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Small businesses in Alaska say new tariffs from the Trump administration are costly and creating a lot of uncertainty.

There's really no way of knowing what's going to happen.

It's hard to know what the tariff, regime is right now, let alone a week from now or a month from now.

What are the main effects on small businesses in the state and how are they responding?

We'll discuss it right now on Alaska Insight.

U.S. tariffs are taxes that are paid by companies importing products.

Those costs are often passed on to consumers of the goods being imported.

The Trump administration wants tariffs to bring in revenue and make American products more competitive in the global market.

But Alaskan small businesses are heavily dependent on supplies that are costing more and squeezing already tight profit margins.

We'll hear about how businesses are coping with the added expense before we get to that discussion, here are some.. stories of the week from A.. Public Media's collaborative statewide news network.

The Alaska Senate is planning to vote Monday on a new education funding bill, even as governor Mike Dunleavy calls for changes.

A new version of a bill originally focused on regulating cell phone use in schools now includes a $700 boost to Alaska's base student allocation formula, as well as a 10% boost to student transportation funding.

The revised bill comes a week after Dunleavy vetoed a prior bill that aimed to add $1,000 to the BSA, and override vote of that veto failed last Tuesday.

The new bill omits several policies included in an alternate education bill.

Dunleavy introduced after his veto last week.

In a social media post on Thursday, Dunleavy said he would sign the bill if his policy priorities are added.

A recent University of Alaska graduate is suing the federal government aft.. foreign student status was revoked by the Trump administration.

Gene Cash Checkoff is one of four UA students and hundreds nationwide who recently had their foreign student status terminated in the federal Student Exchange Visitor Information System or service.

His student visa was also revoked in a lawsuit filed Wednesday in federal court, cash Acosta attorneys say the Department of Homeland Security did not give him proper notice of the termination of his student status.

Homeland Security Secretary Kristi Noem and acting Ice Director Todd Lyons are named as defendants in the suit.

In separate emails, DHS and Ice officials declined to comment.

On Friday, the Justice Department announced it will reverse the mass termination of students from service after the move sparked more than 100 lawsuits across 23 states.

It's unclear at this time how that could affect cash.

A suit.

The northbound span of the Kinnick River bridge between mile 30 and 31 of the Glenn Highway will be closed for around 30 days, as construction crews restore the deck and replace joints that connect the bridge to the highway, according to state construction plans.

A detour will siphon all traffic into three narrow lanes on the southbound span, with two lanes traveling in one direction and one in the other.

Those directions will change twice each day to provide double lanes for the direction with the heaviest traffic.

As construction started this week, travelers faced few delays, with slight slowdowns occurring around the five and 6 p.m. rush hours.

You can find the full version of the.. more stories on our website.

Alaska public.org or download the Alaska Public Media app on your phone.

This evening we're discussing global tariffs and the ripple effect that increased expense for supplies imported from China, Vietnam and numerous other countries that Alaska trades with is having on the cost of goods and services for Alaskans.

Small businesses in Alaska are already feeling the effects from President Trump's sweeping tariff policies.

Businesses are scrambling to stop up, stock up on products, move manufacturing out of China and reexamine their balance sheets.

And as Alaska Public Media's reports, entrepreneurs say the uncertainty they're facing is potentially just as damaging as the tariffs.

Black tea from Sri Lanka.

Oolong from China or the Spice and Tea Exchange in south Anc.. Imports make their business possible.

There isn't a single product in our store that isn't affected by the tariffs that we're looking ..

Even with that 10% baseline, we don't have that kind of working capital to just sort of absorb that without passing on that cost, you know, to a consumer.

But then I think you need to try the key lime.

After that, the store source.. from roughly 60 countries.

Some teas have become more expensive and harder for the company to find as a result of ta.. She says the supply issue is similar to the Covid pandemic.

There's a lot about this that feels very familiar to where we were in 2021 and where we were already having to fight with other companies and brands to get, you know, the amount of product that we are used to having for a reasonable price.

The United States doesn't produce enough tea to come close to the domestic demand.

