Samantha Lim [00:01:26] So last week on what Trump declared to be Liberation Day, he announced a baseline 10% tariff to be charged on all imported goods. Trump also introduced additional tariffs on dozens of countries, I think about 60, in response to what he called an economic emergency.
Trump [00:01:52] But now it’s our turn to prosper, and in so doing, use trillions and trillions of dollars to reduce our taxes and pay down our national debt, and it’ll all happen very quickly.
Samantha Lim [00:02:05] Trump has defended the tariffs by saying that they’re a quote unquote necessary medicine for the American economy. He believes they’ll bring factory jobs back to the United States and in essence, punish countries that have exploited American trade relations. But economists are warning that the aggressive trade policy could have effects on the American economy and its sustainability.
Ericka Cruz Guevarra [00:02:33] So how exactly are these tariffs supposed to work?
Samantha Lim [00:02:38] A tariff is a tax paid on goods imported into a particular country, in this case the United States. Tariffs are actually paid by the importer to the U.S. Treasury, so it’s not the country exporting the goods that handles the costs, it’s whatever company or business importing items into the US.
Ericka Cruz Guevarra [00:02:57] So which countries are we talking about are facing some of the highest tariffs?
Samantha Lim [00:03:02] Largely Asian countries are taking the brunt of this tariff policy. We’re looking at nations like Cambodia facing a 49% tariff and Vietnam facing a 46% tarif. And in particular, one of the United States’ largest trading partners, China, is in the midst of what’s becoming a trade war with US. The United States originally announced that China would be facing a 34% tariff, and this is in addition to a previously imposed 20% baseline. After the Chinese government, however, threatened to retaliate with its own tariff on the United States, Trump then threatened to levy an additional 50% tarif on the country. So it’s escalating as it goes.
Ericka Cruz Guevarra [00:03:50] I can imagine that’s a lot of industries here then that might be affected. Do we have a sense of what industries might be bearing the brunt of these tariffs?
Samantha Lim [00:04:01] Because of the sweeping nature of the trade policy that Trump introduced, it seems like no industry is really being spared or at least that’s what many of the economists I spoke to told me. Generally though, we’re seeing things like the tech industry take the biggest hit. Tech stocks like Apple, Microsoft, and Nvidia took a huge hit immediately following the tariff announcement.
Ericka Cruz Guevarra [00:04:26] And as you found in your reporting that includes local businesses here in the Bay Area, tell me about where you went for your reporting and what you set out to do.
Samantha Lim [00:04:40] So yesterday, a few days after the tariff policy was originally announced, I had the opportunity to talk to a few business owners and employees who operate in the East Bay. One of them was Games of Berkeley. It’s a locally-owned board game store that’s operated in the East Bay for nearly 45 years. And it has three owners, one of whom I got to speak with Eric Bigglestone, who told me that nearly all of the products in store will be impacted by the tariffs.
Eric Bigglestone [00:05:11] There is all sorts of very deep concern about whether it’s going to cause a lot of folks to go out of business.
Ericka Cruz Guevarra [00:05:21] What kind of things are we talking about? I imagine like Yu-Gi-Oh cards or Pokemon cards.
Samantha Lim [00:05:30] Yeah, so if you’ve ever been to Games of Berkley, it’s like a retro board game wonderland. He has card games, like you mentioned, Yu-Gi-Oh and Pokemon cards, trading items, but it’s a really cool space.
Ericka Cruz Guevarra [00:05:49] What specifically for Eric though on his side is going to cost more?
Samantha Lim [00:05:55] So Eric told me more than 90% of those goods come directly from China. He was very clear that this is going to have an impact on his store and on the prices of his products.
Eric Bigglestone [00:06:07] Most of our distributors are at about 10% right now. One of our suppliers sent us an email last week that said, as of April 5th, the cost to you increases by 10%. And then as of May 1st, it increases by 25%.
Samantha Lim [00:06:30] He’s also talked about cutting some of the supply in his store, omitting those games that maybe don’t sell as well or not as popular. There’s also discussion about expanding their stock of vintage and used games as a way of getting around import fees.
Eric Bigglestone [00:06:49] You know, we’ve been in business now for 45 years. We would hate for something like this to knock us out.
Ericka Cruz Guevarra [00:06:57] I mean, what did Eric tell you about how he’s feeling right now as a business owner in Berkeley? I imagine it’s a little scary.
Samantha Lim [00:07:07] I’m hearing from him and other business owners that the biggest feeling is uncertainty and fear when you think about something like a tariff policy where there’s not really any way to mitigate it if you’re a business owner that relies on imported goods. There’s no idea or sense of what will happen. And his biggest fear is that as a result of these tariffs, a lot of community-owned businesses, including Games of Berkeley, may have to shut down as a result. He’s just very scared and worried.
Eric Bigglestone [00:07:40] If you’ve got someone who was already on the fence between whether they were gonna purchase from us or purchase from, say, Amazon, which can continue to afford to discount deeply, then that gives them, unfortunately, even more incentive to buy from elsewhere.
Ericka Cruz Guevarra [00:08:13] You also went to a bike shop in Oakland. Who did you talk to there?
