Cost hikes or too early to tell? How Trump tariffs may impact the suburbs

After months of promising to impose tariffs, Donald Trump takes the oath of office Monday.

If the president-elect follows through, how might that impact the Chicago region?

Suburban retailers and manufacturers, including Laser Precision President Cameron Adams, are watching closely.

“Out of the gates, we don’t really know how much of the tariff talk is real and how much is actually posturing,” said Adams, adding it could be a tactic to get countries to the bargaining table.

The Libertyville company turns raw steel into specialized parts used by manufacturers for heavy equipment, such as excavators.

If tariffs occur, it bodes well, in the short term, for Laser Precision “to take on more work potentially if there are disincentives for these large manufacturers to produce internationally, and incentives for them to produce domestically,” Adams said.

But “supply chains are extremely complex. Any time you turn the dial on one area — i.e. tariffs — there tend to be unforeseen impacts about what that actually constitutes,” he added.

Paul Darley, CEO of Itasca-based Darley, isn’t predicting the future but he remembers when tariffs hit in the past.

“We were severely impacted in 2019 by the last Trump tariffs,” Darley said.

The company manufactures specialized equipment for firefighting units and the U.S. Department of Defense, among other clients.

“We went from selling 50 to 100 fire trucks per year into China, and due to retaliatory tariffs from China, that business was shut off as we were no longer competitive,” Darley said.

Jason Kinander, CEO of Roselle’s Electri-Flex, has lived through multiple presidents’ economic agendas.

“I don’t disagree with President Trump raising importing tariffs because (in) a lot of countries like China and Mexico and others — their labor costs are so much lower than ours,” Kinander said.

But he also recalls President Bill Clinton slapping punitive tariffs on cheap foreign steel to protect U.S. companies in 2000. Electri-Flex designs and manufactures electrical conduit using domestic steel.

“What that did was it gave the domestic producers an opportunity to raise their prices. And they raised their prices greatly because they knew they were going to be protected by these import tariffs,” Kinander said.

“It was a very turbulent time for us, but again we were able to get through it, pass on those price increases in kind, and go from there.”

In Arlington Heights, Vintages wine shop President Robert Owings is preparing for some quick pivots.

“Tariffs will increase the cost of my goods, and I have to pass that along to my customers,” Owings said. “If the tariffs on some items are really big, some of the things that I sell won’t sell anymore — and I’ll have to find different products to sell.”

A majority of the wines at his boutique are imported, as well as some merchandise such as tableware and gifts.

“We’re expecting our costs to go up on a number of items, and we know that will change our customers’ behavior,” Owings explained.

“During the first Trump administration there were punitive tariffs put on various things like champagne and we’re still feeling the effects of that.”

University of Illinois Urbana-Champaign Professor Jonathan Coppess calls tariffs “just a tax on imported goods” that will raise prices across America on everything, including electronics, coffee and bananas.

The trade expert cited 2018, when Trump instituted tariffs on China, and China retaliated.

“It ended up disrupting trade across the globe, which has even more far-reaching implications. That hurts prices, that hurts market access and that can depress prices further,” Coppess said.

He said Trump framing tariffs as a “punitive measure” will generate conflict with other nations.

But “one positive is that it does raise money” for the federal government, Coppess noted. And targeted tariffs, including one on solar panels, helped U.S. producers nurture a fledgling business, he said.

The auto industry also is keeping a close eye on Washington.

“I believe what (Trump’s) trying to do is the right idea, as far as getting more manufacturing into the United States,” said Greg Webb, a partner at Packey Webb Ford in Downers Grove.

“But it is kind of a threat to these other countries and they’re taking it that way. I’ve heard concerns (from) manufacturers — saying that this is going to increase the price of cars and trucks. Personally, I think it’s too early to tell.”

During the first Trump administration, Ford intended to bring a crossover version of its Focus sedan, built overseas, to the U.S.

“We were pretty excited about it, it was a very good-looking car,” Webb said.

But Ford pulled the plug after tariffs were instituted. “It was going to raise the price too much,” Webb said.