariffs on China 145 percent, except on electronics.

Dow loses a thousand points.

Dow gains a thousand points.

Bond markets are shot.

One Trump adviser says Trump uses tariffs as a negotiating tactic.

Another says Trump is keeping the tariffs, no negotiations.

Trump wants to make a deal with China.

If it seems it’s been hard to follow the financial news lately without getting whiplash, you’re not alone.

Americans (and foreigners) have been having a hard time getting certainty or even understanding the motivations of the president when it comes to tariffs and trade. (Maybe that’s just the way he likes it.)

But how is this affecting people and businesses in our community? How might it affect you very soon, if it has not already?

To find out, we spoke with several Lakewood business executives in various industries.

Some agreed to speak using their real names. Others agreed to use only pseudonyms and provide only vague details about their products to protect their business models.

Most are not absolute free traders; they believe there are instances in which tariffs are appropriate. Yet nearly all believe the rollout of Trump’s tariffs have been chaotic, thoughtless, unreliable, and that “Liberation Day” has liberated them only from their money and the business models they’ve worked for years to develop to provide for their families.

***

Like many Amazon dealers, Chaim is an alumnus of BMG who learned in kollel for years before the financial needs of his growing family forced him to look for a way to earn an income without having a secular degree.

He started his Amazon business two decades ago in his family garage, with his then-young children packing items by hand. Since then, baruch Hashem, his business grew, and he achieved success.

Now, he says, everything he has worked for is being threatened. Shortly after Donald Trump—whom Chaim had voted for enthusiastically—was sworn in, the new president, saying that “The extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency under the International Emergency Economic Powers Act,” imposed a 25 percent tariff on all goods from Mexico.

Chaim doesn’t import fentanyl. But he does import an unprocessed food product from Mexico. He had placed the order before Trump was sworn in. Then, just before the tariff was set to take place, he tried rushing his supplier to ship it in. But it didn’t become available until the day after the tariff kicked in.

“I told the supplier to wait a little—we all know how Trump can change his mind, maybe he would take off the tariff,” recalls Chaim. “But since the stuff was already loaded on the truck in Mexico, I had to pay storage fees, so I said, ‘Just send it in, I have no choice but to pay the 25 percent tariff.’”

But soon after he imported the product, Trump removed the tariff. Now, Chaim says, he has to sell the product at the same price as his competitor, but since he paid the tariff, half his profit margin is gone.

Chaim also imports packaging material from China. During Trump’s first term, there was a 25 percent tariff on these goods, but the cost was still cheaper than it would have been to make them in other countries.

But he recently placed an order, and “while it was on the boat, Trump raised to tariffs to 45 percent, so out of nowhere, my costs went up.”

“This is unfair,” he says. “When I placed the order, I knew what my price point and profit margin were. Suddenly Trump does this, and half my profit evaporates. It’s not fair for the president to treat his citizens this way.”

 

 

Tehila manufactures summer items and imports them from China, selling them on Amazon.

Ordinarily, now is the season for her to import the goods, but there’s no way she can pay the astronomical 145 percent tariff Trump has implemented on China.

“If Trump doesn’t make a deal with China soon, I could potentially lose my whole season, chas v’shalom,” she says. “My stuff is sitting for a year in China. I have money tied up for a year; it affects my cash flow. I’m paying interest. I can only sell this product in the summer. I have less than 25 percent of my inventory on hand. I bring in products as close to the season as possible to avoid storage fees. In this case, it backfired.”

 

 

Rivka, the chief marketing officer for a company that purchases children’s prizes from overseas, says she has purchased the items from China for years but can no longer afford to do so.

“I make a few very large orders from China each year through my broker,” she says. “I’ve searched locally, but China always beats the price hands down. But since Trump made these crazy tariffs on China, I’m stuck. I order a million toys at a time for about $100,000. I can’t pay a 145 percent tariff on that. I don’t have brokers in other places, because we always used China. This is also affecting China brokers, many of whom live in Lakewood. Maybe we’ll find a broker for another country.”

