Many Rhode Island businesses are in a “wait-and-see” holding pattern as they anxiously await the results of President-elect Donald Trump’s vow to raise tariffs on imports from other countries when he takes office.
Bacary Diatta, founder of the food company Kassumay LLC, says he may have to pivot his business model depending on where and how much Trump raises tariffs.
“It’s going to be tough,” said Diatta, who launched his business in 2020.
Diatta imports hibiscus – a key ingredient in his products – from his home country Senegal, and he also began importing extract from Mexico to create what is touted as immunity-boosting drinks.
But if Trump follows through with his threat to levy a blanket 25% tariff on all products from Mexico, Diatta says he will have to stop producing the immunity-boosting drinks because it will cost too much.
In 2023, Canada and Mexico were among Rhode Island’s top three trading partners in terms of imports, according to a report from the R.I. Executive Office of Commerce. Rhode Island brought in about $1.45 billion in goods from Canada and $1.42 billion in goods from Mexico. The state’s top import partner was Germany at $1.88 billion.
If Trump’s tariff hikes are applied to West African countries, including Senegal, Diatta says he will likely look to rely on products grown in the U.S. and gradually shift away from hibiscus, even though his original vision for his business was the hibiscus flower he grew up farming in Senegal.
“I don’t know exactly what I’m going to do, but definitely the option on the table is to shift and use other products that are not maybe impacted by tariffs,” Diatta said.
Manufacturers within Rhode Island are also on edge.
David M. Chenevert, executive director of the Rhode Island Manufacturers Association, said manufacturers in many industries are concerned that the proposed tariff hikes will increase their costs and lead to higher consumer prices.
But exactly how much – if at all – remains to be seen.
“Until we know exactly what he’s going to do – and that seems like a moving target – they’re [manufacturers] very concerned about the impact on their supply chain and the costs,” Chenevert said. “It’s an issue that they’re watching very closely.”
Tariffs have always been part of the U.S. trade policy, serving as both a revenue generator for the federal government and a protective barrier for some industries in the U.S. In Trump’s case, he sees tariffs as a punishment until Mexico and Canada stop illegal immigration and the flow of illegal drugs into the U.S.
But tariffs can also lead to retaliatory measures by other countries.
And while tariffs can incentivize companies to create or relocate production jobs domestically, many economists argue that the additional cost to consumers is not worth the additional jobs.
In his first term, Trump imposed tariffs on some products made overseas such as washing machines. But June Youngs, an executive in residence at Bryant University who teaches classes on management and the global supply chain, says there wasn’t as much of a rise in prices, and tariffs charged on goods coming from China were continued by President Joe Biden.
“It’s a tool and it’s a strategy that helps the U.S. if it’s done right,” Youngs said.
Also, many companies within Rhode Island and the U.S. have shifted their production operations away from China during the COVID-19 pandemic to shield themselves from future hits to the global supply chain, Youngs said, making now one of the best times for the U.S. to implement tariffs as a negotiating tool.
For some, Trump’s tariff threats are too severe and risk touching off a trade war with key trade partners.
Diatta expects his expenses could rise as much as 30% if tariffs are assessed at the levels Trump is suggesting.
And even though Rhode Island companies have been among the manufacturers that have shifted production out of China, that doesn’t mean they’re safe from a trade war. While Trump has focused many of his comments on China, Mexico and Canada, Chenevert said it’s still uncertain what countries will be targeted.
“It’s too early to say anything definitive relative to the actual impact,” he said.
One way to reduce the effects of rising tariffs is to “reshore” production back to the U.S. Chenevert said this is underway, but it can’t happen overnight, and the timing can range dramatically across different industries.
Diatta says he’s already thinking about progressively pulling back on his company’s reliance on hibiscus if tariffs go into effect.
“It’s going to be challenging to offer my client 100% of the amount of hibiscus at the same cost and the same price. It’s not going to happen, that is for sure,” Diatta said.
Indeed, Christopher Limnios, economics professor at Providence College, said reestablishing factories in the U.S. may not completely offset the higher costs from tariffs because some products could have materials that need to be imported. For example, he said some jewelry is made with stones that aren’t mined in the U.S., and some appliances need electrical components made in other countries.
Also, as far as the size of the tariffs, Limnios doesn’t expect them to be levied at the percentages that Trump has threatened.
Along with the 25% duty on all products from Mexico, Trump has proposed a 25% tariff on products from Canada and an additional 10% tax on goods from China.
“Twenty-five percent strikes me as a very random, round value,” Limnios said, noting that it could be a tactic to get China, Canada and Mexico to the negotiating table. “The ultimate tariff might end up being something much lower than that.”
(Correction: An earlier version of this story misspelled June Youngs' name.)
