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“There is a lot of uncertainty”: Outdoor industry facing $1.5 billion in monthly losses from Trump’s trade war

“This trade war, it’s having the opposite effect of its intention,” one industry representative said.

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“Who here has a business impacted by these tariffs?” asked the speaker at the lectern.

Hundreds of hands reached for the ceiling of the standing-room-only convention hall.

The angst was palpable at this week’s Outdoor Retailer trade show as the outdoor industry hunkered under painful, punitive tariffs imposed by President Donald Trump in his trade war with China.

This week the Outdoor Industry Association released a report showing that outdoor companies and their consumers paid an extra $1.1 billion from September, when the first Trump tariffs went into effect, through April.

The report found that Trump’s threat to impose across-the-board 25% tariffs on an additional $300 billion worth of Chinese imports could cost the outdoor industry $1.5 billion more every month, sapping one of the country’s most vibrant industries.

“It’s your carry-on surfboard,” Hala Gear founder Peter Hall said of his new carbon-fiber reinforced surfboard. The Steamboat Springs company would have paid an additional $89,000 in fees for the first three months of the year if its inflatable stand-up paddle boards were not exempted from recent tariff increases. (Jason Blevins, The Colorado Sun)

Amanda Schantz came to the meeting this week to ask a question of the trade-war veterans and consultants participating in a panel discussion that offered possible strategies for lessening the blow of looming tariffs.

As the director of product development for Allen Company in Broomfield, Schantz wanted to know if her company could avoid the tariffs by ordering raw materials from China — the only place to get the materials used in Allen’s hunting and fishing equipment — and assembling products in the U.S. She had heard that the steel industry was able to secure exemptions for some raw materials from China. Could she do the same with her zippers, fabrics and other components?

No, she can’t. Not under Trump’s punishing tariffs.

MORE: It’s not just China: The United States’ global trade war has Colorado companies seeking — and finding — workarounds

“Unfortunately this trade war, it’s having the opposite effect of its intention, which was to encourage domestic manufacturing,” Schantz said. “We are trying to manufacture here, but the tariffs are having the opposite effect. Which is a really hard thing to explain to someone, that yes we manufacture in the U.S. but this tariff still hurts us, too. We have customers who are turning to us because they don’t want to buy the Chinese-made products, but you are still unable to offer them an option.”

So far, outdoor companies have done a good job of absorbing the cost of the tariffs imposed last fall. Most of the products heading for shelves this summer were sold to retailers months ago, before the new tariffs, so consumers have not yet seen a price increase.

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“That will change,” said Patricia Rojas-Ungar, the Outdoor Industry Association’s head of government affairs, who expects politicians in Washington, D.C., will hear from those consumers when prices spike. “When they start to hear from Boy Scout troops who can’t get their Eagle Scout badges because they can’t buy the gear they need, that could spur Congress to act. But the pie is going to be half-baked already by next spring.”

Roja-Ungar worries that some small businesses might not be able to survive another round of tariff increases. A majority of the outdoor industry is comprised of small businesses piloted by entrepreneurs who stay afloat on slim margins in order to pursue their passion.

“This is their life dream to have this business and by the time we start to hear from members of Congress who are standing up for them, it might be too late,” she said.

Several outdoor companies skipped the Outdoor Retailer show this week to go to Washington, where they are pleading with leaders to fight the Trump Administration’s tariff war. That’s one tack among many the outdoor industry is deploying as tariffs threaten livelihoods.

Business owners also are sharing their personal stories about how the tariffs are impacting their lives. They are huddling with each other to explore mitigation strategies, including how to shift supply chains out of China, said Rich Harper, OIA’s manager of international trade.

“If they have an opportunity to shift supply chains out of China they should really look into that, but for a lot of companies, that can’t be done in just a few weeks. In some cases it takes years to shift production,” Harper said.

And moving out of China doesn’t always work. Take GoPro for example, which in May announced it was shifting production of some cameras to Mexico to avoid the trade war with China. But then Trump threatened Mexico with a new tariff plan if Mexico didn’t work to contain migrants crossing the southern U.S. border.

“The idea that you can recommend to go somewhere else is a challenge,” said Dan Anthony, with The Trade Partnership, which provides trade consulting and research to both industries and policymakers. “Businesses are making moves thinking they are trying to get somewhere safe and it changes again. There is a lot of uncertainty.”

Most of the optimistic entrepreneurs in the outdoor industry are lamenting not just the cost of Trump’s trade war, but the time it is consuming.

MORE: China tariffs are translating into higher prices and strategic shift for the outdoors industry

“Tariffs and trade talk really sucks the air out of the room,” said Sara Bowersox, the global compliance manager for Keen. “It draws our focus away from things that are important to us.”

Peter Hall’s inflatable stand-up paddling boards were exempted from Trump’s first two rounds of tariffs. He thinks it’s because someone in D.C. saw his products and realized “there is absolutely no one in this country capable of making products like this,” he said.

His importing agent sent him a report showing he would have paid $89,000 in additional duties in the first quarter of the year on his China-made Hala Gear boards.

“We don’t have enough money to make as much as we want anyways so that would have been $89,000 fewer dollars we could invest in new products to sell to customers,” said Hall, showing off a new carbon-fiber reinforced inflatable surfboard he designed from his Steamboat Springs headquarters. “It would have been $89,000 in more backorders. In just the first quarter. What am I going to do? I don’t know what to do. Maybe these tariffs won’t kick in?”

Rising Sun