What Trump’s tariffs could mean for Pennsylvania businesses and consumers

Melissa Rivers’ restaurant, NEPA MR Lounge in Plymouth, has become more than a place to eat since it opened in 2018. It is, Rivers explained, something of a community gathering space, a venue where all are welcome to leave the outside world behind, raise a glass to the end of a work day and eat dishes inspired by Rivers’ grandmother.

Under the chandeliers in the eatery blocks from the Susquehanna River, everyone is welcome — and Rivers wants to make sure there’s something any person walking through her doors can afford. 

“I get the working class come in my happy hour,” she said. “They’re talking about what’s effed up — they didn’t get a raise, they might get fired, they’re scared to lose their job. I hear every story. I even know whoever’s mom got cancer right now.”

It’s important, Rivers said, for her restaurant to remain open — and remain a place where people can buy a good meal for a decent price.

“At the end of the day, it’s a comfort for them,” Rivers said. “So it would be a major loss for the community if I closed.”

Rivers says she isn’t in danger of shutting her doors, but she is worried about the financial effects of President Donald Trump’s looming tariffs on her business. 

Trump announced on Jan. 30 that he will impose a 25% tariff on all goods from Mexico and most from Canada and an additional 10% tariff on goods from China. The president said he will impose a 10% tariff on energy from Canada. Those tariffs are expected to go into effect on Feb. 4. Tariffs are taxes on imported goods and services; they are paid to the federal government by the business that’s importing the goods or services. The president has also floated the idea of a universal tariff on all imports into the United States.

In response, Canadian Prime Minister Justin Trudeau said Canada will impose a retaliatory 25% tariff on goods imported into Canada from the U.S., and Mexican President Claudia Sheinbaum said Mexico would also set a retaliatory tariff but has not yet specified the size. The Chinese government planned a response to the tariffs as well but has not provided specific details. Global stock markets tumbled on Feb. 3 in reaction to the expected trade wars. 

Businesses will have to figure out a way to absorb the higher costs they’ll now have to pay for imports from Canada, Mexico and China. Business owners said those costs will be passed on in the form of higher prices for the consumer and could result in decreased revenues for the seller.

Rivers expects she’ll have to pay more for the produce and beer that she gets from Mexico. That, she said, comes as her other costs have soared, including the price of frying oil, which doubled under the first Trump administration.

“I am already immediately looking at where I can’t make as much of a profit,” Rivers said. “And then you’re starting to be even more creative with, let’s just say, giving people less. I mean, I hate to say it, but give the appearance that they feel they’re getting more, or you’re giving them more, but you start choosing cheaper options for food and making it good. Like, you just start being creative with rice.”

The economic fallout of tariffs

The president has in part framed his push for tariffs as a way to pressure companies to make products in the United States. Economists, however, say tariffs typically don’t result in lower-priced, U.S.-made products. For example, when Trump imposed tariffs on goods from China during his first term and China then instituted retaliatory tariffs on U.S. imports, prices rose on products purchased by U.S. consumers while the number of domestic manufacturing jobs did not increase. 

Economists expect that trend to continue under Trump’s current tariffs plan. When the Wall Street Journal surveyed 44 economists in October, the majority of them said Trump’s tariff proposals would result in a decrease in domestic manufacturing employment.

“From the point of view of consumers, we’re going to see a huge spike in inflation; 25% tariff is a very, very high tariff,” said Marc Stier, the executive director of the Pennsylvania Policy Center, which studies the impact of government policies. 

“Here’s what happens if, say, there’s competition between foreign and domestic producers of light bulbs,” Stier said. “Put a tariff of 25% on foreign light bulbs. Well, domestic light bulb companies are not stupid. They’re going to raise their prices, too, because all of a sudden their competition is diminished. Now, they may not raise the price by 25%, but if they raise the price by 20% to try to increase their market share while benefiting from the limited competition, well, then we’re all going to pay 20% more for light bulbs, and it doesn’t matter where they’re produced.”

Tariffs could harm Pennsylvania farmers

Consumers will feel the pain of these tariffs, Stier said, but, he added, Pennsylvania producers will face equal or greater challenges in the wake of tariffs. During the last Trump administration, Stier noted, China largely stopped buying soybeans from Pennsylvania farmers after the president imposed tariffs on Chinese goods.

“They bought them from elsewhere, and we saw the price received by soybean producers crashed,” Stier said. 

Now, farm operators in the state and country will face economic problems all over again if a trade war with China escalates further, Stier explained.

“I think they’re going to be in big trouble, and that’s assuming they have workers,” Stier said. “Because if Trump goes after their immigrant workers — something like 25% to 40% of agricultural workers in the state are undocumented immigrants — if he goes after those workers, they’re not going to have people to actually produce the amazing range and extent of goods that farmers already are producing in the state.”

The Pennsylvania Department of Agriculture said in 2019 that about 49% of the state’s agricultural workers were undocumented.

Hugh McPherson, a fifth-generation farmer who operates Maple Lawn Farms in York County, urged politicians to allow farmers to continue the trade relations they’ve worked hard to build with other countries. Doing so, McPherson said, would help provide farmers a financial buffer against the costs incurred due to climate change, such as when farmers lose crops due to drought or flooding.

“We need to be able to ship to China,” McPherson said. “We need to be their No. 1. We want them coming here for corn and soybeans, pork. We need them coming here for beef.”

“We want Europe to be able to purchase from us anytime, without harassment,” he continued. “That’s the most important thing. How much can we ship to Mexico? How much can we get to Canada? Opening those agricultural markets is the biggest hedge against climate problems on farms because it means our prices will be better.”

A Lancaster pretzel company prepares for tariffs

Like Rivers, Misty Skolnick is planning for a potential rise in the cost of doing business due to Trump’s tariffs. 

Skolnick, the co-owner of Uncle Jerry’s Pretzels in Lancaster, doesn’t import anything directly, but, she said, her company’s suppliers’ costs will rise because of the tariffs. In turn, at least some of those costs will be passed on to her.

“So, for example, we use biodegradable packing peanuts,” Skolnick said. “If our supplier for those imports any of that, and that sector gets hit with a tariff, that’s how we would be affected.”

There’s a range of products that are important to her business that could be affected by tariffs, Skolnick said, from flour to labels to plastic film.

Whenever there’s a jolt to the supply chain, whether that’s because of tariffs or because of an extreme weather event, suppliers raise the prices they charge businesses like hers, Skolnick said.

“What that would mean for us would be assessing the total amount of increases that we might get, figuring out how much of that increase we can absorb and how much, unfortunately, we would have to pass on to our customer in order to continue providing a handmade product,” Skolnick said. “We do our best to minimize our price increases to the customer, but, unfortunately, if we want to stay in business and we want to continue to be able to produce this item, you have to [raise prices]. It’s a really delicate balance, and it’s very unfortunate.”