Samantha Lim [00:08:27] I also visited a bike shop called King Kog Bicycle Shop in downtown Oakland. They’ve been around for nearly 15 years. And there I got to speak with employee Taylor Poliska.
Taylor Poliska [00:08:40] Like probably 90 to 99% is all imported. And so, yeah, it’s gonna be interesting to see. I mean, our prices for sure are gonna go up eventually, like right now.
Ericka Cruz Guevarra [00:08:51] And for a bike shop, I guess what kinds of parts or things are imported from elsewhere for them?
Samantha Lim [00:08:59] I mean, just looking around the store, I was able to see some of the labels. We’re talking about tools, bike parts, gears, oil. These things are coming from other countries. Even the raw materials for certain goods. If an item is manufactured in the United States, some component of it may come from a country like China, and so you have to think about the raw materials as well, those are also being taxed as they’re imported in.
Ericka Cruz Guevarra [00:09:27] Are people like Taylor also worried about potentially going out of business?
Samantha [00:09:32] So Taylor told me something pretty interesting. He worked in bike repairs and bike manufacturing during the pandemic. And he said, even then, when we saw the economy take quite a big hit, he said people during times of economic uncertainty like to go on bikes.
Taylor Poliska [00:09:53] Bikes are one of those things that I don’t want to say are like recession proof, but like people tend to buy and like bike more in recessions because they’re like a cheap alternative to transportation and they’re, like going out on a bike ride is kind of like a mini vacation. But definitely talking with people in the industry, everything that we make is from overseas.
Samantha Lim [00:10:19] One thing that Taylor mentioned is that he doesn’t entirely disagree with tariffs, but he disagrees with the way that it’s being carried out.
Taylor Poliska [00:10:29] Protecting American infrastructure and American jobs through controlling markets, I think is a really valuable thing. But to do it sort of blanket doesn’t really make a lot of sense.
Samantha Lim [00:10:42] He thinks that sweeping tariffs on imported goods as a whole is unfeasible considering that the United States does not have factories to keep up with the demand.
Taylor Poliska [00:10:54] And to do it without having any sort of domestic infrastructure to replace it doesn’t make a lot of sense. It’s just people are like, we don’t know. We don’t what’s going on.
Ericka Cruz Guevarra [00:11:07] Well, zooming out here, Samantha, I mean, President Trump says that these tariffs are temporary, it’s a sort of necessary evil in response to other countries’ sort of unfair trade practices. But I know you spoke to some economists about the potential impact of all of this. What did they tell you?
Samantha Lim [00:11:31] So one economist I spoke to was Neale Mahoney. He’s a professor of economics at Stanford and a member of the Stanford Institute of Economic Policy Research. He said, there have been few times where a economic policy like the one being instated now has had such a huge and immediate effect.
Neale Mahoney [00:11:54] The tariffs are going to raise prices that consumers see or pretty much everything they purchase.
Samantha Lim [00:12:02] We saw stock market indexes like the S&P 500 take major blows immediately after the policy was announced. It dropped nearly 5% just a couple of days after. And Neale was talking about the effects it may have on consumption as a whole.
Neale Mahoney [00:12:21] When consumers become worried, they hold back. When firms face uncertainty, they pull back on hiring, they pull back on their investments. So, we’ve already seen those troubling decreases in consumer confidence.
Samantha Lim [00:12:37] Companies that import goods will have to increase their prices to offset the additional costs, and even those that produce their products in the United States, like I mentioned, will have to rely on other countries like China, Canada, and Mexico, for example, for raw materials.
Ericka Cruz Guevarra [00:12:56] And I imagine that’s all gonna sort of fall onto the consumer, which, I mean, if I may just speak for myself and all the people around me, I feel like there’s already been so much anxiety about inflation, things getting more expensive, it already being difficult to afford, living in the Bay Area. I mean what is this going to mean for Bay Area consumers?
Samantha Lim [00:13:22] So one thing that Neale mentioned was how integrated the Bay Area is in just the larger international economy. We’re surrounded on all sides by major corporations and a robust small business sector.
Neale Mahoney [00:13:36] Our fate is closely tied to the global economy. The Bay Area is just sort of more integrated with the rest of the world than pretty much any other place.
Samantha Lim [00:13:49] Neale said that there are few industries and or people who are not going to feel the brunt of a policy like Trump’s. And all of that is bolstered by the uncertainty we’re feeling in the market. Neale talked about anxiety and uncertainty being the primary driver of not only our stock but also our consumption. and so it’s definitely going to be difficult to traverse if the policy stands.
Neale Mahoney [00:14:21] We are going to see a lot of people deciding to press pause on their hiring, on their investment, on sort of the types of business activity that make the economy work.
Ericka Cruz Guevarra [00:14:43] Well, I want to come back to, I guess, the people that you talked to, Samantha. How would you summarize, I think, the mood and the vibes right now?
Samantha Lim [00:14:55] I think the general consensus is that people are tired. In addition to being uncertain and anxious, Trump’s policies since he took office in January have instilled a lot of fear into broader society. And I think now with this additional economic turmoil, people are either choosing to fight back and other people are just waiting to see what happens next.
