Mom-and-pop businesses across Hawaii could close their doors and consumers will soon face higher prices for everyday items after President Donald Trump announced an across-the-board minimum 10% tariff on most imports, which went into effect Wednesday night, local business and government officials say.
Businesses are “stressing” with the likelihood of increased, tariff-driven prices while simultaneously dealing with COVID-era loans and deferred rents, said Tina Yamaki, president of the Retail Merchants of Hawaii.
“Retailers are already seeing the prices of Chinese goods rising,” Yamaki said. “They’re adjusting accordingly, but a lot of them don’t know how they’re going to stay in business.”
Yamaki’s group represents about 130 large and small businesses that sell a long list of items including groceries, electronics, sporting goods and luxury goods.
Many Hawaii businesses are still dealing with the aftermath of the COVID pandemic when “a lot of loans are coming up and they face deferred rents,” Yamaki said. “They’re stressing.”
State chief economist Eugene Tian said the timing of Trump’s tariffs “is not good for small businesses” in particular.
“Most businesses in Hawaii are small and have been doing OK because of federal aid during COVID,” said Tian of the state Department of Business, Economic Development and Tourism. “The timing is not good for small businesses. For small businesses, the timing of this — the impact — is enlarged.”
Individual consumers should expect to see prices rise nearly across the board, Tian said.
Certain items — such as foreign parts and autos and all sorts of consumer goods from China — will see significantly higher prices, he said.
Electronics buyers should especially expect higher prices for “the computer, the iPad, all these electronics,” he said.
Stocks were falling globally and on Wall Street following Trump’s latest tariff announcement, meaning losses for individual 401(k) accounts.
Locally and across the country, economists have been warning consumers to also brace for rising inflation and a potential recession as a result of Trump’s tariffs.
But Tamara McKay, chair of the Republican Party of Hawaii, said she believes that foreign countries — especially China — want to avoid a trade war with the United States and will quickly negotiate a comprise that will prevent prices from rising for U.S. consumers.
“They will definitely work it out,” McKay said. “The Chinese are not going to want their profit margin to decrease. … They know that Donald Trump doesn’t play. In the short term, we’re not going to see much change.”
“If not,” McKay acknowledged, “we may see some increased costs in goods.”
She said she supports Trump’s overall goal to bring more balance to what he calls America’s “unfair” trade relationship with much of the rest of the world.
“He’s charging them what they’re charging us,” McKay said. “In the long run it will benefit America and create more jobs and open more businesses.”
Trump on Wednesday announced 10% tariffs on all goods imported to the United States, along with higher “reciprocal tariffs” for specific countries. They include a 34% tariff on Chinese imports on top of 20% duties already assessed the country, bringing the total to 54%. There also is a 20% increase on goods from the European Union and a 24% levy on items from Japan.
Hawaii’s construction industry helped keep the state’s economy afloat through the COVID era.
But Trump’s tariffs likely will increase the prices of critical construction materials, which will increase construction costs and therefore home prices, and make it even harder for working families to buy a home, according to Pacific Resource Partnership, the political arm of the Hawaii Carpenters Union.
“The additional tariffs will definitely exert pressure on our homebuilders and even the ability of some projects to pencil out or not,” PRP spokesperson Andrew Pereira said.
Larger homebuilders have a stockpile of materials “and may not be immediately impacted,” he said. But smaller contractors working on home-remodeling projects or accessory dwelling units for individual customers likely will have to pass along the increased costs of materials to their customers, Pereira said.
“They may see the increased prices of materials before our large builders do,” he said.
Even costs for U.S. construction materials likely will increase as tariffs trigger a “supply-and-demand dynamic” among their U.S. customers for items including soft wood lumber, Pereira said.
Sherry Menor-McNamara, CEO and president of the Chamber of Commerce Hawaii, said Hawaii businesses have been been curtailing spending since Trump began threatening tariffs.
“A lot of them have been holding back on spending and investments and being very cautious in making any financial decisions because there will be impacts,” she said. “We are an island state heavily reliant on imports. The tariffs on top of the costs of having goods imported here is going to have a domino effect.”
Cuts have been “across the board … from travel to restaurants,” Menor-McNamara said.
Trump’s policies have already affected Hawaii tourism, which adds to the overall economic uncertainty, she said.
“We are going to see some kind of financial impact,” Menor-McNamara said. “I don’t think any business will be immune to this.”
