As fluctuating tariff orders implemented by President Donald Trump’s administration continue to rattle the global economy, manufacturers in Rhode Island are bracing for higher prices and reduced availability of raw and intermediate goods.
In April, Trump announced a baseline 10% tariff on all goods imported into the U.S., with some countries – including China, Mexico, Canada and European Union members – facing even higher duties. Tariffs are also targeting specific goods such as steel, aluminum and automobiles. In return, countries levied with these tariffs implemented retaliatory tariffs on the U.S.
The U.S. has since cut a proposed 145% tariff on Chinese goods to 30%, but Rhode Island manufacturers and industry observers say that the sector continues to contend with instability and high prices that are eventually passed on to consumers.
Well before Trump’s second term, manufacturing companies such as Cranston-based Taco Inc. have been preparing for supply chain disruptions and other economic shocks that arose during and after the COVID-19 pandemic. For even longer, Taco CEO Cheryl Merchant says, her company has also been attempting to move away from a reliance on Chinese imports.
But despite this preparation, the new tariffs have still been “catastrophic,” Merchant said.
“Many of our domestic suppliers have components based internationally, and they have passed those costs on to us,” Merchant noted. In turn, “we are having no choice but to pass [costs] on to our customers.”
Additionally, Taco has a facility in Canada. “Not only do we get hit with the tariffs if we bring in those components,” Merchant said. “But then our Canadian operation gets hit with the tariffs from passing [goods] from the U.S. into Canada,” which has resulted in Canadian clients canceling orders.
Trump has described the proposed tariffs as a measure to bring manufacturing operations back to the U.S. But the country lacks the factories and workers needed to support a dramatic upswing in domestic manufacturing, observers say. In the short term, University of Rhode Island economist Leonard Lardaro forecasts that Rhode Island’s manufacturing sector, which was declining even prior to the tariffs, is set for a sharp decline.
Like Taco, many companies took measures to prepare for the tariffs, Lardaro said, creating a temporary, protective “bubble” from orders stockpiled in anticipation of the duties. But Lardaro expects that this supply will run out within three months.
“Our manufacturers rely a great deal on imports from China and from other countries,” Lardaro said, “and the problem is that when you start to tariff intermediate goods, which are the inputs that we use to create outputs ... [manufacturers] might not even be able to get some of the [goods], or even afford them.”
Even in the event of “reshoring” manufacturing, Rhode Island would likely fare poorly in terms of job creation, Lardaro said.
“What did Rhode Island used to produce going way back – jewelry, toys, clothing,” Lardaro said. “Are we really going back to that? Even if you think of reshoring ... how many more robots would there be than employees hired? I don’t think we’re going back to [factory jobs].”
Meanwhile, the state’s manufacturing community is clamoring for answers amid rapidly shifting executive orders and trade agreements, said David M. Chenevert, executive director of the Rhode Island Manufacturers Association.
“It’s such a moving target,” Chenevert said. “You don’t know what’s certain and what’s not ... and the business community doesn’t revolve on uncertainty.”
