In the last month, the Trump Administration has levied 20% tariffs on imports from China. We speak to the CEO of an American home goods company about the impact of the trade war. WSJ’s Hannah Miao explains how it’s already affecting manufacturers and the economy in China. See The Journal live! Take our survey! Further Reading: - The Tariff Pain Is Getting Real for Chinese Companies - Chinese Manufacturers Speed Up Efforts to Dodge Trump Tariffs Further Listening: - Why Trump Wants Ukrainian Minerals - Trump 2.0: Shaking Up Europe Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the focus of the Chicago homeware trade show?
Hundreds of vendors crowded into a Chicago convention center this week for the country's biggest homeware trade show.
We make these insulated vegan leather lunchboxes.
So these are our car and closet diffusers.
All of our pottery has saucers as well as drainage holes to make the perfect home for your plant.
The expo is full of businesses showing off their merchandise, everything from cookware and linens to luggage and vacuums. But this year, the convention has been dominated by one thing.
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Chapter 2: How are tariffs impacting American businesses?
There's a lot of talk about tariffs. Everyone's thinking about it. We're telling our larger customers that the tariffs are going to become higher and it's going to affect us. I'm a little bit worried. It's a challenge, you know, like everybody will be paying more. And, you know, there's complete uncertainty.
These vendors' concerns largely focused on the new tariffs Trump imposed on China yesterday. Many of these companies make products there. And to avoid the tariffs, they're thinking about moving their operations out of China altogether. Like Steve Greenspan, CEO of a company that sells home organization products.
Chapter 3: Why is the CEO of Honey Can Do moving production out of China?
We're moving significantly more to Cambodia, Thailand, more in Vietnam, and Indonesia as well.
And you're moving to avoid the tariffs from Chinese imports.
This is influenced by tariffs, absolutely. This is an exceedingly difficult, long-term, disruptive process.
Welcome to The Journal, our show about money, business, and power. I'm Kate Linebaugh. It's Wednesday, March 5th. Coming up on the show, Trump's tariffs are pushing companies out of China.
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I called up Steve Greenspawn while he was at that Chicago homeware convention. He tried to find a quiet room, but it was hard. Steve is the founder and CEO of a company called Honey Can Do. Honey Can Do, that's the name of your company?
That's the name of the company. It's a little play off the Honey Do list. So one of our goals is to try and enable folks to do things around the house. Nothing makes me happier than seeing a spot that I can organize and make it a little bit more efficient.
What's your sort of crown jewel of your home organization?
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Chapter 4: What challenges does relocating manufacturing to Vietnam involve?
When I first started getting involved in producing products in Asia, which is the late 90s, early 2000s, China was the place to be. And it was because the infrastructure was there, it was low-cost labor, and you could do things efficiently, high quality, and you're able to find partners that understand your needs and can make the infrastructure work for you.
At one point, Steve relied on Chinese manufacturing for about half of his products. And things were going well, until 2018, when President Trump, in his first term, imposed tariffs on China.
So then once the initial tariffs hit China in 2018, and even before that when there was the talk about it, we and our subcontractors, our longtime partners in China, started having discussions and made plans to very quickly move outside of China.
Steve decided to move some production to Vietnam.
This is tens of millions of dollars worth of investment. We're starting with literally a pasture and building it up from there. You have to train employees that have never made this type of product before. You have to build up your entire infrastructure for raw materials as well as the cardboard boxes that the products go into. You have to build your transportation network.
You have to build your shipping network because now you're going out of new ports in a new country. And this is a very, very disruptive thing.
Steve's challenges went beyond just building out his operation from scratch. Vietnam hasn't had as much investment as China, and that makes doing business there more difficult.
In China, they have a very wide network of multi-lane highways that can bring you just about anywhere that you would need to go. In Vietnam, typically it's one highway going from city to city that's two lanes, and you might have a series of trucks that are being slowed down by somebody using an animal. to pull them, or it might even be a number of bicycles there that are blocking up traffic.
And, you know, you might be able to go the same distance in one hour in China, and it might take you four hours in Vietnam to do the same distance.
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