Dog sweater or your sweater, tariffs mean its price will rise

There is only one way to save his business, says Charlie George: by raising the price of dog sweaters.

His company, PetRageous Designs, in Wilmington, Massachusetts, has until now absorbed hundreds of thousands of dollars in tariffs on pet toys, clothing and accessories. But the latest round of tariffs, which went into effect last Friday, imposes a 25 percent tax on virtually everything he sells, making it impossible to stay profitable unless he passes on those costs to consumers.

“This is penalizing people who have no alternative — and ultimately, it will punish the customer,” said George, who co-founded the family business 15 years ago. “The president says he's trying to punish the enemy, but we're not the enemy. We make rain coats for dogs.”

President Donald Trump's trade war with China is striking Americans where it hurts: their wallets. Across the country, manufacturers and retailers say they are preparing to raise prices by about 20 percent to offset the newest tax on Chinese-made goods. Many say this month's escalation of the trade war caught them by surprise — they had just begun to make adjustments to cover the 10 percent tariff on Chinese goods that went into effect in September — when Trump tweeted that the tax would rise to 25 percent. Now the Trump administration is mulling another 25 percent tariff on all remaining Chinese imports, which would affect just about everything Americans buy, from clothing and food to toys and furniture.

Joseph Cohen, chief executive of Snow Joe, last week marked up prices for the first time in the company's 15-year history. Garden tillers, which were previously $99, now sell for $139. The price of electric wood chippers has also gone up.

“These are low-cost products that can't be sourced anywhere else,” Cohen said. “If we were to make them in the United States, we'd be paying four times as much.”

Other manufacturers are also passing on costs to consumers. Leather blazers that sold for $129 two weeks ago now cost $149. Electric bicycles have jumped in price from $2,000 to $2,200. And $470 nylon suitcases now retail for $529.

“Prices are going up and people are starting to notice,” said Nicole Panettieri, owner of the Brass Owl, a boutique that sells handbags and accessories in New York's Queens borough. “But as a small-business owner, there's nothing I can do about it.”

“We're not happy about it, but we're going to have to raise prices,” said Pennye Jones-Napier, co-owner of Big Bad Woof, a pet store in Washington's Takoma Park neighborhood. Several vendors, including PetRageous Designs, have informed her that they'll be hiking prices to keep up with new tariffs.

“As a small, local company, we're already struggling,” she said. “There's nothing else we can do.”

If George had his way, all of his products would be manufactured in the United States. (“When I was growing up, 'imports' was a dirty word,” he says.) But puffy vests and quilted jackets for dogs require a number of handmade components that make it almost impossible to find qualified U.S. workers to do the same type of work at similar prices. Instead, George relies on a network of factories in China and India to make pet clothing, ceramic dog bowls, steel cookie jars and other accessories.

Last week he informed customers that he will soon be raising prices. He's not sure how much the markup will be — or how much more retailers will have to charge customers to make a profit — but he says he expects shoppers will soon be paying about 20 percent more for his products.

“The way the tariffs were imposed, we have no way to seek relief,” said George, a registered Republican who voted for Trump. “I was very annoyed, being a Republican, that our president would suggest that the Chinese are paying for the tariffs. No. It's Americans who are paying.”

The past decade has been good to George. Americans are spending more than ever on their pets, allowing him to build a successful business with 14 employees and millions in annual sales. The company sells to major retailers like Kohl's and Walmart, and also licenses dog vests, jackets and sweaters for brands like Eddie Bauer. George declined to provide sales figures but said it has had “double-digit growth” in recent years.

All of that, he says, could be in jeopardy. Dog T-shirts and cat place mats are often impulse purchases, and among the first things families pull back on as they begin paying more for essentials like toilet paper and groceries. (The 194-page list of items affected by the tariffs includes all sorts of things: cauliflower, clementines, deodorant, ponchos, petroleum jelly.)

In all, the newest tariffs are expected to cost each American family an average of $767 a year, according to a report by the Trade Partnership, a Washington-based research and consulting firm.

“Let's face it, dog toys are not a necessity,” George said. “People see something for $5, they think of their dog at home — he's happy, he's wagging his tail — and they buy it. What happens when that toy is now $7? Maybe they don't want it anymore.”

A year ago, PetRageous Designs used to pay a 2.8 percent tariff on pet clothing. Today, it pays nearly 10 times that, at 27.8 percent. For a company that operates on ever-thinner margins, that sort of cost increase is enough to wipe out any profits, George said.

What bothers him the most, though, is not knowing what comes next.

He's been collecting holiday orders for weeks and now expects that retailers will revise down some of those purchases. A number of factors — like exactly when a certain shipment makes it to shore — can end up costing him thousands.

“We have orders on a ship right now, minding their own business,” George said. “As soon as they clear customs, they're going to be whacked with a 25 percent tariff. We don't even have time to react.”

For now, he keeps a close watch on the news and has been following the president's Twitter account, where Trump maintains that the tariffs are “very bad for China, very good for USA!”

“I would just like to know what the ultimate goal is,” George said. “Businesses like ours, we hate uncertainty, and this guy is like a slinky. To the president, this is just another skirmish. For us, it's a real-life test.”

Business owners say they were just beginning to breathe a sigh of relief when the president's May 5 tweets sent them into a tailspin. By May 10, they were dealing with a surprise round of new tariffs.

“There's a reason trade policy is historically developed over many months or many years, versus the course of minutes,” said Peter J. Bragdon, chief administrative officer for Columbia Sportswear. “It has a dramatic impact and can create immediate disorder.”

Consumers, he said, “have been told they won't see any rise in prices, and that's just not true.”

Delta Children, the country's largest manufacturer of baby furniture, receives $500,000 worth of cribs a day from China. Now those same products will cost the company $625,000, which means shoppers will soon pay as much as 20 percent more on cribs sold at Walmart, Buy Buy Baby and Restoration Hardware.

The company has spent decades — and millions — building a network of factories and test labs in China. The sudden onset of tariffs, and the looming uncertainty of what happens next, has been paralyzing, president Joseph Shamie says.

“What am I supposed to do, abandon all that and head to Indonesia and Vietnam, build millions of dollars worth of infrastructure there?” Shamie said. “And then what happens when these tariffs disappear?”