(This column originally appeared in The Inquirer)
While we wait to see the resolution of President Donald Trump’s tariff demands on the European Union, Canada, Mexico, China and other trading partners, small businesses in the area remain on edge and uncertain.
Although Trump’s proposed tariffs on China and other countries have been suspended for at least the next two months, many other tariffs remain in effect.
For example, a new 10% across-the-board tariff on all goods coming into the U.S., regardless of their origin, and tariffs as high as 25% that began during the Biden Administration continue to be levied on steel, aluminum, auto parts, and other products.
As important as manufacturing is, in reality more than three-quarters of the United States’ economic output is generated by the service industry. Businesses in this industry tend to be less impacted by tariffs on their operations. And Philadelphia’s economy is no different.
Professional organizer Annie Amoon Richard, owner of Amoon’s Custom Organizing based in West Chester, said tariffs have not affected her business, and she’s not expecting them to have an impact.
“I support local — buying and selling — wherever possible,” she said.
John Harris, a managing director of healthcare consulting firm VMG Health in Bala Cynwyd, is concerned that his clients — large health systems to small practices and everything in between, including investors and private equity firms — could be affected by tariffs and that could trickle down and impact his future business growth.
“As a management consulting firm, we don’t see much impact from tariffs,” he said. “However, hospitals do and are spending a lot of time figuring out how to keep drugs and supplies coming and affordable. And since hospitals can’t raise their prices [because they are locked into multiyear contracts with insurers], they take a big hit with inflation.”
The real estate industry is already facing challenges from low supply and high interest rates and could also be indirectly affected by tariffs. And although this will create additional headaches, some in the business feel it will also offer opportunities.
Benjamin Oller, a partner at TCS Group, which specializes in real estate sales and rentals in the Philadelphia metropolitan market, said he “hasn’t seen the full impact of tariffs” yet, and sales are “holding steady” at normal levels.
“However, as the cost of goods rises and families try to manage their budgets, I expect that many will delay making changes to their living arrangements,” he said. “This will likely slow down the housing market and brokers will feel the hit for sure.”
While the housing sales may be negatively impacted, Oller said, the rental market could see a boost.
“I’ve noticed an increase in rental inquiries, which may be an early sign of shifting market dynamics,” he said. “I anticipate that investors will seize new opportunities, leading to a larger and more active rental market.”
Jonathan Myerow, the owner of Tria restaurants in Philadelphia, said some wine costs have gone up “a bit” but not dramatically. However, he believes it’s imminent.
“The ramifications for this are going to be felt increasingly over time. A lot of the wine impacted by tariffs isn’t even stateside yet,” he said.
Myerow is worried that increasing costs will make it harder for his business to operate.
“We don’t like the option of increasing menu prices because our guests don’t need that right now with the uncertainty facing our economy,” he said. “Our strategy is to look for a balance of offerings that create a dynamic menu without raising prices for our guests. We’re looking at reworking what we offer and how we offer it.”
Don Adriaansen, president and CEO of TITAN Mobile Shredding in Doylestown, sees tariffs impacting his company’s ability to purchase critical equipment as rising costs influence his company’s purchasing decisions.
“We’re concerned that our delayed purchases of the mobile shred trucks from Canada will ultimately stop us from buying,” he said. “An increase of 10% to 30% in costs due to tariffs on a $255,000 piece of equipment is significant.”
Adriaansen said he will be analyzing “every expense” and capital investment and “delaying spending and investments until there is more certainty.”
National Chemical Laboratories, a Philadelphia-based manufacturer of cleaning solutions and products, plans to mitigate any price increases due to higher costs, said president and CEO Harry Pollack, and the company has “actively hedged” some purchases.
“It is too soon to draw any conclusion on how tariffs might affect our business,” Pollack said. ”There is too much uncertainty.”
Warminster-based Gamry Instruments, which designs and builds precision electrochemical instrumentation and accessories, is already facing headwinds. The company exports its products to China and other countries in Europe, Asia and Africa. Founder Max Yaffe said tariffs have already reduced his company’s sales by over 30% and he expects things to get worse.
“We are under a significant disadvantage because of import tariffs on parts needed to make our instruments and export tariffs on the final products,” Yaffe recently wrote in an open letter to the Bucks County Courier.
While businesses can take some steps to mitigate tariff impacts, all of this is easier said than done. Even in the best-case examples, these actions can be complicated, costly and take time.
The Trump administration, meanwhile, says it is actively negotiating trade agreements with many countries, including our largest trading partners. Businesses here will just have to wait to see how things turn out.
