REGIONAL— While the fate of President Trump’s tariffs are currently stuck in legal limbo for now, it remains to be seen how those assessments will impact retailers here in the North Country.
Whether its clothing, gifts, or home furnishings, many of the products on display in area shops are manufactured outside the United States, and that means most, if not all, are potentially subject to a wide range of import taxes, at least for goods brought into the country after the tariffs went into effect.
For most retailers who agreed to speak to the Timberjay, the effects of tariffs remain an open question. Most are just beginning their busy season and many ordered their products months in advance, prior to implementation of tariffs. Others are finding ways to adjust their business models to compensate for the changed circumstances.
That’s the case with Alvin Goeser, at Ely Bike and Kick Sled, who said he’s focusing more on service than sales right now as some of the product he used to sell is tougher to find from suppliers. He said he currently has just four new bikes in stock, but said he can typically order bikes from Surly or Salsa for customers and get them next day. For now, he’s just keeping a lot less inventory on hand ‘and spends his time on the service side of the business, which is keeping him plenty busy, thanks in part to the arrival of the Mesabi Trail in Ely last year.
While Goeser’s approach is working well for him right now, shops that rely more heavily on product sales are finding the current circumstances more challenging. “It’s definitely had an effect,” said Terry Murphy, who co-operates Mealey’s Gift and Sauna Shop in Ely. The impact goes beyond the cost of the tariffs, which she said is now showing up on some of the recent orders she’s received from suppliers, in some cases even on products she ordered back in January. “And some of our usual products aren’t even available because some people decided not to even bring product in,” she said.
At the same time, the threat of tariffs prompted her to order more product than usual, hoping to avoid the need to restock with the tariffs in place. “That means we bought more than we really wanted,” she said. “It’s been very challenging as a small business in a seasonal market.”
Like most small retailers, Murphy said she has no choice but to pass the cost of the tariffs onto her customers. Whether that will impact sales this year remains an open question given that the summer season is just getting underway.
But tariffs aren’t the only challenge for many small retailers in the area. Murphy said she remains short-staffed, which meant they couldn’t be open on the Sunday of Memorial Day weekend, typically one of their busiest weekends of the year.
While the impact of tariffs can be quite modest on some smaller, low-cost items, the impact can be considerably more onerous for big ticket items, like home furnishings. That’s been the experience at Nordic Home North, in Tower, where owner Marit Kringstad had struggled in recent months to determine the total price for customers buying any of their high-end Norwegian-designed chairs and recliners, which had been in high demand until the tariffs hit.
“We hadn’t gotten any orders since because we couldn’t tell customers what the price would be,” said Kringstad. That’s because the chairs are manufactured in one of two countries, Thailand and Vietnam, which are subject to differing tariffs. And with tariff rates changing on an almost daily basis, she said she’d been reluctant to quote prices, since a wrong guess could wipe out any profit on the sale, or even cost her money.
In response to the situation, Kringstad said her supplier recently arranged to provide their retailers with a set price that will include the tariff at the time of the order, to allow them to quote a firm price to customers.
The tariffs on the store’s handwoven rugs from Nepal, which Kringstad imports directly from the manufacturer, remains uncertain.
While tariffs are impacting some shops directly, they’re having a more indirect effect on others. Nancy Imhof, who owns Mason’s on Main, an apparel shop in International Falls, said the drop in cross-border traffic has been her biggest challenge in recent months. “We’re just not seeing the volumes of Canadian customers we’re used to seeing,” she said. Canadians were upset by the stiff tariffs placed on their exported products as well as the general disrespect toward the country exhibited by President Trump.
A weak Canadian dollar isn’t helping, either, said Imhof, nor is the fact that Canadian customs is now doing more enforcement of import duties on American goods that Canadian shoppers are bringing back home, another bit of indirect fallout from the tariff situation.
Imhof has largely avoided the impact of direct tariffs, at least so far. She said her current stock of product was largely ordered before the tariffs took effect. “It remains to be seen what happens later on,” she said. “My next marketing will be towards the end of the summer. I’ll know more at that time. I’m not sure what I’ll do, but I might have to shop around a little more. I don’t feel prices can get much higher for our local economy.”
Making the best of it
While the tariffs have meant some products are no longer available for local retailers and that prices of imported goods are higher, there have been some surprises. Kringstad said she had avoided ordering a brand of scrubber made in Canada to avoid tariffs. But she recently discovered that the products aren’t covered by the tariffs so she plans to order a new supply.
Kringstad said wholesale suppliers have been studying various options since the tariffs took effect and are finding products that won’t be hit with the import tax. She’s also been surprised to learn that many of the products she’s used to ordering are made in the U.S. and so aren’t affected by the tariffs. If nothing else, it is making retailers more aware of the source of many of the products they sell.