Sen. Mitch McConnell and local business leaders held a press conference on Thursday to denounce tariffs and, as they put it, educate voters on the effects tariffs could have on small businesses.
“I think it’s important for everyone to understand that the trade war is ultimately paid for by taxpayers, regular voters,” McConnell said.
Tariffs are essentially a tax placed by a government on imported goods. The Trump Administration has imposed a 10% tariff on imports worldwide and more tariffs on select countries. The Trump administration has said the goal of these tariffs is to encourage American consumers and businesses to purchase more domestically produced goods, thereby motivating companies to increase manufacturing within the United States. The universal tariffs went into effect on April 5.
However, experts warn that tariffs will lead to higher prices for businesses importing goods and their consumers. A critique of the universal tariffs is that some businesses may be forced to pass the cost of the tariffs on to their customers. While some larger businesses with greater financial resources may be able to absorb tariff costs, small businesses with tighter margins are forced to pass on the costs to customers in order to stay afloat.
The conference took place at the CVG Centre in Erlanger, which serves as the airport’s administrative center. McConnell was joined by Kentucky Chamber of Commerce CEO Ashil Watts, CEO of Galerie Candy and Gifts Rick Ross, President of Post Glover Resistors Richard Field, and, finally, CVG CEO Larry Krauter.
Krauter didn’t speak much, but the others denounced the tariff policies – or, at the very least leveled criticism of the tariffs’ hasty implementation – coming out of the Trump administration and called upon the president to make exemptions for small businesses.
“Tariffs are essentially a tax increase,” Watts said.
McConnell discussed historical parallels, such as the Smoot–Hawley Tariff Act, which President Herbert Hoover signed into law in 1930. The act raised tariffs on foreign goods in an effort protect domestic businesses, but historians and economists largely agree the law had the effect of amplifying the Great Depression, which began only a year earlier.
As it relates to Kentucky, McConnell cited a report from the National Association of Realtors, which argued that Kentucky relies on global trade more than any other state in the country. The study found that imports into Kentucky equal 32.3% of the state’s gross domestic product, the highest of any state, while exports make up 16.3% of Kentucky’s GDP, behind only Louisiana and Texas.
The business leaders, meanwhile, described the impact the tariffs had on their operations.
“It’s been very challenging now with these tariffs, where you can take a successful business and bring it to a standstill,” said Ross, whose company operates out of Hebron. “There are so many businesses across Kentucky and across the country that are not going to survive the impact of these tariffs. When you see 145% tariffs added to product that you import to make other products as parts of products, it makes it really challenging to service your customers.”
“Not everyone is large” and has huge balance sheets, said Field. Field’s company, Post Glover Resistors out of Erlanger, gets parts from suppliers and distributors all over the world. He gave an example of what could go wrong.
“I was in a meeting this morning for production,” Field said. “We are missing a part that’s manufactured in France. We bring it into a distributor in Louisville, and they’re just holding it in France. They’re on the hook for the tariff. They don’t want to pay the tariff, so they’re just going to put it on hold. That means an off road highway truck somewhere else in the United States isn’t going to get complete because that’s the part that comes from us that allows that off highway truck to work.”
Ross called upon the executive branch to make tariff exceptions for small, family-owned business as they tended to be more susceptible to stress than big, multi-national corporations. Field asked for the administration to consider the risk tariffs force small businesses to take on.
McConnell, as well as Kentucky’s other Senator Rand Paul, have both come out against the Trump administration’s new tariffs. McConnell announced in February that he would not be seeking reelection. Former Kentucky Attorney General and gubernatorial candidate Daniel Cameron and Lexington-based Republican U.S. Rep. Andy Barr have both thrown their hats in the ring for McConnell’s seat in the Senate.
Kenton Hornbeck and the Kentucky Lantern’s Jamie Lucke contributed reporting to this story.