WASHINGTON − The sine wave on David Levi’s T-shirt illustrates the physics behind the STEM kits he creates to teach kids how to build electronic musical instruments from scratch.
But the oscillating line could also represent President Donald Trump’s tariffs that have bounced up and down, creating higher costs and uncertainty for small businessmen like Levi.
Levi, an electrical engineer who founded MicroKits in 2020, has had to raise prices, slow production and pause plans to launch a new product – Banan-a-Synth – that lets kids turn a bunch of bananas into a kind of keyboard.
And if the tariffs that Trump has imposed on nearly every imported good – including many of the electronic components Levi uses to build his kits in Charlottesville, Virginia, − are going to remain high for the foreseeable future, Levi said he might have to move production out of the country.
That could be needed both to allow Levi to sell his kits at a competitive price and to gain more predictability about costs. Trump is setting rates by bypassing laws that require a more detailed process for imposing tariffs in limited circumstances.
“I can’t really plan if the rates might change again next month,” he told USA TODAY.
Businesses are not embracing Trump’s tariffs
American businesses moving overseas is the opposite outcome Trump promised when he imposed tariffs on nearly every product imported into the United States.
Trump said persistent trade deficits have become an emergency because they’ve hollowed out the nation’s manufacturing base. He’s also used tariffs as a way to get China, Mexico and Canada to do more to stop illegal drugs from coming into the United States.
But businesses are not embracing his strategy.
Levi is among the small business owners challenging Trump’s tariffs, an issue the Supreme Court will take up on Nov. 5.
Other businesses arguing that Trump overstepped his authority include a Vermont company that makes women’s cycling gear, two Illinois-based businesses that sell educational toys and a wine-importer based in New York City.
“These tariffs threatened the very existence of small businesses like mine, making it difficult to survive, let alone grow,” Victor Owen Schwartz, who founded his wine and spirits import business nearly 40 years ago with his mother, said of his decision to take on the president. “I was shocked that those with much more power and money did not step up.”
U.S. Chamber of Commerce opposes Trump’s tariffs
While Fortune 500 companies did not file suit as Schwartz did, major business organizations have spoken out against the tariffs.
In a filing supporting the challenges, the U.S. Chamber of Commerce and the Consumer Technology Association told the Supreme Court the question of whether the tariffs are legal is of “paramount importance to the business community.”
Trump’s tariffs injected greater uncertainty into the trade economy than the disruptions caused by the COVID pandemic and, unless stopped by the court, would let presidents claim “unprecedented authority to upend the domestic economy through taxation,” the groups wrote.
A ‘blessing for the American factory worker’
Drew Greenblatt, CEO of Marlin Steel Wire Products, is a rare businessman championing the tariffs.
Greenblatt said the import fees evened the playing field for companies like his which rely on U.S.-made steel to make metal baskets and other wire products in Baltimore, Michigan and Indiana factories.
Greenblatt competes against companies that get their steel from China, which subsidizes its steel industry.
But after tariffs were imposed on Canada, Marlin Steel took a $1.3 million job away from a Canadian company that uses Chinese steel. That order is funding six shifts around the clock, he said.
“Tariffs are a leveling tactic because there are a lot of people out there not playing fair,” he said. “It’s a blessing for the American factory worker.”
Greenblatt said he’s not naïve enough to think all the manufacturing jobs that migrated overseas will come back because of the tariffs. But if just 10% or 20% do, he said, “our factories will double or triple in size.”
Economists argue tariffs hurt more than they help
Michael Strain, an economist at the American Enterprise Institute, a conservative think tank that promotes the free enterprise system, said there’s no question the tariffs help some businesses.
But on balance, he said, American manufacturers are worse off.
Domestic manufacturers import a lot of materials and equipment they need to make their finished product, he said. And the higher cost from those “intermediate goods,” are greater than the benefits of import protections.
That was proven, Strain said, during the trade war of Trump’s first administration. Economists for the Federal Reserve estimated that the U.S. lost five times more manufacturing jobs than it gained.
A group of economists – including Strain and former U.S. Federal Reserve Chair Ben Bernanke – told the Supreme Court that the decline in domestic manufacturing jobs has nothing to do with the trade deficit.
“In fact, the United States does not manufacture less today than it did in the past,” the economists said in a filing supporting the businesses challenging the tariffs. “Instead, the same manufacturing now requires fewer people and is less expensive relative to other goods.”
Small businesses could be hurt the most
More than 700 small businesses signed onto a separate brief telling the court their decision “will determine whether many small and micro businesses across the United States can survive.”
Cassie Abel, the CEO of Wild Rye, an Idaho company that produces outdoor apparel for women that is made in China, said she leveraged her house to help finance her business.
“So every tariff increase means the risk of losing my home,” she said. “My family’s housing is at stake in addition to everything else.”
Jess Nepstad, the chief adventure officer with a Montana-based company that designs and sells coffee storage and brewing equipment, said he hadn’t realized how nerve-wracking the tariffs are until the day in May when a lower court ruled that Trump lacked the power to impose sweeping tariffs.
“I remember sitting out on my porch, eight o’clock at night, hearing that ruling and I actually wept,” he said. “I had no idea I was carrying that much stress.”
Asked what it’s like taking on the president of the United States from his small workshop in Charlottesville, Levi – the founder of MicroKits – said it “kind of just feels like being a citizen.”
“As a citizen, you can go to the courts and be like, ‘I’m not sure if the government can do this. Let’s figure this out,’” he said.
Whatever the justices decide, Levi hopes they will rule quickly.
“The main thing is I just want enough certainty,” he said, “to be able to move my business forward.”
