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In The Trade War, Iowa Businesses And Shoppers Pay The Price

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U.S. tariffs cost the average American household $414 in 2018, according to data from the Federal Reserve of New York

Trade tariffs on imported goods are impacting the bottom lines of many Iowa businesses, and may even drive some to change their ticket prices and the products they offer.

Ryan Baker owns World of Bikes in Iowa City. The local bicycle shop has seen the prices of some of its most popular bikes increase, often more than once, over the last year. While Baker says they cannot exclusively correlate price changes to increased tariffs, he says he’s watching the trade war closely.  

“We’re kind of caught in the middle of all of this. The real unfortunate part is that everything gets passed on to the end user. We see the price impacts, the prices get raised at retail level and then it goes right to the guys that are using it on the streets,” Baker says. “Keeping that in mind, we’re going to have to be more careful on what products we’re carrying, how deep we’re going, what our price offerings are going to be, how widespread of a product line we can offer.”

With no hard resolution in sight for international trade tensions, particularly those between the U.S. and China, Iowa State economist Dave Swenson says businesses and consumers are likely to continue feeling the impact.

“A tariff is basically a tax that is paid by consumers who use these products. What we’re getting right now for consumers is, more of the effects are associated with… appliances, tires, any of these durable kinds of products,” Swenson says. “Proposed increases in tariffs, they haven’t been increased and expanded yet, will move into what are called non-durable goods. That will start tapping into toys and clothes and other kinds of things that we also depend on from China.”

Small business owners are not the only ones keeping an eye on U.S. trade relations. Senior Vice President, Secretary and General Counsel to Fareway Stores, Inc. Garrett Piklapp says he doesn’t know of any products Fareway has stopped selling due to tariff-related price increases, but the Iowa-based grocery chain continues to monitor the trade war closely.  

“It’s part of our general everyday discussions on how we are making sure we’re doing our best to serve the customer,” Picklapp says. “We’re making sure we have a good plan in place to have an open dialogue with our current suppliers and backup suppliers… to make sure we always have access to high quality product at a reasonable price for our customer.”

On this episode of River to River, host Ben Kieffer is joined by Dave Swenson and Iowa-based business leaders for a look at the impact of trade tensions on businesses and the consumers they serve.

Guests on the program include:

  • Dave Swenson - Associate Scientist in the Department of Economics at Iowa State University
  • Ryan Baker – Owner, World of Bikes
  • Garrett Piklapp -- Senior Vice President, Secretary, General Counsel to Fareway Stores, Inc.

Katelyn Harrop is a producer for IPR's River to River and Talk of Iowa
Ben Kieffer is the host of IPR's River to River