For now, Rivka is instead buying goods in the US but using a shoddier manufacturing process because using the full labor intensiveness she had in China would have been way too prohibitive.

“So now,” she says, “my customers are going to pay more for a worse product.”

 

 

Shlomo is the vice president of a family-owned company that’s manufactured children’s toys in China for the past 30 years.

“Almost no company can handle a 145 percent increase,” he says. “Even if a company is willing to take part of the hit, part of it will have to go to the consumer.”

Shlomo says that Chinese companies require payment up front and don’t sell on credit. A $250,000 order for Chinese goods, for example, would now cost over $600,000 in cash.

“It’s almost impossible for any small business to come up with that cash,” he says. “Even if you want to borrow it, it’s harder to borrow now. Banks are tighter, and interest rates are high.”

 

 

Tzippora is neither an importer nor a businesswoman. She’s a Lakewood grandmother who holds a salaried job. But she, like everyone else, is a consumer, and she says she’s furious that Trump—whom she voted for—will cause the products she buys on a daily basis to rise in price.

“It’s amazing how someone like Trump, who can be such a good businessman and has such good instincts in so many areas, can be so economically illiterate,” she says. “His whining about trade deficits is simply ridiculous. All his tariffs are accomplishing are helping certain American companies and trade unions at the expense of all of us consumers.

“We might agree with Trump on 90 percent of the issues, but this has the potential to be absolutely devastating. It’s the dumbest economic policy any president has done in my lifetime.”

Trump says he would like his tariffs to force companies to “reshore” in the US. But that’s not so easy for the Lakewood businesspeople who spoke with the Voice.

Chaim says the natural food product he imports grows only in a South American climate.

“What does Trump want me to do?” he asks. “Try planting the trees here and wait decades for them to grow? Even then, this product is very labor-intensive. Unemployment in the US has been at all-time lows. There’s a shortage of workers here. Does Trump want our workforce, which is highly skilled relative to the rest of the world, to leave their jobs and go pick produce?”

Chaim also says that many products produced in less-advanced countries cause significant pollution, and that reshoring would just bring that pollution to the United States. Besides, he says, it’s untrue that his imports from Mexico harm Americans.

“When we import products, plenty of Americans benefit too,” he says. “American trucking companies makes money—and the truckers get paid much more than the workers in Mexico making this product. We get cheap products from Mexico—that’s great for us. Somehow Trump sees this as them harming us. That makes no sense.”

Shlomo says being forced to leave China would mean his costs rising significantly.

“Forget about coming to the US,” he says. “Even going to Vietnam could give me twice the labor costs I have in China.”

Many of our interviewees believe tariffs are appropriate in some cases, but the way they were rolled out and the uncertainty surrounding them are harming our economy.

“Conceptually, the tariffs on China are nice, but his implementation has been lousy,” Tehila says. “China’s dominance over the US—given the fact that they own so much of our debt and are manufacturing so many of our consumer goods and stealing so much of our IP—is kind of unsustainable, and everyone has been kicking the can down the road. No president or person has really taken concrete steps to mitigate, in a tangible way, the threat this poses to us economically, forget about militarily.”

Tehila says a more appropriate rollout would have been to announce a gradual schedule of increased tariffs on large companies that have the ability to move their manufacturing to other countries while exempting small businesses.

“Doing it at one shot is crazy,” agrees Shlomo. “This is lethal. As is the uncertainty.”

Whether by design or incompetence, the uncertainty surrounding Trump’s tariffs are scaring business owners and investors just as the tariffs themselves are. (The Voice planned this article with some hesitation, in fact, knowing that in the few days between submission to the printer and the publication date, the circumstances could be totally changed.)

“In two weeks,” Shlomo predicts, “we could see stores emptying of non-essential items. Essential products, people will be forced to pay for no matter the price. But for non-essential products, importers will hold out. At some point, people might adapt, but for now, nobody wants to import at 145 percent when they know that any day the tariff might drop to 100 percent or 50 percent or 25 percent.”

