How Trump Tariffs will Impact YOUR Business

President Trump loves tariffs and is using them as an economic and political tool to try to improve the USA’s prospects. If you’ve ever wondered how such tariffs affect the prices of the products you buy, you’re not alone, there was a huge spike in Google searches for tariffs in the USA when the administration announced new tariffs on China, Canada, and Mexico at the start of February 2025.

Many American businesses that source goods from overseas—especially from China—have to deal with tariffs, which can increase their costs by a serious amount. In this post, we’ll watch Pete Keller, CEO of Fringe Sport’s video discussing tariffs, and then break down how tariffs work, how they affect the final price of products you purchase, and why even American-made products may not be immune to price hikes.

Tariffs 101

A tariff is essentially a tax imposed by a government on imported goods. The company importing the goods pays this tax, not the country exporting them. In the case of gym equipment, for example, Fringe Sport sources some of its products from China, and the current tariff on these goods is about 12.1%.

To illustrate the impact, let’s assume a company buys a gym product from China for $40. There is an additional $5 in ocean freight to transport it to the U.S. With a 12.1% tariff applied, the tariff cost comes out to about $4.84, making the total landed cost $49.84. If the product is sold for $100, the company’s gross margin is around $50.16—out of which other expenses such as marketing, salaries, and utilities must be covered.

Increased Trump Tariffs and their effect on in-store prices

President Trump has added a blanket 10% tariff to all Chinese goods (in addition to any existing tariffs) and proposed increasing tariffs to 60% or even 200%. What happens to the same US$40 gym product under these scenarios?

• With the new 10% tariff, the tax increases from $4.84 to $8.84 giving a landed cost of $53.84. This isn’t a large hit to the margin if the product’s RRP remains at $100, but to retain the same level of profit the cost would now have to increase to 104, an increase of 4%.
• At a 60% tariff, the tax jumps from $4.84 to $24, raising the landed cost to $69. If the company keeps the price at $100, its profit margin drops significantly. To maintain the same margin, the product price would need to rise to $138.40—an increase of 38.4%.
• At a 200% tariff, the tax soars to $80, pushing the landed cost to $125. If the company continues to sell at $100, it would take a $25 loss per unit. To maintain margins, the price would need to be raised to $250—a 150% increase.

But will the tariffs spur domestic manufacturing instead?

One goal of Trump tariffs is to encourage more domestic manufacturing. But is this actually feasible? More than one source doubts that the first round of his tariffs was effective in that sense, econofact.org writing:

The tariffs Trump imposed on Chinese goods in 2018 had a net negative effect on manufacturing jobs as well overall U.S. employment.

The Federal Reserve Board found that the tariffs caused a reduction in manufacturing employment of 1.4%. Modest gains (0.3%) achieved by shielding domestic producers from foreign competition were “more than offset” by rising production costs for manufacturers who used steel as an input (-1.1%) and retaliatory tariffs (-0.7%).

It is also feared that the new tariffs of February 2025 will have a similarly negative impact on U.S. manufacturers (ABC News):

Jay Timmons, president and CEO of the National Association of Manufacturers, said small- and medium-sized firms in the sector employing millions of Americans risk “significant disruptions” as a result of potentially high energy prices and costly supply chain workarounds.

“Manufacturers will bear the brunt of these tariffs,” Timmons said, adding that the policies would put “American jobs at risk.”

Increased product costs will almost certainly affect demand

Price increases don’t just affect business margins; they also impact consumer demand. When prices go up, fewer units are sold. Keller gives the example of a barbell that used to cost $300. If the cost suddenly rises to $400, sales may decline, and if it skyrockets to $2,000, sales could drop to zero. Most American vendors will pass on all or most of the tariff cost to consumers, something that many American consumers are beginning to realize and dislike:

Could reshoring production and using an American manufacturer work?

While manufacturing in America may sound like a smart workaround to avoid tariffs, using a U.S. factory to produce your goods instead of your regular Chinese one may be unworkable for many businesses for these reasons:

1. Inflation & high costs – Prices increased across industries, but many U.S. manufacturers have not reduced their prices post-pandemic.
2. Foreign components – “Made in the USA” products often rely on imported materials, such as steel from Canada, which faces 25% tariffs (which are temporarily paused right now). Needless to say, electronic products are extremely likely to use Chinese components which are, obviously, also tariffed.
3. Substitution effect – If Chinese-made gym equipment becomes more expensive, U.S. manufacturers will also likely raise prices in turn as they don’t feel the need to sell at the lowest possible price and compete in that way.
4. Must make margins – U.S. manufacturers will raise prices to make the desired margins, usually passing this on to customers.

Bearing the above points in mind, even if you can find a domestic manufacturer for your products, it may not be cheaper than the Chinese option, even with the additional 10% tariff.

Conclusion: A rocky road ahead as tariffs rise

Tariffs do affect importers; but in turn, they increase the prices consumers pay and could reduce their choices. While they may protect domestic industries in some cases, they also contribute to inflation and higher costs across the board.