Chris Irwin highlights cars on display in the parking lot of Irwin Automotive in Laconia last week. (Daniel Sarch/The Laconia Daily Sun photo)
Changing domestic tariff policies have Lakes Region businesses struggling to keep up. President Donald Trump imposed reciprocal tariffs on almost every country in the world on April 2, calling it “Liberation Day." All but 11 countries were hit with the new tariffs. Then on April 9, Trump paused the tariffs for 90 days, to allow those countries to negotiate with the administration.
Tariffs are taxes on imported goods and services.
Local businesses leaders were already concerned about how tariffs would affect prices, and now the uncertainty of whether the tariffs will continue is creating confusion. Chris Irwin, president of Irwin Automotive Group in Laconia, said companies producing goods are grappling with all these changes.
“A lot of the manufacturers, they're trying to figure this out,” Irwin said. “Not just for our industry, but for a lot of industries, that's created a lot of uncertainty.”
Economist Eric Herr has had an extensive career, including as staff of the President’s Council of Economic Advisors for the Nixon administration, senior economist at McGraw Hill publications, president of Autodesk, then co-chair of a task force of economists for Joe Biden's 2020 campaign on the urban-rural divide. He explained tariff taxes will either be passed on to the consumer for the products they buy, or to the company or importer. Evidence suggests tariffs often create burdens on consumers, by forcing higher costs on products.
“Will tariffs raise prices in the United States? Certainly, they will,” he said.
With a broad 25% tariff on imported passenger vehicles and light trucks, as well as key automobile parts like engines, transmissions, powertrain parts and electric components, vehicles made outside the United States are expected to get more expensive. Irwin said currently, the cars he’s selling are not affected by tariffs due to a large inventory on the ground already.
“We have, right now, in stock, over 1,000 vehicles, and those are all carefree,” he said “But those have been on the ground with us and are not affected by any tariffs. Moving forward, I don't exactly know what's going to happen.”
Cars stretch across the lot at Irwin Automotive in Laconia last week. (Daniel Sarch/The Laconia Daily Sun photo)
Craig Cote, co-owner of Cote Builders in Gilford with a shop in Moultonborough for wooden products like cabinets, said his business also faces uncertainty. Like Irwin, he has products and material he bought before the imposition of tariffs.
“We're really not affected right now. But that will change, I'm sure, as the supply chain kind of fluctuates, too,” Cote said. “There's a lot of fluctuation in building material, so it all depends.”
One of the first tariffs the president instituted was a 25% tariff on goods from Mexico and Canada. Canada is the primary supplier of softwood lumber imported by the U.S., with a value of $8.4 billion in 2020. In light of the tariffs, the price to build homes is expected to jump. Congressman Chris Pappas met with New Hampshire forest products industry leaders last week in Kingston to discuss the tariffs, saying they will raise costs for small businesses and housing construction across the state, according to a press release.
“President Trump’s sweeping tariffs are creating chaos for New Hampshire families, small businesses, and our economy,” Pappas said.
Herr said the tariffs, and Trump’s comments on Canadian statehood, are having an impact on local tourism businesses due to Canadian boycotts on American goods and services.
“The tourist volume from Canada is going to plunge, and that's going to directly affect New Hampshire entertainment service businesses,” he said.
The broad tariff on vehicles was expected to help domestic American manufacturers and increase production in the country. But Irwin confirmed there are complicated supply lines to build cars in America that go between Canada and Mexico, making it hard to foresee cheaper American-made vehicles.
“There are components to vehicles that are shipped back and forth across borders, multiple, multiple, multiple times,” he said. “And you do scratch your head as to why that is. But nonetheless, it does make for added complexity.”
The National Highway Traffic Safety Administration publishes a list each year reporting the makeup of various automakers’ car models. The report, released in February, which is required by the American Automobile Labeling Act, includes the percentage of parts sourced outside the U.S. and Canada, as well as where the car is finally assembled, and where the vehicle’s motor and transmission come from. On the list, the vehicle with the most American-made parts is the Kia EV6, a South Korean car. Of its contents, 80% come from the U.S. and Canada, and assembled in the United States. But many, including the Toyota 4Runner, are made 100% in Japan, which currently has a 24% tariff. The American Ford Bronco Sport only contains 23% of content from the U.S. and Canada, with 64% coming from Mexico.
Herr criticized the tariffs and emphasized comparative advantage, where a country can produce a good or service at a lower cost than another country, and trade that resource with others. The United States is better at producing wheat than Mexico. In an interconnected world, Herr believes it’d be hard to find a country which would not benefit from trade. Herr used a micro example, saying everyone doesn’t produce their own clothes or gasoline, and instead do what they're comparatively good at, and rely on each other, like trade.
“Everybody can be made better off by trading internationally, just as you're better off not trying to be totally self-sufficient,” he said.
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