XPost: ca.politics, talk.politics.guns, sac.politics
XPost: misc.taxes, alt.fan.rush-limbaugh

It's nothing new for businesses to agonize over cash flow, credit lines, inventory, expenses and hiring.

But pencil in the heightened economic uncertainty created by the
on-again, off-again tariff negotiations by the Trump administration, and
some businesses are seeing red.

A panel of tariff experts tried to calm the nerves of nearly 100 people
who attended a business forum held May 28 at the Richard Nixon
Presidential Library and Museum. The event came just ahead of a judicial
order on Wednesday blocking Trump's tariffs before another court ruling
on Thursday let them stand, at least for now.

Attendees either wanted to know ways to skirt the tariffs or grumble
about when they might end.

Here's what the experts had to say about Trump's tariffs and how they
might affect Southern California. Their answers have been edited for
clarity and length:

When you're forecasting, how should we be factoring in tariffs?

Kevin Depew, deputy chief economist from RSM US LLP in San Diego.
The reality around tariffs, and you see this as a carry over from the
initial Trump tariffs in his first term, is that many were retained
throughout the Biden administration. I think it is no secret that when
you offer politicians a revenue stream, they're very reluctant to give
that up. What we're seeing now with the federal budget, there is this
10% threshold for tariffs - which is extraordinarily high - that is
providing some offset for the administration to push forward with
potential tax cuts at the same time. The other aspect to this is
inflation.

All of this is kind of coalescing into a perfect storm, combining to
create some significant headwinds in the economy.

For consumer goods, the profit margins can be very thin, and any kind of tariffs immediately affects their cash flow. It affects their ability to expand. These are the kinds of effects that we won't feel until the
second or third quarters.

We've kind of arrived at a moment of a weird paralysis in some
industries, where they can't make a decision about where to locate a
supply chain because they don't know what the underlying justification
for the tariffs are. It's a function of how long are we willing to live
with this. Maybe there are other paths to achieve these objectives that
don't put our economy in a state of uncertainty and chaos.

What impact are tariffs having on small businesses in Southern
California?

T.J. McCree, senior vice president in charge of commercial banking in
Orange County for Cathay General Bancorp. There are two camps. The
proactive camp is looking to reshore, or onshore, their suppliers to
limit the amount of exposure that they have to the tariffs.

Then we have the reactive group. They want to wait and see. They are
delaying some major repurchases. But they aren't kicking them down the
road for years. They're just trying to see if there's material change in
the cost of the goods from, let's say, March to May, and asking whether
there really is going to be a big delay or a big concern about the
tariffs in the long term.

There is a lot of volatility going on, and everybody would like to see
it stabilized.

It's a complicated time for small businesses.

Several months ago, under Cathay CEO and President Chang Liu, the bank
began looking at the bank's risk models and how they were being impacted
by tariffs. We wanted to know what's the impact of tariffs on our
clients? What do tariffs mean to their financial strength and
underwriting to the risk, so that it provides a clear view of the
business to the regulatory world?

We're looking at opportunities for clients to look at really what their business needs are.

On a typical day, a client might have one or two containers that are
coming into the port, and it may cost $1 million in tariffs. Well, you
have to pay the tariff on those containers. If that's a 25% tariff, you
need to pay $250,000 on that $1 million. A lot of times, a business'
cash flow is not consistent with what the new tariff costs. You want to
make sure that the clients are aware that once the product has landed,
the tariffs are due.

Are tariffs an effective tool to level the playing field, and are there
other domestic sourcing for markets that we should be thinking about?

Christopher Schwarz, professor of finance with the Paul Merage School of Business at UC Irvine. Tariffs are here in the short term. You have one individual (Trump) who has sole control over the tariffs and, of course,
it's going to be very volatile. Last week (May 23), 50% tariffs were
imposed on the EU. That lasted for 43 hours, and it went back down, to
whatever it's going to be. I think questions about fair trade are very
valid. There have always been concerns about China. That is something we
should worry about it. But I'm not necessarily sure the tariff idea is
the best way to go about it.

There's one thing the markets hate, and that's uncertainty. We just add
more uncertainty every day. We have inflation. There's no output, and valuations are very high. So the best opportunity to bring manufacturing
back to the U.S. is probably through automated manufacturing, or places
for whatever reason, the supply chain is already in the U.S. I don't
think labor is ever coming back.

I don't think the tariffs will do anything. Apple is better off paying a
tariff of 25% for iPhones made outside the U.S. than trying to make them
here. We're very expensive. Do we want people here to make $10 T-shirts?
That's a fundamental question.

If we had people make their T-shirts for $100, how many people would buy
them? We have this conundrum where I don't think you're going to see a
lot of movement of manufacturing back onshore. We don't have that many
people who can do the job right now, honestly - or want to do the job. I
don't think all of this talk of tariffs is going to move the needle that
much.

Ultimately, it's really hard to fix the trade deficit. If you want no
trade deficit with every country, then basically we're only going to
trade with countries that enrich us. One of the biggest risks of tariffs
is the erosion of the brand of the U.S.

Charron Ricks, director of brokerage product development with UPS Supply
Chain Solutions in Los Angeles, overseeing California and Nevada.
Shifting supply chains is not easy. It takes time. Really, companies
build supply chains around relationships. So, many businesses have to
find a new sourcing country and build that relationship, and make sure
that the new country has the quality that they expect. There are a lot
of risks to consider before sourcing from a country.

What we are seeing our customers trying to do, is move finished goods
from China to another country, and do some light touching, or whatever,
and say, 'OK, now it's made in Vietnam.' That's a no-no. You can't do
that.

My big advice to everyone is to make sure that you have trade compliance
with professionals evaluating your mitigation strategies. If you don't
have those policies well vetted out, you're going to have issues with
[U.S. Customs and Border Protection], who may question the true country
of origin.

Remember, they have your history of buying a widget over the past 10
years from China. If, all of a sudden, it's coming from Pakistan, or
wherever, they have the resources to verify that.

There was some confusion created on Liberation Day, when tariffs for
China went up 125%. You had shippers with products already in the supply
chain. If you had bought at the point of origin, and it hadn't shipped,
you could have put a hold on that. But for a product that was moving,
the customers had to decide what to do. You can't afford to pay more
duty than the value of the product.

So, we had customers deciding, 'Do we move that product into bonded
warehouses somewhere else, so that they'll make it here?' Or, they
looked at exporting back to China, or buy more bonded warehouse capacity
here in the U.S.? There's a huge increase in interest in bonded
warehouses. These are structures where you store your products and let
it sit, and hopefully something happens. That can either be the tariff
gets changed, or you decide the tariff is due and pay.

https://www.ocregister.com/2025/05/30/california-tariff-experts-warn-of-h eightened-economic-uncertainty/

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)