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For Ken Nobis, a life-long resident of St. Johns, Michigan, it’s never been easy being a dairy farmer. Now that he’s found himself on the frontlines of a budding trade war – a battle he wants no part of – he’s learned it can get much worse.
“I feel like we are the pawns," Nobis told CNN. “I don’t feel like it’s right that hardworking people have to pay the price in trade negotiations.”
And he’s not alone. More than $2.5 billion in Michigan exports are vulnerable due to the emerging trade war, leaving business owners like Nobis paying the bill. The stakes are just as high for the nearly 1.2 million Michigan residents whose jobs depend on international trade. Collectively, they are the collateral damage of an emerging trade war, and the potential damage to America’s industrial and agricultural heartland is about to get much worse.
In June, the Trump administration imposed a 25% tariff on imports of steel and a 10% tariff on imports of aluminum. And the tit-for-tat between the countries has only ratcheted up since. After months of rhetoric, a 25% levy on $34 billion of Chinese goods entering the U.S. took effect on Friday, July 6. China hit back immediately via duties on U.S. shipments including soybeans and automobiles.
For small businesses, there are no winners in a global trade war. The blustering, posturing and gamesmanship means rising costs and eventually layoffs. Here are three small businesses in Michigan already struggling to cope.
1. Ken Nobis, St. Johns, MI
Ken Nobis has spent half a century as a dairy farmer – 50 years working alongside his father and brother on the same farm in St. Johns, Michigan. He can’t remember a time when business has been tougher, the future more precarious, and the stakes so high, especially with dairy prices already under pressure.
Canada, China, the EU and Mexico have all targeted the cheese and dairy industry with regulations and extra duties. Those added price pressures, combined with the issues the industry is already facing, has Nobis worried that many family farmers might not be able to survive.
“People feel dejected, depressed and you can see it on their faces,” said Nobis from his farm 20 minutes north of Lansing. “These are hardworking Americans. But once they are gone, they are gone. And they don’t come back.”
2. Padnos, Holland, MI
“It’s hard to make up a market like China,” Jeff Padnos told NPR. “The whole announcement is introducing uncertainty and volatility into our markets,” Padnos explained to a Michigan newspaper. “It’s just another element of uncertainty, and we have to deal with that all the time.”
Far from Washington D.C., his family’s scrap recycling business has been a proud job creator and staple of Holland, MI, since his grandfather started the company in 1905.
His company exports products to Mexico, Canada and around the world, which means the trade war will threaten his company’s bottom line.
Now, Jeff Padnos’ recycled metal is piling up, idling in Chinese docks, unable to get to his customers.
“We don’t know exactly, but we have to be ready for anything,” Padnos said. “As a company, we are committed to free and fair trade. There have been some cases in which the U.S. has been taken advantage of, but it’s hard to believe the tariffs are the best way to solve this issue.”
3. Trans-Matic, Holland, MI
Pat Thompson opened Trans-Matic in 1968, when the metal stamping company had just one employee and a small warehouse. Fifty years later, Thompson’s company employs more than 500 people in two U.S. factories. But, as a business owner, Thompson worries about a tariff on imported steel.
Thompson told MLive.com that the tariffs are making his components more expensive to manufacture. U.S. steel prices have risen more than 50% since the beginning of the year as markets anticipated and reacted to the U.S. tariffs.
"It creates a difficult situation if you're a steel consuming company like ours."
To learn more, visit www.thewrongapproach.com to see a map showing how states are affected by tariffs from China, the European Union (EU), Mexico, and Canada.