The trade war with China is hurting small businesses, like mine
Deena Ghazarian, founder and CEO, Austere | 10/15/2019, 4:20 p.m.
Earlier this year, I realized a lifelong goal and launched my own company. After more than 20 years in the consumer technology sector, I started Austere – a home theater company that combines my consumer tech experience with my passion for fashion and design. It’s been an incredible experience to create a company and serve as its CEO and to offer a unique brand to consumers. But upon finally launching the brand and putting product into retail stores, we – like many other tech businesses and startups – hit a roadblock. It’s not something we overlooked or a flaw in our business plans: it’s the increasing cost of tariffs and uncertainty the U.S.-China trade war is imposing on American companies, including ours.
My business operates on modest profit margins – a common approach for American small businesses trying to get a foothold in the marketplace. We made this choice in order to provide quality products at an accessible price. But the added cost of the tariffs is potentially crushing. The fact is, American businesses and workers and families pay for these tariffs – China does not. We are among the countless American businesses now being taxed nearly 30% extra for every product we import from China. Still, we have not increased our prices for consumers. This is a significant threat to our bottom line, causing us to reconsider all parts of our business – from the size of our staff and how many new people we can hire, to where our products are manufactured and even our manufacturer’s suggested retail price.
It is indisputable that cheap, counterfeit goods that violate intellectual property (IP) rights have come from China. One of the products on Trump’s tariff list include speaker cables. For that reason, we chose to have Austere’s speaker cable manufactured outside China. While I understand and appreciate that IP theft and forced technology transfer are serious problems in the U.S.-China trade relationship, as an American business owner, I know firsthand that tariffs make it harder and more expensive for me to conduct a sustainable business.
The recent announcement that some tariffs will be delayed by two weeks is a welcome delay, but highlights the larger issue with this trade war – the lack of certainty American businesses have to plan for the future. On October 15, I expect tariffs on Austere products to increase from
25% to 30%. But, in reality, I don’t know whether the tariffs will go into effect next month, next year, or at even higher rate of 50% to 100%, as has been recently threatened. I do know is that if the cost of the parts we use to produce our products increases 5,10, or 15%, it could mean the difference between hiring new employees or downsizing; getting in to new categories or stalling our product line; or, as a worst-case scenario, forcing the price increase onto consumers.
Given the uncertainty in the market, any entrepreneur who is thinking of starting a goods- based company right now will probably have second thoughts, and I can’t blame them. As a startup CEO, I worry about my business every day – I suspect I will 10 years from now, too – but I didn’t think my biggest source of doubt would be my own government. I hope President Trump listens to American business owners like me and realizes that we need consistent trade policies that keep overhead costs as low as possible or, at least, predictable. To keep our innovation sector thriving, we need a trade deal with China that protects intellectual property without tariffs that increase costs for American businesses and consumers. And if President Trump can’t bring this trade war to an end, Congress must step in and do something. Until now, Congress has done little to intervene – and businesses of all sizes can’t to sit back and wait any longer. It’s time for our elected officials to start working on behalf of American businesses and American families, so we can bring an end to this trade war.
I’ve fought battles for decades amid fierce competition to reach my career goal, launch my own company, hire my own employees. But now, I and my entire business are in danger of being casualties in someone else’s war.