So Eldridge is stocking up in hopes of mitigating Trump's reciprocal tariffs from countries like Vietnam, Thailand and Japan, which are paused through early July.

That looming deadline makes it hard for businesses like hers to plan for the future.

There's so much uncertainty, it changes by the day, so I am just taking it one day at a time.

Continuing to operate my business as best I can.

Tariffs are also stressing Eric Parsons, owner of designs in Alaska based company that manufactures bike packing gear.

About half their goods are manufactured in Seattle, the rest overseas.

When Trump announced reciprocal tariffs in April, Parsons says his heart sank.

So when I saw 46% for Vietnam and 49% for Cambodia, like I just despaired.

Like my heart just totally sunk and I was just like this wave of, I would say, panic and like, anger swept through me because I was just like, why are you destroying our business?

Manufacturing outside of the U.S. gives the company flexibility to adapt to the industry's changing demands and ramp up his manufacturing volume.

Right now, it has an order being made in China worth $50,000, which Parsons says is subject to tariffs totaling around 200%.

He'd like to avoid that and sell the gear intern.. but that may not be possible.

But the problem with that is we needed.

We need some of it to sell ourselves because it's now we don't have the inventory here.

So we are going to have to be shorting like I for example, on some things are to for short, you know, we'r.. out of some .. we don't import them.

Even businesses that manufacture in Alaska aren't necessarily celebrating the tariffs.

Paxson Wilbur is the owner of Urban Skates, which he says is the only Nordic skate manufactured in the US.

So you think that we might be kind of excited to have tariffs on foreign goods, but the reality is actually quite a bit more complicated.

Everything from the skate ceramic coating to sharpening is done in Alaska.

But they're made of steel and aluminum, which is subject to a 25% tariff.

There is also a movement across the globe to boycott American products, which is bad news for companies like ermine that sell to retailers abroad.

I don't think that's very productive for .. for American businesses that are trying to manufacture and export to the rest of the world.

Wilbur says he's talked a lot with his customers who've canceled orders because of economic conditions and political tensions.

There's really no way of knowing what's going to happen.

It's hard to know what the tariff, regime is right now, let alone a week from now or a month from now.

For now, business owners say they're taking tariffs day by day, and they hope Alaskans keep supporting local businesses in Anchorage.

I'm Ava White.

Joining me tonight to help us better understand what business owners in Alaska are grappling with is Greg Wolf.

Greg is the president and CEO of the Alaska International Business Center, and John Bittner is the state director for the Alaska Small Business Development Center.

Thanks both of you for being here tonight.

Thanks for having me.

So the story that we just hea.. potentially 200% tariffs, businesses trying to stay viable in Alaska.

The Trump administration's policy has changed a lot in the last weeks and months.

Where are we right now in the the the tariff plan?

John, you know, it's hard to say.

I mean, we we went from, you know, broad based tariffs hitting all of our major trade partners.

Then all of a sudden they're put on pause for a litt..

I think more recently we've heard that, you know, mayb.. but those types of trade deals can take years.

So it's really hard in the markets.

And and the polling that we're seeing is really reflecting that confusion in the business community.

Greg, follow up there.

What are you hearing about how businesses are grappling with this and where the tariffs are currently?

Yeah, I've spoken to a lot of people abou..

I just spoke to a conference a few days ago, and I, we had a briefing for our members.

You know, we represent about 120 exporting companies.

So what they talked about here was the the impact on importing to the United States.

Companies that need to import, inputs for their whatever they're making here.

That's one side of it.

Our companies, of course, they worry about that because they use some of those same inputs, but they're even more conc.. the import, the tariffs that their pro.. once it gets to the other country who have put up retaliatory tariffs on American products, or just some just banned them out.

Right.

So we're worried about the reaction, of, of other countries to what we're doing here.

And, I do talk to a lot of foreign leaders as part of my job.

I just did yesterday with the Canadian government.

One of our most important trading partners, by the way, for Alaska.

And there's a sort of state, as John mentioned, around the business community and really around government a little bit.

