During Wednesday’s Senate Small Business & Entrepreneurship Committee hearing, Sen. Ed Markey (D-MA) questioned Julie Robbins, CEO of EarthQuaker Devices, about the impact of President Trump’s tariffs.
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00:04Next, I recognize Ranking Member Markey for his questions.
00:07Thank you, Madam Chair.
00:09Trump's tariffs have been thoughtless, they've been reckless, unpredictable, overly broad.
00:15They've caused economic uncertainty, as I already said, a 35% reduction in the number
00:22of huge containers coming into Massport, the port of New England really, for the month
00:29of June, which is absolutely unbelievable, and it has a profound impact on small businesses
00:35and consumers all across the country, and it places small businesses at a competitive disadvantage.
00:41They're not able to weather the storm the way bigger companies are.
00:45Ms. Robbins, you are already a 100% U.S. manufacturer, but as you state in your testimony, it's entirely
00:53impractical for you to be able to manufacture all the raw materials and components that
00:59go into your final product in the United States, especially with the current tariffs.
01:05Can you describe why this would be near impossible at this time?
01:10Thank you for your question, Senator.
01:13Yes, I'd be happy to.
01:16First of all, any type of investment like this would require months or years and a lot
01:22of money, and I don't have that time and I don't have that money right now, especially
01:27as I'm being taxed heavily.
01:30I can also share some data with you.
01:33One of my friendly competitors did an analysis on what it would take to re-shore just one of
01:40the components that goes into a pedal.
01:43This one that I have here behind these knobs is what's called a potentiometer.
01:49They are used to adjust parameters on a pedal, such as tone, level, distortion, et cetera.
01:56His annual volume on this part, he uses 130,000, so it's one of his most frequently used parts.
02:02And his current cost...
02:03130,000 what?
02:04Potentiometers.
02:05Okay.
02:06Okay.
02:07Beautiful.
02:08And his current cost is $0.22, and his annual cost is $28,600.
02:16The analysis showed that the cost per part would be $3.75 for an annual cost of $487,500, over
02:2717 times the cost.
02:28For you?
02:29For a company that was attempting to re-shore a single part.
02:34So the tooling would be $238,000.
02:41That's eight times the annual cost.
02:43And that's just one part of hundreds that go into an effect pedal.
02:49So he actually listed here the nine different parts that go into making this.
02:54And I'd like to submit this for the record, and I'd like to thank John Cusack for providing
02:59me with this evidence today.
03:02Without objection, we'll have that entered into the record.
03:04So as you mentioned in your testimony, you were named SBA Exporter of the Year in 2019.
03:13So no one does it better than you.
03:15You were the, you were number one.
03:18And so now tariffs are imposed.
03:22So describe that in terms of the daily headaches that you're now confronting.
03:30It's basically all we do now is try to navigate this environment.
03:33I'll tell you what I'm not doing.
03:35I'm not putting out new products.
03:37I'm not growing.
03:38I'm not thriving.
03:40I'm not hiring.
03:41I've actually canceled job openings.
03:44These are all things that I'm not doing.
03:45What I am doing is worrying, stressing, things changing from day to day, you know, thinking
03:51over my employees and how they're dependent on our healthcare to manage their chronic conditions
03:58or chronic conditions of loved ones, thinking of my daughters and how they're relying on myself
04:02and my husband for our income to complete their education.
04:06This is what I'm doing.
04:07I'm not doing things that are productive.
04:08Right.
04:09So President Trump's motto of short-term pain for long-term gain.
04:16So you're sitting there, you're short-term pain.
04:19But that short-term pain could turn into long-term pain for you.
04:23It could be an extinction event.
04:24Absolutely.
04:25It could be an obliteration event, not a liberation day, but an obliteration day, huh?
04:31If this goes on for too long.
04:35So do you really feel that he's picking winners and losers here?
04:39Apple gets a pass, other big companies get a pass, and you're down there trying to figure
04:44it out all by yourself.
04:45I do.
04:46I do think that the disparity between large and small businesses has grown wider.
04:50I'm here publicly stating how poorly my business is doing while those companies are meeting royalty
04:57in the Middle East.
04:59It's a huge disparity.
05:00Yeah.
05:01Do you have lawyers and lobbyists here in town helping your company?
05:04No.
05:05Does Apple?
05:06Yes.
05:07Yeah.
05:08They have departments.
05:09Does Google?
05:10Yes.
05:11All these big companies, they do.
05:12You have no one here.
05:13Except for this committee, actually.
05:14We're supposed to be your advocates to protect you.
05:19So you just think there's a disproportionate impact on you, huh?
05:22That's correct.
05:23I do have some advocates.
05:24The Main Street Alliance is working hard to level the playing field and elevate the voices
05:30of small businesses.
05:31And I really appreciate their support.
05:33But it still does not compare to what the large companies have.
05:36So do you keep a bottle of Pepto-Bismol now nearby as each day's stories, you know, give you something
05:45else to think about and worry about?
05:47As a small business owner, I'm used to navigating challenges.
05:51Yeah.
05:52I have excellent problem solving and stress management skills, as you must, to be in this
05:58position.
05:59However, I just don't see solutions.
06:02They're just not immediately available.
06:04And I need immediate solutions.
06:06So, in my opinion, the only option is to rescind the tariffs, to pass the bill that you've
06:14mentioned, exempting small businesses.
06:16It's just not survivable.
06:18As you mentioned, I believe we're facing the mass extinction of small businesses.
06:22We are clinging to dear life.
06:24The reason you're not seeing bigger numbers of the fallout in the economy is because of
06:29folks like me that our house is on the line.
06:32We're going to do everything we can to save our businesses, to keep our employees employed.
06:37We're also not like big companies that we're going to slash jobs the moment things, the forecast
06:42change.
06:43So, just one final question.
06:44I appreciate your indulgence, Madam Chair.
06:47When the President announces that he's in the process of beginning to try to find an
06:53agreement with China, does that just lift the cloud off your head and all of a sudden
06:59you're feeling, you know, instant relief?
07:02What does that mean to you when you hear that, that they're trying to get a deal but they
07:06don't have a deal and then there's still 179 countries left to go to get a deal with?
07:11There's absolutely no relief.
07:13It just creates more confusion and uncertainty and it actually creates some effects such as
07:22retail stores loading in on products from China in order to get things in before the
07:29tariffs theoretically go up even higher.
07:32That's what happened over the last month while there's been a break on the other reciprocal
07:36tariffs.
07:37So, it absolutely doesn't help us.
07:39It just extends the period of uncertainty and I really need to be making changes now
07:45and I can't due to this uncertainty.
07:48You know, in the U.S. where we sell to retailers and it is our largest market, if you make a price
07:53increase, you really can't go backwards, you know.
07:57And the more that you increase your price, the less competitive, the less affordable that
08:00you'll be to end users.
08:02And you really can't predict how much further your demand will fall when you raise prices.
08:07And it's certainly not something that you want to do repeatedly.
08:10So, having something that I could plan for, you know, we absorbed the 2018 tariffs.
08:16They were 25%.
08:17That was difficult, but we did it.
08:19What's going on now is absolutely so challenging.
08:22I don't know a way forward.
08:24Yeah.
08:25So, thank you, Madam Chair.
08:27Thank you, Ranking Member.