“Total Chaos” and Price Hikes: Two American Businesses Facing Trump Tariffs

CHRISTIANE AMANPOUR, CHIEF INTERNATIONAL ANCHOR: Now, as we have been discussing, President Trump’s tariffs are prompting radical changes for American business owners, like Debbie Wei Mullin, the founder of a coffee company rooted in Vietnam, and Sarah LaFleur, who owns a clothing brand, which relies on overseas factories. They speak now to Michel Martin about what this has done to them.

(BEGIN VIDEOTAPE)

MICHEL MARTIN, CONTRIBUTOR: Thanks, Christiane. Debbie Wei Mullin and Sarah LaFleur, thank you both so much for joining us.

SARAH LAFLEUR, FOUNDER AND CEO, M.M. LAFLEUR: Thank you for having me, Michele.

DEBBIE WEI MULLIN, FOUNDER, COPPER COW COFFEE: Thank you so much.

MARTIN: So, the reason we called you both is that you have been affected by these promised threatened tariffs. Both of you are entrepreneurs, you’re — both of your businesses are established. So, before we get into that, why don’t you just start by telling us why you’re in the business that you’re in. Debbie, why don’t you start?

MULLIN: So, I started Copper Cow Coffee as the first premium Vietnamese coffee company, and it’s a real homage to the way I grew up. My mom is from Vietnam and I’m really passionate about all things Vietnamese cuisine, and think that Vietnamese coffee, which is the second largest coffee producer in the world, was really not seen in the U.S. market and really wanted to elevate Vietnamese coffee as a way to bring development to Vietnam.

MARTIN: So you had a mission. It was, it was about the coffee, but it was also about what you could do through the coffee company.

MULLIN: Exactly. So before I worked at, at – before at Copper Cow Coffee, I worked at the World Bank focused on international development and how to bring better economic opportunities to Vietnam.

MARTIN: Interesting. Sarah, what about you? You also have a story that you’ve shared on your website about why you started your business.

LAFLEUR: Yes. I started my business back in 2013. I myself actually don’t come from the fashion world, but I was a management consultant. I found it very far hard to find good practical but fashionable clothing for professional women. Women on average spend two more weeks per year getting ready for work versus men. And I really wanted to tackle that challenge. I was — I partnered with my co-founder, Miyako Nakamura, who came from a high-end fashion background. And our goal has always been to provide, you know, luxurious fabrics, luxurious manufactured clothing to hardworking professional women.

MARTIN: So, Debbie, Coffee isn’t really grown in the United States, is it? I mean, maybe in Hawaii, right, in Hawaii?

MULLIN: Yes.

MARTIN: But not in the continental United States.

MULLIN: It’s only a fraction of what the U.S. consumes in terms of coffee consumption.

MARTIN: But you couldn’t have the kind of coffee company you have with outsourcing it from Vietnam, right?

MULLIN: Absolutely not.

MARTIN: OK. So, how did you — did — when you first heard that Vietnam was on the schedule of tariffs, and in fact, Vietnam was one of the countries that was originally supposed to be hit with one of the highest tariffs at like 46 percent, do you remember what went through your mind?

MULLIN: Just complete shock, to be honest. As I’m sure you’re aware, we’ve been suffering through a coffee crisis for the past year and a half, and with double coffee prices already having to adjust the business to that has been a complete whirlwind. And so, I think that we were really particularly surprised not only because it’s coffee, which the U.S. primarily doesn’t grow, but also Vietnam really does admire Trump and has been really willing to concede to whatever demands that he wants. They are really cooperative with him. So, I think that we went into the tariff — the idea of tariffs being relatively a lower possibility for Vietnam and for coffee. And so I think we were really shocked to be on the, the, the high upper end of what they were.

MARTIN: What would this do if, if, if the 46% tariffs were to hold, what would that, how, how would you absorb that? I mean, what, what would you do?

MULLIN: Honestly, the, the direct to consumer business side is a little bit easier. People are coming to your website. You have real estate to really explain the dynamic. You can instantly change your prices to accommodate these changes. The hardest part is that half of our business today is actually in retailers where it takes a minimum of six months for us to do a price change. And also, we have no idea what that’s going to do with our position, with the company– with, with these, with these clients. And I think that’s what’s really hard is that Vietnam, the kind of coffee that we grow is much easier to grow. It’s much easier to grow organically. There’s a lot of advantages of what we’re doing for the coffee space to make it more sustainable and much more affordable for organic coffee. And it’s really, it’s, it’s incredible the how much, how much work is being completely basically leveled from these tariffs. In terms of our avail, our ability to make affordable, organic, great tasting coffee no longer, no longer applies with these tariffs that they were to come through.

MARTIN: And I wanna come back more also to your mission with this. I mean, you say on your website, you actually pay these farmers twice what the market rate is. And and why is that? Because you wanna raise the living standards.

