When President Donald Trump announced new tariffs on nearly all U.S. trading partners in April, Ben Knepler, co-founder of the Pennsylvania-based company True Places, immediately contacted his factory in Cambodia. His urgent directive was simple: “Stop production.”
The April announcement included a 10% levy on imports from most trading partners, with plans for further increases. For Cambodia, however, the proposed duty was a staggering 49%. “We literally cannot afford to bring our own product into the U.S. with that kind of tariff,” Knepler told AFP, describing the painful decision to halt manufacturing of his company’s outdoor furniture.
This was a particularly difficult move for True Places, as Knepler had just spent a year relocating his production from China to Cambodia to escape the tariffs imposed during Trump’s first presidency. “We were facing 25% tariffs in China, and there were zero percent tariffs in Cambodia,” he recalled. After the extensive effort to move massive equipment and molds, he was now facing another steep levy.
With Trump’s “reciprocal” tariff hikes taking effect last Thursday, the duty on his Cambodia-made chairs now stands at a still-significant 19%.
Knepler’s experience reflects the challenges faced by many U.S. companies that have spent years offshoring manufacturing, from yo-yos to clothing. To cope, businesses are employing various strategies. Some are passing the new costs to consumers as a surcharge, while others have halted imports altogether, hoping that Trump will secure bilateral trade deals that make their operations viable again.
The President has repeatedly claimed that foreign countries pay for his tariffs, citing tens of billions in revenue. However, companies like True Places dispute this, with Knepler stressing, “We make the tariff payments when the product comes into the U.S. Before we sell it, we’re the ones who pay that tariff.”
Now saddled with hundreds of thousands of dollars in debt from the relocation to Cambodia, Knepler is worried about the survival of his business. He likened the constant policy shifts to a “wheel of misfortune,” noting that the planned tariff rate on Cambodian exports has changed five times in just four months this year, fluctuating from 0% to 49%, then to 10%, 36%, and now 19%. “It’s impossible to have any kind of confidence in what the rate will be in three- or four-months’ time,” he said.
Economists are warning that these tariffs could lead to inflation and hinder economic growth. Gregory Daco, chief economist at EY, noted that the duties that went into effect on Thursday have raised the average U.S. tariff rate from 2.8% at the start of the year to 17.6%—the highest level since the early 1930s. Although Trump has lauded the limited effects his duties have had on U.S. prices, experts say it often takes time for tariffs to filter through to consumers.
Many of Trump’s sweeping levies are also facing legal challenges over his use of emergency economic powers.
The new global tariffs are especially difficult for businesses to avoid. Barton O’Brien, a Maryland-based veteran who sells dog harnesses and accessories, said he borrowed money and accelerated production to import as much inventory as possible before Trump’s tariffs took effect. The Republican leader had floated a 60% tariff on imports from China, where O’Brien manufactures most of his products. To prepare, O’Brien even rented a container to ship as many items as he could, leading to a surplus so large he “had dog life jackets in the bathroom.”
O’Brien stated there is “no way” to produce his products domestically, as comparable American-made goods sell for nearly six times his retail prices. While he also makes some items in India and Vietnam, those countries also face tariffs of 25% and 20%, respectively. An extended truce on Chinese products expired in November, subjecting them to an additional 30% duty this year. “If you look at the brands I compete with, we’re all made in the same countries,” he said, highlighting the widespread impact of the tariffs across the industry.
