Some small businesses in Texas are bracing for economic fallout which may come from incoming President Trump's tough negotiating tactics. He plans to increase tariffs on several countries when he takes office on January 20.
He campaigned on a twenty-five percent across-the-board tax on goods coming in from Mexico and Canada, and higher taxes on goods from China, and other countries. At a Tuesday press conference, he threatened a tariff on goods from Denmark if they fight against his desires on Greenland.
Some local businesses are concerned they're going to get caught in the middle of a trade war.
In Old East Dallas, Gabe Sanchez, the owner of Black Swan East Dallas is concerned about the tough talk coming from the incoming President.
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“Yeah, leave us out of it," said Sanchez.
His bar had to close and move to another location during the COVID-19 pandemic. As President Trump takes office, he and his four-person staff worry the products they carry will become more expensive as Republican leaders become more skeptical of free trade policies.
“The bar business, the restaurant business, is difficult. As far as small businesses this is about as small as it can get," said Sanchez.
Lone Star Politics
Covering politics throughout the state of Texas.
His bar offers wine from France, tequila and mezcal from Mexico, Scotch whiskey, and other alcohol from around the world. If those products become more expensive, he'll have to pass those costs down to customers or stop selling them.
“If it goes a week, we’ll probably be fine. A month ok we’ll really hurt. Eight weeks, twelve weeks, two quarters we’re going to be dead in the water," said Sanchez.
President Trump argues America has been on the losing end of trade deals: American consumers get cheaper products at the expense of American jobs.
To Ben Aneff from the U.S. Wine Trade Alliance, it reminds him of the tariffs put on French wine in the first Trump administration over a dispute over French-made Airbus. The fight rocked the industry.
“It hit the US wine industry pretty hard. One of the problems in general with imported wine, most of the damage is done to US businesses rather than businesses overseas," said Aneff.
The business community and lawmakers in Washington are waiting for the specifics.
One Lone Star Politics, Texas Senator Ted Cruz told NBC 5 he believes the tariffs will never happen. This, he says, is only a tough negotiating tactic to get other countries to help with American immigration efforts.
“We’re seeing the leaders of Mexico and Canada both very quickly coming to the table," said Cruz.
Meanwhile, free-trade, pro-business groups and small businesses like Black Swan are hoping Cruz is right: that this is tough talk and not an escalating trade war.
The idea of tariffs is actually a throwback to older times. Before the federal income tax, the government in DC collected a lot of its revenues by tariffs.