They feel it's sort of chaotic the way things are happening.

They don't know what the tariff will be.

He mentioned a day.

A day from now or a month from now.

How about an hour from now?

This is what's happening right now.

Some of the tariffs change by the hour.

I get notified on my phone when they do.

But, So there's this feeling of uncertainty, chaos.

And in some cases, like, our friends, Canada, a little bit of a betrayal.

Are they, they wonder why they're being .. And they've always thought that they are our best friends and our neighbors.

We share a 5000 mile border.

We do a lot of business back and forth on a daily bas.. For Alaska, they're an important partner, including tourism marketing.

They're the largest investor in the mining industry in Alaska.

So it's sort of giving people not just for today with the tariffs, but into the future.

Is is America a reliable trading partner?

Is it safe to say Alaska is the most tariff state in the nation?

I think we're exposed to this more than any other state.

And there's a couple of reasons for that.

One is our operating costs were already significantly higher.

The majority of our goods are shipped in, we don't have a very robust manufacturing sector, but also, we're the only state where any ground transportation has to go through a foreign country.

Right?

So n.. with that in Canada.

They've been a great partner to us for years.

They've indicated that, look, if this keeps going, we're going to have to start charg.. trucks as they cross the border.

That would be hugely disruptive for us and only impact us honestly.

And that's not even talking about the fact that we're a global cargo, trade route, that Ted.. International Airport has the top three, top four, largest related cargo ..

So all of this seems I know it wasn't tailored.. but it's going to unfortunately grain you know, add to that there's because we have a fundamental sort of weakness, if you will, in the Alaska economic model.

By that, I mean, we don't really do any of the final proc.. or refining of anything here, or whether it be oil, whether it be, mining.

You know, we we take the ores, we take the ores, and we ship them to another country, like we shipped them to Canada in the case of the Canadian miners.

We ship it to Australia.

So imagine this with the same with, forest products and the same with seafood.

We we do primary processing in some cases, but we don't do the final processing.

So this subjects Alaskan exports to a potential in a way.

Think of it as a double tariff.

We send the ore to Canada.

They put a 25% tariff on it.

They refine it, send it back to America.

There's another 25%.

So all of a sudden, you know, if we if we produced the resource here and did all the refining and all of that, that would be a one story.

But we don't do that.

We just don't do the final processing of really any major resource here.

So our, our, our resources and, you could also argue some products will be subject to double double tariff.

John, you surveyed businesses about kind of taking their temperature.

What did you hear about how they're trying to gain clarity and how difficult that may be, making it for future planning?

Yeah.

Every ye.. an annual survey at the end of the calendar year, and we were about to release the report.

But with everything going on, it's an entire..

It didn't make sense anymore.

So we had to release a second, sort of a smaller survey just to the people that to the original survey.

And what we saw was was pretty profound.

There is a lot of, confusion.

There's a lot of shock.

There's a lot of change in their perception on what the next year is going to bring.

For example, we asked them, where do you think the state economy .. Is it going to, you know, get better or worse at the end of the calendar year?

It was positive.

It was 60 or 70% thought that that we were going in a good direction.

Today it's down to, 25%.

So we it's a 40% swing.

We talked to them about how are the tariffs impacting you?

70% of the businesses we surveyed that have suppliers say that the .. increased their prices, and that I think 60% of the businesses have already passed those on to consumers.

So we're seeing the impacts of this today.

And then lastly, the 10% of them said in the that they anticipate that they're going to have to close if things don't get better.

Some of the businesses repo.. they were being affected by tariffs but su.. the policy.

Did they expand on t.. Are they hoping maybe that something will change in the future?

It's interesting.

So we did we gave open ended question space for everyone.

And there were people that were supportive of the president himself.

And they believe that he has a vision.

But they did say that they are being negatively impacted.

And their hope is, is that this is a short term impact and that there's some, long term gain to be had by this.

There weren't a lot of specifics on what that would look like.

But yeah, there's .. rooting for, you know, some.. that will come from this.

