In-Depth

Houston Small Businesses Feel Negative Effects From Chinese Tariffs

For small business owners, a trade deal can’t come soon enough.

As the United States and China keep working toward a trade deal, small businesses in Houston are feeling the sting from the tariffs imposed on Chinese goods by President Trump.

One such business is cookware company Chantal. Heida Thurlow founded Chantal in 1971, after moving here from Germany.

“I moved to Houston because I fell in love and I have a degree in mechanical engineering so I thought, well, it’ll be easy to get a job within the oil tool companies,” Thurlow said. “But 40 years ago it was not something that they were interested in hiring, a young female engineer.”

But Thurlow loved cooking and couldn’t find cookware that was both functional and looked nice at the same time, so she decided to make some herself.

Thurlow designs tea kettles, pots and pans, baking dishes and travel mugs and has them made in countries like Germany and Thailand.

But it’s her electric tea kettles from China that are now causing an issue for her business.

Thurlow had just ordered 30,000 of them from her Chinese manufacturer. But then the Trump administration announced new tariffs on over $100 billion worth of Chinese goods to take effect in September.

Her electric tea kettles are part of it and Thurlow said thanks to the tariffs, her business lost $60,000 with that order.

She said she won’t be able to sell that product anymore in the future.

“Our retailers, the large retailers, don’t accept price increases, so we have no intention to sell our electric tea kettles at a loss,” Thurlow said. “For what?”

And unless a trade deal is reached, all of Thurlow’s products will be subject to a 15% tariff starting Dec. 15.

Thurlow’s is not the only houseware business that’s suffering from the trade war.

Mark Adkison, vice president of International at the International Housewares Association, said of the trade group’s about 1,300 members, the vast majority has been negatively affected by the China tariffs.

“We have businesses that don’t operate on the type of margins that could sustain or just endure a 10, 15, 20 and especially a 30% tariff rate,” he said. “The margins just aren’t there, so the products become unprofitable.”

Adkison said none of the trade association’s members have had to close their business, but it could happen if the tariffs stay for a long time.

And the problem of higher costs for businesses extends past the houseware industry.

“It’s very common,” said Steve Lewis, a senior fellow at Rice University’s Baker Institute for Public Policy and an expert on China.

He said with all these tariffs on Chinese goods, companies are having to look at other countries if they want to keep paying the same for their products. And small businesses are especially affected because they don’t have the same resources as large companies, he said.

“For them it’s a lot easier to search and get the absolute lowest cost, but for small companies it’s very hard because at the end of the day it’s usually just one or two people who are searching,” Lewis said. “And they had a good relationship with China but if that relationship is gone, they’re going to have to keep searching and they may not be able to find it right away.”

As for Heida Thurlow, she said she can’t find any electric tea kettles that are made in America, so she is questioning the administration’s purpose of making American companies competitive with Chinese ones.

Ed Hirs, an economist at the University of Houston, said there are really only losers in this trade war.

“That is what international trade is about, the international trade construction that has been advanced for decades by economists is, one economy can produce goods and services more efficiently, less costly than another economy, so it makes sense for A to trade with B,” he said. “There are gains to be made.”

In the end, tariffs affect consumers, Hirs said, because retailers have no choice but to pass the cost onto them.

“The consumer, for example, hasn’t had a 25% pay increase,” he said. “The consumer is going to make choices and will opt for maybe one item or another or maybe just opt not to buy anything at all in anticipation of the tariffs coming off at some point in the next year.”

The Trump administration says it’s in talks with China to achieve a trade deal that would eliminate the tariffs.

But it’s not clear it will happen and until then, small business owners like Thurlow say it’s companies like hers and their customers who are getting stuck with the bill.

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Florian Martin

Florian Martin

Business Reporter

Florian Martin is currently the News 88.7 business reporter. Florian’s stories can frequently be heard on other public radio stations throughout Texas and on NPR nationwide. Some of them have earned him awards from Texas AP Broadcasters, the Houston Press Club, National Association of Real Estate Editors, and Public Radio...

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