Ed Markey Asks Business Owner Why Tariffs Make It ‘Near Impossible’ To Keep Manufacturing In The U.S.

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During Wednesday’s Senate Small Business & Entrepreneurship Committee hearing, Sen. Ed Markey (D-MA) questioned Julie Robbins, CEO of EarthQuaker Devices, about the impact of President Trump’s tariffs.

Transcript

00:04Next, I recognize Ranking Member Markey for his questions.

00:07Thank you, Madam Chair.

00:09Trump's tariffs have been thoughtless, they've been reckless, unpredictable, overly broad.

00:15They've caused economic uncertainty, as I already said, a 35% reduction in the number

00:22of huge containers coming into Massport, the port of New England really, for the month

00:29of June, which is absolutely unbelievable, and it has a profound impact on small businesses

00:35and consumers all across the country, and it places small businesses at a competitive disadvantage.

00:41They're not able to weather the storm the way bigger companies are.

00:45Ms. Robbins, you are already a 100% U.S. manufacturer, but as you state in your testimony, it's entirely

00:53impractical for you to be able to manufacture all the raw materials and components that

00:59go into your final product in the United States, especially with the current tariffs.

01:05Can you describe why this would be near impossible at this time?

01:10Thank you for your question, Senator.

01:13Yes, I'd be happy to.

01:16First of all, any type of investment like this would require months or years and a lot

01:22of money, and I don't have that time and I don't have that money right now, especially

01:27as I'm being taxed heavily.

01:30I can also share some data with you.

01:33One of my friendly competitors did an analysis on what it would take to re-shore just one of

01:40the components that goes into a pedal.

01:43This one that I have here behind these knobs is what's called a potentiometer.

01:49They are used to adjust parameters on a pedal, such as tone, level, distortion, et cetera.

01:56His annual volume on this part, he uses 130,000, so it's one of his most frequently used parts.

02:02And his current cost...

02:03130,000 what?

02:04Potentiometers.

02:05Okay.

02:06Okay.

02:07Beautiful.

02:08And his current cost is $0.22, and his annual cost is $28,600.

02:16The analysis showed that the cost per part would be $3.75 for an annual cost of $487,500, over

02:2717 times the cost.

02:28For you?

02:29For a company that was attempting to re-shore a single part.

02:34So the tooling would be $238,000.

02:41That's eight times the annual cost.

02:43And that's just one part of hundreds that go into an effect pedal.

02:49So he actually listed here the nine different parts that go into making this.

02:54And I'd like to submit this for the record, and I'd like to thank John Cusack for providing

02:59me with this evidence today.

03:02Without objection, we'll have that entered into the record.

03:04So as you mentioned in your testimony, you were named SBA Exporter of the Year in 2019.

03:13So no one does it better than you.

03:15You were the, you were number one.

03:18And so now tariffs are imposed.

03:22So describe that in terms of the daily headaches that you're now confronting.

03:30It's basically all we do now is try to navigate this environment.

03:33I'll tell you what I'm not doing.

03:35I'm not putting out new products.

03:37I'm not growing.

03:38I'm not thriving.

03:40I'm not hiring.

03:41I've actually canceled job openings.

03:44These are all things that I'm not doing.

03:45What I am doing is worrying, stressing, things changing from day to day, you know, thinking

03:51over my employees and how they're dependent on our healthcare to manage their chronic conditions

03:58or chronic conditions of loved ones, thinking of my daughters and how they're relying on myself

04:02and my husband for our income to complete their education.

04:06This is what I'm doing.

04:07I'm not doing things that are productive.

04:08Right.

04:09So President Trump's motto of short-term pain for long-term gain.

04:16So you're sitting there, you're short-term pain.

04:19But that short-term pain could turn into long-term pain for you.

04:23It could be an extinction event.

04:24Absolutely.

04:25It could be an obliteration event, not a liberation day, but an obliteration day, huh?

04:31If this goes on for too long.

04:35So do you really feel that he's picking winners and losers here?

04:39Apple gets a pass, other big companies get a pass, and you're down there trying to figure

04:44it out all by yourself.

04:45I do.

04:46I do think that the disparity between large and small businesses has grown wider.

04:50I'm here publicly stating how poorly my business is doing while those companies are meeting royalty

04:57in the Middle East.

04:59It's a huge disparity.

05:00Yeah.

05:01Do you have lawyers and lobbyists here in town helping your company?

05:04No.

05:05Does Apple?

05:06Yes.

05:07Yeah.

05:08They have departments.

05:09Does Google?

05:10Yes.

05:11All these big companies, they do.

05:12You have no one here.

05:13Except for this committee, actually.

05:14We're supposed to be your advocates to protect you.

05:19So you just think there's a disproportionate impact on you, huh?

05:22That's correct.

05:23I do have some advocates.

05:24The Main Street Alliance is working hard to level the playing field and elevate the voices

05:30of small businesses.

05:31And I really appreciate their support.

05:33But it still does not compare to what the large companies have.

05:36So do you keep a bottle of Pepto-Bismol now nearby as each day's stories, you know, give you something

05:45else to think about and worry about?

05:47As a small business owner, I'm used to navigating challenges.

05:51Yeah.

05:52I have excellent problem solving and stress management skills, as you must, to be in this

05:58position.

05:59However, I just don't see solutions.

06:02They're just not immediately available.

06:04And I need immediate solutions.

06:06So, in my opinion, the only option is to rescind the tariffs, to pass the bill that you've

06:14mentioned, exempting small businesses.

06:16It's just not survivable.

06:18As you mentioned, I believe we're facing the mass extinction of small businesses.

06:22We are clinging to dear life.

06:24The reason you're not seeing bigger numbers of the fallout in the economy is because of

06:29folks like me that our house is on the line.

06:32We're going to do everything we can to save our businesses, to keep our employees employed.

06:37We're also not like big companies that we're going to slash jobs the moment things, the forecast

06:42change.

06:43So, just one final question.

06:44I appreciate your indulgence, Madam Chair.

06:47When the President announces that he's in the process of beginning to try to find an

06:53agreement with China, does that just lift the cloud off your head and all of a sudden

06:59you're feeling, you know, instant relief?

07:02What does that mean to you when you hear that, that they're trying to get a deal but they

07:06don't have a deal and then there's still 179 countries left to go to get a deal with?

07:11There's absolutely no relief.

07:13It just creates more confusion and uncertainty and it actually creates some effects such as

07:22retail stores loading in on products from China in order to get things in before the

07:29tariffs theoretically go up even higher.

07:32That's what happened over the last month while there's been a break on the other reciprocal

07:36tariffs.

07:37So, it absolutely doesn't help us.

07:39It just extends the period of uncertainty and I really need to be making changes now

07:45and I can't due to this uncertainty.

07:48You know, in the U.S. where we sell to retailers and it is our largest market, if you make a price

07:53increase, you really can't go backwards, you know.

07:57And the more that you increase your price, the less competitive, the less affordable that

08:00you'll be to end users.

08:02And you really can't predict how much further your demand will fall when you raise prices.

08:07And it's certainly not something that you want to do repeatedly.

08:10So, having something that I could plan for, you know, we absorbed the 2018 tariffs.

08:16They were 25%.

08:17That was difficult, but we did it.

08:19What's going on now is absolutely so challenging.

08:22I don't know a way forward.

08:24Yeah.

08:25So, thank you, Madam Chair.

08:27Thank you, Ranking Member.

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