Saturday, April 19, 2025

Turning Love into Hate: Trump and Business, Large and Small

 A map of the world with a map of boxes

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Turning Love into Hate: Trump and Business, Large and Small

PETER ON THE WRITERS’ HANGOUT PODCAST!

Trump portrays himself as the champion of the working man (yes, I said “man”) and small businesses. His reconfiguration of the National Labor Relations Board has created the largest anti-union agency in many decades. Union members face more layoffs But his going-forward tariff and trade policies are creating untold misery on small businesses, many of which are unlikely to survive. In short, billionaires will continue to grow and prosper, especially if Trump’s tax cut proposals are enacted, and everyone will pay for that horrendous mistake. Butas well shall see, it isn’t all roses for America’s big tech industrial complex. And remember financial services, and tech based innovators account for 70 percent of the private economy here. They get killed too.

Let’s look at big tech, which is heavily reliant on component imports, now starring down Trump’s double-down barrel of a shotgun that will tank their shares and raise prices to unsustainable levels. For big, it’s even worse than our automotive industry. Unless, like the premiere law firms who cave, Big Tech has to seek Trump’s exemptions. As Queenie Wong and Wendy Lee, writing for the April 6th Los Angeles Times, explain: “Apple makes most of its iPhones in China, though in recent years the Cupertino-based company has made more of its products in India, Vietnam and other nations. In all, the tech giant says it relies on more than 50 countries and regions to put AirPods, iPads and MacBooks in the hands of consumers.

“Now, that global supply chain is under siege… Last week, President Trump said he would impose a baseline 10% tariff on imports from all countries on Saturday. His administration also added tariffs of 34% on China, 46% on Vietnam and 26% on India… ‘Apple has nowhere to hide,’ said Eric Harwit, professor of Asian studies at the University of Hawaii at Manoa. ‘No matter where they’re making their technology, they’re going to be suffering, they’re going to see higher costs.’

“Trump’s sweeping tariffs have rattled both investors and some of the world’s most valuable tech companies that have fueled the global economy and Silicon Valley’s growth. They’ve also raised questions about whether these global businesses will pass the higher costs on to consumers or slash their payrolls… Apple has been especially hard hit. Its stock plunged more than 9% on Thursday [4/3] and dropped another 7% on Friday to close at $188.38… Share prices of other tech titans, including Google parent company Alphabet, Meta, chipmaker Nvidia and Amazon, also saw big declines, causing the tech-heavy Nasdaq composite to fall 5.8% on Friday — putting it more than 20% below its record set in December.

“The unease reflects worries among investors that the tariffs could cause lasting damage, potentially making it harder for the U.S. tech industry to compete globally and dominate the race to deploy artificial intelligence technology, analysts said… The duties also are expected to drive up the costs of consumer electronics, including the iPhone, as products become more expensive to produce… ‘Technology pervades everyday life and these tariffs are attacks on consumer electronics,’ said Todd O’Boyle, vice president of technology policy at the Chamber of Progress, a trade group. ‘They’re attacks on everything that we buy and that includes any foreign parts with global supply chains.’…The levies could cause consumers to pay as much as $2,500 more for an iPhone, which costs roughly $1,000, depending on the model…

“Daniel Ives, a managing director at Wedbush Securities, said that it would take Apple three years and $30 billion to move just 10% of its supply chain from Asia to the U.S. Plus, the iPhone’s price tag would grow to $3,500, he estimated… ‘The chances that Apple and the overall tech supply chain moves to the U.S. is a fantasy, fictional tale, unless you like $3,500 iPhones, $2,500 TVs and $300 AirPods,’ Ives said.” China’s revenge is not just reciprocal tariff rates but a threat to veto the sale of TikTok to a US buyer. OK, let’s screw the big boys, particularly if they are located in that radical leftist California. Except even the little guys are going down… no matter where they are located. Indeed, smaller business, many of which are too small to manufacture their wares, are justifiably terrified. As Lydia DePillis, writing for the April 6th New York Times, tells us:

“Thousands of entrepreneurs are finding themselves in similar positions as they confront the blizzard of changes from Washington over the last two and a half months. Funding freezes, staffing cuts to federal agencies and an immigration crackdown — along with, of course, tariffs — are throwing many into turmoil, with little certainty about how to proceed… ‘It’s feeling like a tornado to small-business owners,’ said Natalie Madeira Cofield, chief executive of the Association for Enterprise Opportunity, which supports initiatives to help companies with fewer than 10 employees. ‘This is an unprecedented moment.’

“The last few years have been a whirlwind for this part of the private sector, which is critical to feeding the American economy with new ideas and competitive vigor. The Covid-19 pandemic ushered in a boom of business formation, and many of those start-ups continued to thrive in new niches, with modern practices.

“Then, a surge in inflation, followed by a run-up in interest rates, stretched many small enterprises to their limit. Small firms have fewer employees on average than they did before the pandemic, according to the payroll platform Homebase; hiring declined 1.6 percent in the first quarter of 2025 from a year earlier. And data from the accounting software company QuickBooks shows that the set of businesses with fewer than 10 workers started shrinking rapidly in March 2024.

“The economist who compiles those numbers, Ufuk Akcigit of the University of Chicago, also found in a working paper released last month that small businesses started to run up their credit card bills in 2021, incurring heavy interest payments. As interest rates rose in 2022, revenues declined and more businesses became delinquent. … ‘Small businesses don’t have internal capital to rely on,’ Dr. Akcigit said. ‘As a result, if there’s any financial difficulty, they’re the first group to be left out of the credit market.’”

Let me put this in perspective. The above are just a few examples of why high tariffs and trade barriers invite massive failure, from which it could take years to recover. Even if Trump totally reversed himself (not his double-down style), his unpredictable behavior, his mercurial personality and proclivity to bully his solutions would probably require a few years of consistency to convince the world that this reversal were real. See the problem?
I’m Peter Dekom, and there are moments when I envy an ostrich with its head in the sand.A close-up of an ostrich

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