MULLIN: Yeah. And it’s also just because the kind of coffee that Vietnam grows is robusta coffee, which is historically not been treated as well in its processing and its cultivation. And we’ve proven that if you, if you put much more care into the processing and the way that it’s grown, it can create a delicious cup of coffee. And not only that, it really can make it a very much more sustainable through organic farming ’cause it’s so much more pest resistant. What’s been really hard is that we’ve done a lot of also investment into the farms, into the processing, into the manufacturing to make organic and the grade of coffee that we have possible on the premise that it will be much cheaper in the long term for our customers to have organic coffee and the tariffs erode those savings. Right. And so then no longer are we gonna be a competitive, a competitive product with what we’ve been working on for the last several years.

MARTIN: Sarah, let’s go to you. You you, you’re a New York based company. So, you know, New York used to be, it’s still a fashion capital, but a lot of the fashion shoes, clothes are manufactured in China. Why is that?

LAFLEUR: When we started our business, we actually did manufacture in the garment district right here in New York City. And even compared to when I started the business in 2013, the garment district has shrunken dramatically. We manufactured a lot of our clothes until 2017 in New York City. And really as the business grew, which was wonderful, we, we had no choice actually, but to leave a lot of our partners in New York City. And, and at the same time, they were also losing business. And so they were starting to shut down. And so really, I, I wanna say since 2018, we’ve been mostly a hundred percent, you know, manufacturing overseas. China has been just a, an amazing source of manufacturing. Their skill level is so high. The, the, the craftsmanship you know, it takes really generations to, to create good sewers. You know, everyone thinks that that clothing, oh, you know, some part of it must be automated. And, and yes, there is some machinery involved, but every single thing that you are wearing, someone is sitting behind the sewing machine putting those fabric, pieces of fabric together. And that’s not just a skill you can develop overnight. You know, even some of the best sewers in New York City who still remain, they’re in their seventies and they don’t have anyone to pass it down to. And so I think China does have that craftsmanship. They have that level of skill. And honestly, when we move some of our manufacturing out to New York from out from New York City to China, we were surprised by the level of quality that we were getting.

MARTIN: The argument the administration is making is that the, the whole point of this, they say is to reshore these industries. How long would it take in from your experience to reshore your operations, assuming it could be done in a way that, that you could sustain your business.

LAFLEUR: It’s obviously not impossible. It would take a ton of infrastructure from the government. We, the – even the factory spaces that you see in the garment district are tiny compared to the, you know, tens of thousands of square footage that you have in factories in China, in Vietnam. And then you’ve got generations of, you know sewers training the next generation. So of course, all of this is possible. It would take enormous resources. And, and also we need to think about how we actually, you know, transport those goods. And so that’s infrastructure at, again, at a different scale. Do we actually have the, the, the tanker ships to, you know, get things over from, I don’t know, New York to, to different parts of the country or trains? I, it’s, it’s, it’s kind of I, you know, I’m, I’m not an economist, but to me that sounds like a lot more money. It has been total chaos with our partners both in Vietnam and China, but specifically in China. My May collection has 90% evaporated overnight because we cannot afford to bring in goods from China.

MARTIN: Wow.

LAFLEUR: You know, the night before –

MARTIN: Wait, lemme understand this. You literally have a collection that you cannot afford to bring in.

LAFLEUR: Correct. I mean, from a cashflow perspective too, I think that’s the other thing people don’t quite understand when they say, well just raise prices. Yes, of course we could raise prices and, and, you know eventually perhaps the customers will cover the cost of the tariff. But if you think about the duty, that is actually the tariffs that we have to pay to the government, we pay that the moment our goods hit the United States border. So from a cash perspective, that’s, that’s an outlay that we are making to the US government. And without certainty that the customer is actually going to be willing to take on those price increases.

MARTIN: Debbie, you were saying that one of your intentions was to improve, you know, standards of living in, in Vietnam, but also to improve the quality of the, the product. And in so doing, you know, improve people’s lives. What are you saying to the farmers that you, you work with?

MULLIN: I haven’t had a chance to talk to the farmers directly, but I’ve talked to, we, we, we coordinate with really amazing co-ops in Vietnam and talking to their leadership. I mean, I think that they’re incredibly stressed out. You know, I think that this is some– they, they see Vietnam and Vietnamese coffee becoming this really exciting space in the US and how that’s a huge opportunity for them to, to have access to much higher rates, if they’re able to cultivate their coffee a certain way. It’s a, it’s again, a really wonderful thing for their farms to be able to eliminate chemical pesticides and for, and fertilizers and to be able to get a premium for that effort in, in the US market. And I think that it’s, it’s, it, I think everybody’s just really sitting on the edge of their seat wanting to see what is the number going to be, you know, if it’s, is it gonna be 10? Is it gonna be 46? Is it gonna be zero ’cause coffee becomes exempt? We, we really have no idea what’s going to happen and know that what what we’re facing is not being taken into account in, in, in this trade war. And so we have to really, really be able to plan whatever, whatever happens to the businesses.

