MICHEL MARTIN, BYLINE: One of President Trump's signature initiatives is his tariffs. They're aimed at punishing countries that he says take advantage of the U.S. and pushing more companies to bring manufacturing back to the U.S., all of which he says will make America richer in the long run. But in the short run, it's unleashed chaos and pain. We've been asking a variety of business owners how they've been affected. Today, we meet two women entrepreneurs who say their successful ventures are now threatened by high tariffs and uncertainty. Deirdre Quinn is the co-founder and CEO of Lafayette 148. That's a luxury women's fashion brand based in New York.
DEIRDRE QUINN: Inside the company, I wanted to build an environment that I wanted to work in. I worked in plenty of good companies and bad companies, good bosses and bad bosses, and then you learn your style, and my style is so much bigger than me.
MARTIN: Beth Benike is the founder and CEO of Busy Baby. It's a Minnesota-based company that makes baby products.
BETH BENIKE: Being a new mom was really hard for me. It's really hard to become a first-time parent and wonder if you're doing it right. Then my products make things just a little bit easier.
MARTIN: Our conversation focused on Trump's on-again, off-again tariffs on Chinese imports because both companies rely on China for manufacturing. First, Deirdre Quinn.
QUINN: I'm so proud of where we're at as a company, never seeing that these tariffs were going to threaten us to have to close.
MARTIN: Where were you and what were you doing when you heard that the administration had imposed 145% tariffs on China? Do you remember how you reacted? Or...
QUINN: I know exactly what happened. That week, I about wanted to fall on the floor.
MARTIN: So I don't think everybody understands how this works. You have to pay that tax before you can bring the products into the country, is that right?
QUINN: Correct. So the tariffs cost more than the goods themselves, including the fabric, the trim, the labor, everything. So if something costs a hundred dollars when it left, you have to pay a hundred and fifty dollars more just in the new tariffs. Forget the old tariffs and duty and shipping and freight. It's insane.
MARTIN: What about the effect on your inventory? Could you even bring goods into the country?
QUINN: I didn't have the cash flow. You could not bring the goods into the country. But we have stores, so I needed to bring something for my stores. It was terrible. It was terrible. So obviously, waking up to 30% is good news, but 30% is still not good news.
MARTIN: So, Beth, what about you? Tell me how long have you been manufacturing overseas, and tell us why.
BENIKE: Yeah. You know, as a veteran, I not only wanted to manufacture in the U.S., I wanted to manufacture in my home state of Minnesota. The main problem was the material needs to be imported. It's not a material that is sourced in the U.S. So I had to start in China because that's where, one, the specific kind of manufacturing used for my products, they specialize in that. And they were willing to take the risk on me as a new business owner and start out very small with just 2,000 units.
MARTIN: So what about you? Where were you and what were you doing when you heard about this 145% tariff? Do you remember, like, what went through your mind?
BENIKE: We knew with this administration, there would be tariffs, so we budgeted. Twenty percent would be a reasonable, expected high tariff on our products. So when it hit 54, we started scrambling. We're like, well, maybe we could borrow some money from our stepdad 'cause we're a very small family-owned company. There's five of us total. And then when it quickly went to 104, it was like, now we're a lost cause. And our products were ready to ship. So I quickly called the factory and said, cancel the booking. There's no way we can come up with that money in a month. And then it went up even higher. And that's when I hit the floor and just cried.
MARTIN: Wow. What about now, now that the president says he's going to bring it back to 30%?
QUINN: We're in fashion, you know, our inventory changes every month. If we didn't ship May, which leaves in April to be in the stores in May, we would absolutely be sitting on it as excess goods. And I couldn't afford that either. You have all your salespeople, you have your leases. It's so complicated. So we brought in what we could, and we had to pay the very high tariffs on it. So now that it's 30, you know, a lot of people ask me, so do you think it's going to go up or down in 90 days? I don't know. My guard's up. I wish it would go down. I wish the world would be at 10. But that's my wish. That's my dream.
MARTIN: Beth, you actually put this information on your website because you wanted people to know. You said that if this continues, you could lose your house.
BENIKE: Oh, yeah.
MARTIN: Because, as a small business owner, you had to personally guarantee your loans, and your house is part of the guarantee. So what about now?
BENIKE: I'm fighting like crazy. I'm not a quitter. Things change so drastically and so swiftly that I don't even know how to make a business decision right now because what's going to happen next? So I'm making backup plans, sell my products internationally. There are babies everywhere. I am selling to a very price-sensitive crowd. You're talking about people who are just having their first baby. That comes with so many new expenses they've never had in their life, so I can't charge more. You know, my products sell between 10 and $30.
MARTIN: Yeah.
BENIKE: I don't have the room, the margin to absorb these tariffs.
MARTIN: What I think I hear you saying is your customer doesn't either.
BENIKE: Right, exactly. So right now, I'm drinking from the fire hose, learning how to distribute my products internationally.
MARTIN: Yeah. Can I ask each of you, if we were to talk again around Christmastime, what kind of conversation do you think we're going to have? Deirdre.
QUINN: I have two plans in my head. The one plan is that once again, the company doesn't make money. If anything, we do desperately to break even. OK? But that's not a great plan, but that's, you know, a realistic survival plan. The beautiful plan would be that we get back to where we were. Maybe there's exclusions for companies like myself and Beth's that we get to make money again 'cause that's the whole point of being in business. So I am an optimist by nature. I don't believe this is about red or blue. This is about red, white and blue. OK? I'm an American with an American dream, and I would like to believe that by the end of the year, we're like, well, that was terrible, but it's over, just like COVID was.
MARTIN: What kind of conversation do you think we'll be having, Beth?
BENIKE: I think that the past two months have proven that anything is possible. So it's truly, to me, impossible to know what conversation we would have one month from now, much less six months from now.
MARTIN: We wrapped up our conversation with Beth Benike, talking about the feedback she's getting, from hundreds of notes and letters of gratitude to hate-filled comments on social media.
BENIKE: It's, like, how do we make America great again when actual Americans are being so horrible to one another? Like, as a society, as a nation, we should have grace with one another, be kind to one another. And everyone is attacking one another, and I just am so scared for what that means for our society if this continues for another six months.
MARTIN: Beth Benike is the CEO of Busy Baby. Deirdre Quinn is the CEO of Lafayette 148. Transcript provided by NPR, Copyright NPR.
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