Is there, or are there businesses that could benefit in Alaska from this current situation?

I'll be honest, there are very few business.. that benefit from chaos, and that's kind of what we're seeing right now.

There are a few I think that if you're looking for a silver lining to all of this, one of the results, if you're going to survive what's coming, is you're going to have to get more effici.. You're going to have to get leaner.

You're going to have to do more with less, and you're going to have to find expanded markets for your products or services.

And so the businesses that make it through this, I think, will by definition, be stronger than they would have before.

But I don't know that there's many benefiting.

The other sort of aspect of this as we are seeing more mergers and acquisitions.

Some businesses just aren't going to make it and they're getting bought out by their competitors.

Okay.

Greg, you have a lot of tenure in international business 40 years.

You've seen tariffs, trade wars in the past.

What usually happens in these escalations and how is Alaska usually affect.

Well, that's a good question.

The, you know, I've been through many tariff wars and a few trade wars.

And my feeling on tariffs is this I it's no secret.

I'm not a big fan of tariffs.

It's just one tool in our government's any government's toolbox.

If they have there's a concern about trade, some unfair trade or the trade imbalance or something like that.

There are other tools that can be used that are and this may not be the absolute best one.

But generally speaking, if you look back historically, and there's been many tariff wars.

Tariffs are nothing new.

But there's usually it's, it's easy to find those tariff force.

It's harder to find a winner.

Usually when it turns out to be because of who pays the tariffs.

Both initially and then eventually, it's usually for the businesses and consumers of both countries that are affected.

A lose lose situation.

And so usually they're short term.

Usually, you know, you know, people co.. realize nobody's winning here.

Let's figure out how we can, you know, solve this.

And yet, for, you know, a mutual benefit.

Do you think that, U.S. and China leaders are waiting for the other one to blink?

And if so, who is most vulnerable in that situation?

Yeah, I do, the of course, China is Alaska's number one trading partner.

There's really no one even close.

Last year was $1.5 billion of what we sent to to China.

The second place they were number one, second place .. 800 million.

So for Alaska, it's our most important international relationship in terms of trade and commerce is China.

In terms of foreign countries, you know, both President Trump and President XI are great leaders.

They are powerful leaders.

I suppose you might say they both probably have an ego.

And, you know, one will say you should call me.

And they said, no, you should call me.

Hopefully, maybe staff at maybe through back channels and things.

Maybe a way can be done.

It's a face saving way that no one really looks like they were the first, you know.

So there is some some face involved in this.

Some ego involved in this.

But also these are this is the number one and number two largest economies in the world.

And they both feel, you know, they have some advantage perhaps or Americans buy everything from China.

And so we feel they're dependent on us.

Chinese might feel that the Americans are dependent on them so they could get goods at Walmart for a ve.. very inexpensive price.

John, you mentioned that, a lot of the businesses you surveyed are saying, that they may have to consolidate.

They may have to merge with others, th.. to 10% of them may go out of business.

That sort of contraction must affect how many supplies are ordering and what they're thinking about for output.

How does that ripple out?

What's known about how that aff.. other businesses an..

I mean, the ripple effects of all of .. are going to be pretty profound.

And the further outside the urban centers, the bigger the impact is going to be.

So as things get more expensive, things get harder to transport as the shipping routes get a little more nebulous.

It's a problem.

We've already heard several of the larger, you know, retailers.

You know, it's not just impacting small businesses.

It's all businesses.

Larger retailers are claiming that if something isn't done, that she.. going to be emptied.

Like, there's just nothin.. Alaska ships up the vast majority of the goods that we we use, we buy, we we sell.

There's just no way this doesn't have an impact that sort of cascades down right now.

I mean, we're still riding high of.. you know, the previous year's ec.. but that that will only last a long.

You said in a previous interview, Covid hammered the economy, but you said this is worse.

Why is it.

Yeah.

I mean, a lot of the, a lot of the, the businesses we surveyed say that this feels a lot like Covid.

The big difference h.. is that during the Covid pandemic, there was a massive influx of federal dollars to support small businesses.

