Jim Sanfilippo, a small-business owner in Pasadena, is feeling the pressure as new trade tariffs take effect. For the past twenty years, he has been designing high-powered LED lights for various uses, including stadiums and Hollywood productions, such as the James Bond film "Quantum of Solace." Now, he faces uncertainty due to the highest average effective tariff rates in nearly a century.
The recent trade policies introduced by President Trump, including a staggering 145% tariff on Chinese goods, impact every component of Sanfilippo’s energy-efficient lights. Most of these lights are assembled in Pasadena using parts sourced from Asia, including circuit boards and durable metal housings. Sanfilippo expressed frustration, saying, “It’s chaos created by uncertainty.” He explained that the inability to predict whether these tariffs are permanent or temporary makes it hard to plan for the future, leading to delays in customer orders.
U.S. Representative Judy Chu, who visited Sanfilippo’s company, Nila, highlighted the broader implications of these tariffs for small businesses. She warned of potential economic downturns, noting that a 10% tariff on imports from all countries, along with higher rates for specific products, could hurt many sectors, including agriculture and entertainment in California.
President Trump argues that these tariffs are necessary to reduce the trade deficit and revive domestic manufacturing. However, he has also indicated that the 145% rate on Chinese goods might not last, suggesting it could decrease significantly but remain above zero.
In response to the looming tariffs, Sanfilippo rushed to place orders with suppliers, even paying an extra $17,000 to expedite shipments before the inauguration. He has managed to secure enough supplies to fulfill orders for his smaller lights for about two years and for larger lights for six months. However, the future of larger projects remains uncertain.
Nila has designed lighting for several major stadiums and has ongoing contracts with entities like the U.S. Senate recording studio. Initially, the company relied on American manufacturers for parts but shifted to overseas suppliers as costs rose in the U.S. Sanfilippo noted that returning to domestic production would drastically increase prices, making their products unaffordable.
To mitigate the impact of tariffs, one of Sanfilippo’s suppliers in China is considering opening a facility in Mexico, where labor is cheaper and shipping times are shorter. Sanfilippo is also looking to expand his international client base and plans to ship products directly from China to avoid U.S. tariffs.
As the situation evolves, Sanfilippo is preparing for the changes ahead, including building his consulting business aimed at helping American companies reduce energy consumption, though orders will still likely come from overseas. The uncertainty surrounding tariffs continues to loom large over his business and the wider economy.