MARTIN: Sarah, if you can’t afford to bring these these goods in, what’s gonna happen to the company?

LAFLEUR: That’s a really good question. Honestly, I, I’ve been grappling with just what the reality looks like for my business. You know, I think in times of chaos, the advice that I’ve gotten is, move slow. And I think right now things are changing so rapidly. You know, one moment it’s 47%. The next moment it’s 150%. I don’t actually know what this means. I’m, I’m just trying to take it one step at a time. You know, we are raising prices, we know that we’re doing that. I have already cut costs. And I will probably have to cut some more. I am rejiggering entire collections. I’m now trying, you know, literally in the office next door, I’ve got Portuguese partners who I’m, I’m trying to woo because you know, the tariffs in Portugal are gonna be better than the tariffs in China. It, it is just like a complete upheaval. I hope my business survives. In fact, I should say, I know my business will survive. You know, COVID was one of those moments where it was so devastating and I didn’t know if we would make it through. And somehow we magically, we magically did through, through the team’s exceptionally hard work. And, and it is one of those moments again, where I’m looking at my team and I’m saying to them, it’s, it’s gonna be another hard, gosh, two, three years. Will you fight this with me? So that’s, that’s what we’re facing right now.

MARTIN: Just a few days ago, the administration decided to exempt certain products from these tariffs, mainly, you know, electronics. And I, Sarah, when you heard that, like, what, what went through your mind? Did you feel, did, did you feel some kind of way about that? Like why that and not this?

LAFLEUR: I mean, I, my honest reaction is I felt angry. You know, I think people with direct access to the White House and that people who have the ability to lobby they, they will get special privileges and advantage that, advantages that small businesses like myself won’t. You know, we are a, a, a small, small business in, in the context of the US economy, but I think it’s also important to remember, US small businesses make up 45% of the country’s GDP. We are not the ones making electronics. We are the ones making clothing, making coffee, engaging in, in agriculture, you know, and, and we’re a really, really important part of the US economy. But we are not capable of, of, of actually making, I think our, our voices heard in a way that the US government will understand.

MARTIN: Debbie, what about you?

MULLIN: I echo everything Sarah says, and I think that additionally, you know, I, I work in food and beverage and I know how much the hyperinflation that Americans have experienced has been so, so detrimental to their everyday life. And I think that this, these tariffs are going to just exacerbate that so much, whether it’s for the raw goods or the packaging or so much of the stuff that, like Sarah said, it’s just the, the US is not, not prepared to be able to, to make everything that the, that Americans have become accustomed to consuming. And to, to be, to be doing this, especially on top of the coffee crisis, I think is something that is just really hurting, especially a lot of coffee is our small businesses. There’s so many small coffee businesses out there, and how we’ve already been suffering so much from, from climate change, from a lot of the things that have been affecting our market. And that these tariffs are just gonna make things so much harder for us, for us smaller players in the market.

MARTIN: The president’s kind of theory of the case as it were, is that, you know, short-term pain for long-term gain. So, so Debbie, and in your case, there’s, there’s really no way you can, you can’t reshore the coffee business from —

MULLIN: No, we can’t. We’re not gonna, I’m not gonna buy farmland here and plant trees and wait for them to, to harvest them five years later. I don’t think that that’s something that the US is in a position to even do. I, I think that it’s been, it’s, it’s one of these things where it feels, it feels like it could be, like Sarah said, I think we’re just trying to see what it is. ’cause there are levels of tariffs where it’s just, it’s just lethal to, to businesses, to small businesses. And whether that’s cashflow because, or if that’s just because your, your, your customers, your grocery stores are gonna drop you because you’re gonna say you’re gonna have to increase prices by 40, 40%. I mean, I, there, I can’t think of a retailer who would, who would possibly let you do something like that regardless of what the macro environment is. And I think that this is just something that, that is, that – it’s just something we’re, we’re, we’re just collateral damage to, to an argument or a strategy that, like you said, what – the long-term gain for who, and I’m really not sure who that is, when it is kind of, it is going to be those who have the money to lobby for protections against these tariffs. And it’s, it’s just something that doesn’t, doesn’t totally make sense to– from where I’m sitting today.

MARTIN: And Sarah, is there any long-term gain that you can envision here?

LAFLEUR: No. And you know, I think we will, we will find a way. We will, we will survive this. That I think I, I am wondering at what cost that, that’s really the main question running through my head right now. I think one of the things that businesses, you know, any business owner will tell you that, that unpredictability is the enemy of, of, of business growth. And, and I think what we are asking for is really communication with a lot of, of advanced notice and a lot of – from communication, a lot of these challenges could be overcome. There are ways that we can get around it with, with advanced notice, but I think right now that is what is, feels, is lacking. We don’t know what to expect. Every day is, is something different.

MARTIN: Debbie Wei Mullin of Copper Cow Coffee and Sarah LeFleur of M.M. Lefleur, thank you both so much for speaking with us.

MULLIN: Thank you so much.

LAFLEUR: Thank you so much.