Trillions of dollars, an unprecedented amount of money to try and mitigate the impacts.

There's no such, support system this time around.

We just don't have the wherewithal to do it.

And so while the economic impacts hopefully are shorter than the Covid pandemic, if they persist, it will be significantly worse.

At the beginning of the pandemic, we were predicting and a lot of economists were predicting ten, 15, 20% of businesses wouldn't make it through.

That could very well be the case here, unless we find a way around it.

Greg, you said this is the first time in history the U.S. has imposed universal tariffs on pretty much every country, every country.

Have you heard what went into deciding this unprecedented across the board approach?

Are there economists who have called for something like this saying the U.S. economy needs it?

Where is this thinking coming from?

That's a good question.

The, I don't know any economists.

At least I haven't heard from, any or heard this that, that we need to put a universal tariff on every single country, including to Ireland, to where there's no residen..

I mean, literally every country.

To me, I said that traditionally tariffs are done on a thoughtful basis, very specific.

Like we one time we had a tariff, we did some trade.

Trade action against South Korea because we felt they were dumping their, automobile tires on the US market.

But we did tariff everything in Korea, just the tires, you know, that type of thing.

So generally, it's done thoughtfully.

It's done very specifically.

I think it requires less thinking if you just tariff everything.

You don't have to.

You don't have t.. a lot of ana.. Every country gets a tariff and you don't have to spend only a few minutes thinking about it.

So I'm sure there was more thought than that in it.

But it's a it's a bit it's a bit unusual the way they've rolled it out.

John pick it up there.

And I think that you I mean you may find economists that are supportive of tariffs and one from the other.

I think what really makes this so dis.. at which they deployed it.

They did not give businesses or the economy time to prepare.

If you want to replace overseas, many manufacturers with local manufacturers.

That doesn't happen overnight.

That's a massive investment.

And the more chaos and confusion you create, the harder it is to justify that kind of investment.

If you don't know what the situation is going t.. six months, 12 months, 18 months down the road.

It's hard to get behind 100 million or $1 billion of investment in new manufacturing.

And given what we know abou.. that China has created in their own manufacturing settings.

Is that realistic to bring major amounts of manufacturing back to the United States?

Greg you're shaking.

I would say unrealistic.

I use the example all the time of the iPh.. seems to have one.

None of the iPhones are made in America.

Right now, about 80, 90% are made in China.

They made an announcement today on the television that they're going to switch a lot of that production into India.

Again, they're not bringing it ba..

They're just moving it from one country to the next.

But they're not bringing it back here.

The reason for that, very simply, is it would be your iPhone.

The price would triple or even greater than that.

$1,000 iPhone would become a $3,000 iPhone.

At least some.

Some economists say 5000.

If they do it here.

Just one.

Everyone talks about lower wages.

And there's truth in that.

There's other reasons like you mentioned the supp..

But workers there that make the iPhones for Foxconn, they're by Foxconn in China they make $2.87 per hour, which is not considered bad.

If you made it here.

Probably a worker would have, what, 30, $30 per hour?

We would have there would be union labor involved.

Most likely, yes.

Thank you both so much.

This time went by far too quickly.

There's so much to discuss, and I'm sure we'll have you come back and help us better u.. as we move forward with this.

Thank you for having us.

Thank you.

Thank you.

Small businesses are the economic engine of healthy communities.

They create jobs and unique goods and services that may not be available anywhere else.

They help increase the flow of locally made products that stimulate other parts of the economy, and are clearly needed in a state heavily dependent on imports.

US tariffs may bring negotiations that could help boost manufacturing in the lower 48 in the future.

But Alaska's unique position as a state with road access only through Canada and as a major international cargo hub make tariffs especially challenging for the businesses we need for Alaska's future.

That's it for this edition of Alaska Insight, visit our website.

Alaska public.org for breaking news and reports from our partner stations across the state.

While you're there, sign up for our free daily digest so you won't miss any of Alaska's top .. of the day.

Thanks for joining us this evening.

I'm Lori Townsend.

Good night.