After the U.S. Supreme Court ruled Feb. 20 that President Donald Trump illegally imposed tariffs — taxes that the Treasury collects on imports from trading partners — the path forward has many moving parts. We checked in with business owners and industry experts in and around Sacramento to understand how local businesses are navigating this complex moment.

Rick Hayes owns Raptor Blaster, a manufacturing firm located in South Sacramento. “So many elements go into making a product and selling it that can affect the price for the product as it pertains to the tariffs,” Hayes says. “I use European and Chinese machinery that equates into the price of the product, and if those prices go up or down, then I am affected. I’m going to have to adjust my margins according to inflation.”

Luis Fonte Halindo is the owner and lead technician of Ace Tech Professional home appliance repair service in Sacramento, operated by a six-person team. “The past year and this year have been the most difficult for me over the past six years operating here,” he says, adding that a main challenge is the weakening of consumer spending. Customers, commercial and residential, are delaying their repairs and deferring maintenance.

Fabrice Moschetti owns Moschetti Artisan Roaster, a Vallejo-based firm that does business mainly with mom-and-pop firms. As an importer of coffee grown abroad, he has ridden the ups and downs of tariffs on this agricultural product. He’s taking the long view on tariffs and his business adaptation strategy.

Related: Trump’s Tariffs Hurt Some Local Businesses, but Prompt Others to Shift Gears

“The Supreme Court’s recent decision on tariffs pleases me,” Moschetti says. “However, I’m looking at five to six months for the market to reset.” He says resetting supply chains for seasonal products such as coffee is a fluid process, and market equilibrium can be fragile.

It is unclear if businesses will receive refunds for the tariffs they have already paid; the Supreme Court ruling did not address refunds. Meanwhile, the president imposed a 10 percent global tariff on foreign products entering the U.S. after the Supreme Court ruling.

​

Another relevant development on the cost of doing business is energy prices. Gas and oil prices spiked sharply after Iran struck Persian Gulf petroleum facilities in retaliation for U.S.-Israel attacks. The price of a barrel of oil was $70 at the beginning of this war. With declining oil production in the Persian Gulf region, some analysts are predicting the price of oil will reach $150 a barrel.

In the meantime, Trump wants the Federal Reserve Bank to cut interest rates to boost home-buying before the midterm elections. However, the central bank’s policy of reducing the cost of borrowed money in accord with what the president’s monetary approach is uncertain at best.

Robert Heidt is president of the Sacramento Metro Chamber. He emphasizes the importance of business stability relative to tariffs.

Related: Sacramento Manufacturers and Distributors Weigh the Effects of Tariffs

“The Supreme Court’s decision provides important clarity,” Heidt says, “and that is welcome news for businesses throughout the Capital Region. Over the past year, many Sacramento-area employers — particularly those connected to global supply chains in manufacturing, construction, and retail — have faced rising costs, supply chain disruptions and compressed planning timelines as tariff policy shifted.”

Like Moschetti of the roasting company, Heidt is concerned with the rate of change in the marketplace after the Supreme Court ruling.

“What we consistently hear from our members is the need for predictability,” Heidt says. “Businesses can adapt, but stable and clearly defined trade policy is what allows companies to invest with confidence, support wage growth and keep costs down for families. We encourage the administration to use this moment to reset tariff policy in a way that strengthens economic growth and provides long-term certainty for employers and consumers alike.”

Sanjay Varshney is a professor of finance at Sacramento State University. He takes a glass-half-full approach for businesses in the Capital Region following the Supreme Court ruling. “This is better news for business today versus a year ago,” Varshney says. “The rollbacks of the Trump tariffs are good, because they weren’t sustainable and more of a negotiating tool.”

The Supreme Court ruling reduces businesses’ exposure to volatility, especially those exposed most to the tariffs. However, things are still in flux, and businesses are now looking at an effective tariff rate of perhaps 12 percent.

Related: Tariffs Are Everywhere — But They’re Not the Whole Story

Some businesses can’t sustain the higher costs of tariffs, while others can, according to Varshney. For example, the leisure and hospitality industry has low profit margins and will struggle. That comes on top of the lingering effect of COVID-19 shutdowns, which throttled the industry.

“There is going to be pain,” Varshney says regarding business adaptation strategies. “Industries face the pain from tariffs unevenly.”

–

Stay up to date on Sacramento region business: Follow @comstocksmag on Instagram!