As the Trump Administration’s 90-day pause on the newly announced tariffs runs out, local businesses are thinking about how they will adjust operations to plan for the future.
While the 10% blanket tariff on most imported goods remains intact, uncertainty over the recently announced potential higher tariffs, which are still being negotiated country by country, has caused many local business owners to consider their current sourcing strategies, pricing models and long-term plans.
On April 2, the Trump Administration announced a 10% blanket tariff on imported goods from most countries. On April 9, the administration announced a 90-day pause on the mentioned higher tariffs, with an exception to China.
“The 10% blanket tariffs are highly unusual within foreseeable history,” Matthew Flynn , assistant professor of finance & economics at Texas State, said.
Flynn said the impact of tariffs will depend on the exposure of the business and how easy it is for the importers to pass through costs to the businesses.
“Tariffs are gonna increase the cost, generally, of importing things from other countries,” Flynn said. “And then they’re going to ship these goods down to the local businesses. And so if the cost can be passed on, what we find is that generally companies do that. So if you are willing to pay more, they’re gonna try to charge you more.”
Flynn said competitiveness can play a part in the local businesses’ choosing sourcing when dealing with these changes and thinking about their pricing.
“If the local businesses can source from different suppliers – domestic suppliers or suppliers that are willing to bear more of the cost, then we won’t see their supply costs increased quite as much,” Flynn said.
Professor and Chair of the Department of Economics Haiyong Liu said while there is a lot of uncertainty about how the discussed tariffs will affect businesses, locals won’t feel a significant difference short term, especially if the businesses cater to the local consumer. He said overall, some people will be helped and some will be hurt.
“Lots of details are yet to be clear in terms of gauging the potential impact,” Liu said. “I can expect that some sectors might be better off with the tariff imposed on the products, especially if they impose the tariff on the foreign imports, which means that they are more expensive; so the domestic substitutes would be better off.”
Liu said after the pandemic, some people have tried sourcing with more versatility, and it has had an effect on the resilience of some businesses.
Senza Maeso Tasting Room and Bar
Brothers Ryan and Jay Gitman own and operate Senza Maeso Tasting Room and Bar in San Marcos. Gitman’s compound spirit is made from purchasing corn-based grain alcohol from a company in the U.S. Then, Ryan purchases hundreds of pounds of Cape Gooseberries from Colombia. Two of the six herbs used to make the drink, damiana and epazote, are Latin American herbs he purchases from Mexico.
Ryan said he does not have any current plans to try and batch the spirit in high quantities for several reasons.
“Space is an issue,” Ryan said. “Tanks are an issue. I’m trying to meet the demand of how much we’re selling, or how much we sell out of here. And right now, we’re at a steady incline, but not where I would wanna produce a ton of it for no reason. Or it wouldn’t be good for me to do that.”
Ryan said he has not increased prices as he hasn’t needed to yet, nor does he want to.
“I don’t want to raise my prices,” Ryan said. “This is a service industry spirit; it’s supposed to be under $30. We’re gonna have to meet somewhere in the middle there. It’s just something that’s gonna have to happen at some point. I’ve been trying to keep it at a reasonable rate.”
Ryan said as far as paying employees, as well as musicians fairly, that will not be adjusted. Ryan’s business has live music and frequent vendor events, but he said he only foresees the tariffs impacting the raw materials within the business, or the spirit he sells.
“If it’s a 10% increase, that’s not gonna move the needle, I don’t think, for us,” Ryan said. “I don’t have an answer of where the demarcation line would be for us to raise prices. I am trying to avoid it as much as possible.”
Douglas Smith Soap Company
Owners Michael and Kevin Douglas Smith of Douglas Smith Soap Company, which opened in August 2023, said they don’t think the tariffs will impact their business to a large degree, since they source a majority of their resources domestically.
“The tariffs, we don’t think are gonna impact us that much,” Michael said. “The only thing that we really get out of the country is palm oil.”
The business is partnered with Palm Done Right out of Ecuador, due to their pledge to source responsibly, according to Michael.
According to Michael, most of what they purchase to make their product and sell along with their soap is from within the U.S. They are looking for domestic sources for several items they purchase out of the country, like their mesh soap bags, shaving brushes and metal bowls.
“When we do the math, it isn’t impacting us so bad that we have to increase the price of our soap,” Michael said. “With the market being uncertain, we’re wondering if we are benefiting or experiencing the lipstick effect – when the market is uncertain, there’s a phenomenon where people tend to spend more money on low cost luxury goods like lipstick or soap or cosmetics of some kind. And we have seen an increase in shoppers over the last couple of months.”
Mark Spencer’s honey
Mark Spencer has sold honey at the San Marcos farmers market for five years, and for seven years in Seguin. Spencer’s main product is honey, and he doesn’t believe his business will be impacted directly by the tariffs.
“I don’t think the tariffs are gonna affect me and the beekeeping or the chicken raising or the egg business in particular,” Spencer said. “My main product is honey, and I sell to specifically local markets, geographically so confined that it’s not gonna have any impact.”
According to Spencer, he doesn’t compete with the big honey producers; he’s exclusive to about 10 different local spots. Spencer believes that the announced tariffs will have a positive long-term effect.
“Overall, my belief is that the net result in the end will be lessening tariffs, lessening the bureaucracy and overall making it more equal access to the different markets,” Spencer said.
San Marcos Auto Center
Rick Benavitez, owner of San Marcos Auto Center, says he doesn’t expect the tariffs to affect his business. According to Benavitez, his business doesn’t source any of its products or materials from outside the U.S.
“Honestly, I don’t think it’s gonna affect me at all because I think it’s gonna affect mostly the franchise dealerships and the new used car dealerships,” Benavitez said.
Benavitez said business has increased in the past two months, so if there has been an impact for him, it does not appear to be immediately negative.
“I’m sure some [products] are made in China that I’m not aware of, but I’m not physically buying stuff offshore,” Benavitez said. “I’m not interacting with anybody outside the country. It’s typically inside here. So if the product came from China, I don’t know.”
