As the Town’s summer visitor season kicks off this month, retailers are beginning to see tariffs on invoices for imported merchandise they will put on their shelves to sell.
Listen to Panel Discussion here on the EVV Podcast:
More than 40 business and community members attended a panel discussion on dealing with tariffs and understanding the uncertain economic landscape Monday afternoon at the Estes Park Holiday Inn, hosted by the Estes Valley Voice.
Adam Crowe, economic development manager for Larimer County Economic and Workforce Development, moderated the discussion, which included Mark Ell, a financial advisor with Alpha Capital Management Group, Maureen McCann, owner of The Mad Moose, Rajiv Poudel, owner of Estes Village and several other area businesses, and Scott Applegate, president and CEO of the Bank of Estes Park.
Saying, “Brace yourself,” Ell provided a 30,000-foot overview of what has transpired over the past several weeks and how the tariffs may affect the economy throughout the calendar year and beyond.
While the situation with tariffs is fluid, Ell said economic data is already starting to show the impact of supply delays, shortages, price hikes, and market volatility, “which is rolling into what we would call inflation.”
Imports from some countries carry a 10% to 50% tariff, with products from China carrying a tariff of 145%, up from 20% before April 2. This is increasing the wholesale prices of toys, furniture, clothes, smartphones, computers, and consumer electronics.
“The way U.S. imports work is China sends us about $440 billion worth of products every year. The U.S. sends about $150 billion of its products to China every year. So, there’s a trade deficit of about $300 billion,” Ell said.
To balance that, Ell said the White House is trying to negotiate better bilateral trade agreements with many nations in a 90-deals-in-90-days tariff pause with some countries. As this plays out, consumer sentiment has fallen, which will likely impact spending locally, at least in the short term.
Referencing Donald Trump’s book, Ell said some people are asking, “Is it ‘The Art of the Deal,’ or is it the art of a train wreck? And that’s really what the conversation is, depending on what side of the aisle you lean on.”
McCann recently opened her first shipment of items for her store and experienced sticker shock when she saw the added tariff on the invoice.
In preparing for tariffs and hoping to grow her business, she ordered more stock than usual and added a storeroom to avoid the added costs of tariffs on reordering merchandise. Still, she is uncertain if customers will spend as much as they have in the past.
To order in advance, many merchants are using credit cards to finance their purchases and are finding that vendors are adding a 3% processing fee, which is adding to their bottom line.
Poudel said that between credit card fees and shipping costs, “we’re looking at 15 to 20% of the cost.” He is trying to work with Colorado-based companies so he can drive down the hill with a truck and pick up merchandise himself to save on shipping.
To maintain his profit margin, Poudel is also trying to negotiate pricing and payment plans with his suppliers. In the past, he has been able to ask for later payment dates and better terms, but negotiating has become more difficult because of market uncertainty. Many vendors are requiring payment up front from the merchant before shipment.
A supply chain problem both Poudel and McCan are experiencing is that shipping containers filled with merchandise have been held up in Los Angeles, Long Beach, or Miami because the vendors are not paying the costs to release the containers.
Poudel is also seeing a shift in consumer behavior. While visitation to Estes Park is up, spending in the shops and restaurants is down. “What we’re seeing is that people are hesitant to spend.”
As a local banker with a Main Street view, Applegate offered advice on staying resilient in uncertain times.
“I’ve seen fire and I’ve seen rain,” said Applegate, who has weathered wildfire evacuations and floods in Estes. The first thing retailers must do is “be liquid, be liquid, be liquid.”
Calling bankers “Jedi-level Rebel Alliance nerds,” Applegate’s next words of advice were about credit.
“You don’t just need a line of credit, you need to not use your credit cards if you can avoid it. And you need a right-sized line of credit,” Applegate cautioned. “You need a line of credit that you are able to revolve with, that lines up with what you’re going to spend, and what you sell will pay it off.”
Applegate said retailers need to know their banker, adding, “Cash is king. It solves problems. It secures discounts. It gets responses now. It expedites processes. It’s the best favor you can do for yourself in an environment exactly like this.”
With market uncertainty, Applegate told retailers also to know their vendors. “They don’t make the rules. They act like they do, just because they put the line item on the invoice. Negotiate or renegotiate it. Change vendors if necessary. Ask them to absorb the tariff. If it wasn’t quoted on the order, push back. Ask them to split the cost with you. Ask them to allow more time to pay that portion of the cost.”
Applegate said if a vendor is unwilling to work with a retailer, look for other vendors.
The town’s economy runs on “ice cream, taffy, and t-shirts,” Applegate said. Retailers need to know their customers and what they will and will not buy. “Protect your margin,” he said.
McCann encouraged area retailers to collaborate and help each other. Last summer, during the chaos of the traffic problems caused by the Loop project, she and several other merchants collaborated to create a “retail rally” punch card to encourage shoppers to shop at participating stores.
For every $20 a customer spent between Memorial Day and Labor Day at a participating shop, they would get a hole punched in the card. When the shopper had 15 holes punched, they could drop their card in a designated box at any one of the participating shops and be eligible for a $1,000 prize at that store.
The idea was so successful that she is working with Visit Estes Park to get retailers to participate this summer. Area merchants can sign up to participate in this year’s promotion by emailing her before May 15.
Both Ell and Applegate offered a positive outlook for the economy in the long run, though there may be some rough patches in the weeks and months to come.
Crowe suggested that a similar panel discussion be organized in late fall to bookend the high tourist season and allow area businesses to share their insights into what worked well and what surprised them.
Dallas Heltzell, a journalist with BizWest, covered the tariff talk. Read his story here.
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