 

 

Eli Fried, CEO of Lakewood-based Leatherback Investments and founder of financial information website GeltGuide.com, says this sort of uncertainty is what’s causing the financial roller coaster we’ve seen in the stock market since Liberation Day. Bond markets have taken a beating as well—which Fried says “got Trump really spooked, because usually US government bonds are a safe haven during a financial panic.”

Trump has at times indicated a belief in tariffs for their own sake, while at other times indicated a belief in using them as leverage to get other countries to lower their own tariffs.

“Ultimately, no one really knows,” Fried says, “because it’s all playing out in Trump’s head, and he himself seems to be changing his mind as to what extent he wants to fight this battle.

“He has said mixed things, but he really does believe in tariffs in a deep way. It’s the most consistent political position that he has. He has been talking about tariffs since the 1980s, feeling that America is being ripped off. Fundamentally, he’s the only one who had the guts to really stand up to China, but the question is can he take on the whole world at once? And how does he navigate this restructuring of the American economy in a modern way?”

In addition to raising prices for importers and consumers, the tariffs and trade wars have roiled world markets.

Though it may seem that everyone in this town is against these tariffs, that’s not quite the case.

 

 

Ira Zlotowitz, CEO of GParency, told the Voice that he has spoken with many big players in the financial markets, and it’s a mistake to look at these tariffs narrowly. Rather, he says, they must be viewed as part of Trump’s complete restructuring of the economy and national order, though, Zlotowitz says, “Right now everyone does have pain.”

Zlotowitz says Trump is trying to “find the right balance with tariffs—the 145 percent is obviously not going to stay—to have people build more factories here. And the money he does get from tariffs, he wants to use for proposals like eliminating income taxes for people earning under $150,000 and for having a national school-choice program.”

With any government initiative, Zlotowitz says, “Five percent of people are huge winners and 5 percent of people get destroyed. But for 90 percent of the people, the government will figure out an appropriate tariff level, and this will be a net good because it will bring jobs back to this country and we will get some revenue.”

Our interviewees acknowledge that there is some tariff level they could live with, possibly without passing costs on to the consumer, but that really depends on the product and its profit margin.

“With certain items,” Shlomo says, “a tariff of even 15 percent has to be passed on to the consumer. There are other items that even a tariff of 50 percent wouldn’t be passed on.”

“But,” he reiterates, “the huge problem is cash flow. Nobody can handle this sort of payment up front.”

Trump probably had more support among frum Jews than any other demographic. Now, many of those very same voters say their means of supporting their families is at stake.

“Some people might try to dismiss this as short-term pain,” Chaim says, “but many of us have built our businesses and our way of lives on a particular system. Now the rules suddenly change, and everything has to be shut down, but we still have to pay our bills, pay our workers, and pay our overhead. Our loans, many taken out at high interest rates, have to be paid back. This can be life-altering.”

Fried says this turmoil will hurt Trump’s standing in the community “only if he triggers something really nasty and prolonged, a Great Depression 2.0. But Trump’s history proves him to be a shrewd observer of facts on the ground, and he adjusts quickly to his advantage.”

Tehila says she’s encouraged by Trump’s saying last week, “In the end, I think what’s going to happen is we’re going to have a great deal,” and that regarding China, “145 percent is very high and… It won’t be anywhere near that high. It’ll come down substantially. But it won’t be zero.”

She says she’s “hedging” that Trump will make a deal by bringing in smaller quantities of containers now—they take a month to arrive, and she hopes a deal will be reached before then.

“But that’s risky,” she says.

She’s also looking into other sourcing points and looking to sell things in European Amazon markets instead of only America. But she says Europe has just a small fraction of the Amazon consumers the US has.

 

***

Ultimately, the frum businesspeople of Lakewood know things are not really up to Trump.

“As tough as it seems right now,” says Chaim, “we know that hakol b’yedei Shamayim and lev melachim b’yad Hashem.”

Shlomo says there’s a lesson to be learned in all of this.

“So many of us thought Trump was our savior,” he says. “And this is a message for all of us Yidden to remember that only Hashem is in control.”