Bay Area Hardware Stores Face Price Hikes, Job Cuts as Trump's Tariffs Begin

Alarm bells rang in Jeff Leopold’s mind when President Donald Trump slapped a new 10% tariff on Chinese imports last week. Planned tariffs on Mexican and Canadian goods were paused, but that didn’t put Leopold, who owns six Ace Hardware stores in the Bay Area, at ease.

Most of the products he sells are imported from other countries, including China, Canada and Mexico. Leopold calculated how much more he would have to pay for a shipment of outdoor summer furniture that he had ordered on its way from China. He said he’ll have to pass the extra costs on to customers.

“We have a margin we have to work off to make a living,” said Leopold, 58. “And you get a retail item at a certain price point, it just doesn’t sell. But we don’t have an option when the tariffs are just thrown at us like this.”

On the campaign trail, Trump claimed that tariffs — a fee on goods imported to the United States — would be paid by other countries. However, Americans are likely to be stuck paying higher prices on imports such as consumer electronics, cars, toys and more. A recent analysis of Trump’s tariffs published by the nonpartisan Tax Foundation found that the levies would cause employers to cut jobs and U.S. households to pay more in taxes.

Trump has argued tariffs on China, and potentially on Mexico and Canada, are needed to force those countries to do more to stem the flow of illegal immigration, fentanyl and other drugs into the U.S. That doesn’t ring true for Leopold, whose family has experienced the devastation caused by a fentanyl overdose.

Further complicating matters for business owners is an already existing tariff imposed by the first Trump administration on certain Chinese imports, which Leopold said raises the total duties on his furniture shipment to 35%. Then, there are the sweeping fees on all imports from Mexico and Canada that may take effect in less than a month. The New York Times reported Trump is ready to impose tariffs of 25% on steel and aluminum imports on Monday.

“Retail’s tough right now. People aren’t spending as much because interest rates are higher. People are uncertain about politics and the economy,” said Leopold, who learned the business as a kid helping at his dad’s hardware store in San Francisco, which he now runs. “And then you throw something like this on it, it doesn’t help.”

In California, the nation’s top importer of Chinese goods, the administration’s trade maneuvering means uncertainty for many businesses. The state imported nearly $200 billion in goods from China, Mexico and Canada in 2023, according to data compiled by the California Chamber of Commerce. The previous year, it was $232 billion.

Hours before the tariffs on America’s largest trading partners were to go into effect, Mexico’s President Claudia Sheinbaum agreed to send 10,000 members of her country’s National Guard to the border. Canadian Prime Minister Justin Trudeau said Canada would expand a $1.3 billion plan — announced in December — to reinforce the border, appoint a “Fentanyl Czar” and list drug cartels as terrorist organizations to appease Trump.

“That’s not a trade issue, but he’s linked it to trade,” said Kyle Handley, who teaches economics at the UC San Diego School of Global Policy and Strategy. “And so now you brought in a whole host of other issues where we’ve got to think about policing on the border, narcotics and drugs and things like that. And there’s no trade solution for those problems. There’s just a trade threat.”

For Leopold and his wife, Michelle Leopold, the issue is personal. Their 18-year-old son, Trevor, died of an accidental fentanyl overdose in his freshman dorm at Sonoma State University five years ago. Trevor thought he was buying an OxyContin pill and took it before bed, Michelle said.

He never woke up.

The Leopolds, who live near their San Rafael store, doubt Trump’s approach will make much of a dent in fentanyl trafficking. Since Trevor’s death, Michelle has volunteered to educate parents, high school students, Boy Scouts and others about fentanyl poisoning. She has trained their employees how to use Narcan to reverse opioid overdoses, and the medicine is part of first aid kits at their stores.

She said the federal government should increase education on the issue and make Narcan widely available in communities.

“I don’t see any connection between stopping fentanyl and the tariffs. It’s just insane how there is supposed to be a connection,” said Michelle, 59, whose business cards read: The “Mom” in our six Mom & Pop Hardware Stores.

The uncertainty of an escalating trade war makes it difficult for businesses to plan. Smaller stores, in particular, can’t absorb cost increases or push distributors for discounts like big-box retailers such as Walmart or Home Depot can, according to Handley, who specializes in international trade and uncertainty dynamics.

“If you always think bad news is around the corner, that’s a tough way to do business,” he said. “They may not hire people they otherwise would have hired. They may not make the investments that they would have made. They’ll just hold off on all that. And that’s ultimately bad for economic growth and bad for people in the U.S.”

California Ports of Entry handled a third of all Chinese imports that entered the U.S. in 2024, a whopping $159 billion in goods, according to data analyzed by Handley. If the new tariff causes trade volume to drop, logistics, transportation, warehousing and other businesses could be directly hurt, he said.

Some store owners in Oakland told KQED they believed the tariffs could lead to more manufacturing jobs for American workers as Trump wants, but many economists doubt the positions will materialize. At the Northern California Ace Retailers Summit last Tuesday, several of the 130 attendees said they expect business to decrease if the cost of lumber, electrical parts, manufactured goods and other imports rise.

“When the lumber prices go up, people don’t do the little projects we saw before,” Matt Richert said in a conference room at the Wine & Roses Hotel in Lodi.

Ritchert, who owns a lumber yard and hardware store in Pleasanton, sells a lot of Canadian wood, mostly to contractors and homeowners doing remodeling projects. He said he believes lumber prices will rise due to the threat of tariffs on imports from Canada, plus a higher demand for wood to rebuild homes lost during the Los Angeles fires.

To prepare, he said he started cutting work hours among his 31 employees.

“We are trying to make the cuts as minimal as possible,” said Richert, whose family started the business in 1976. “They’re all meant to add up to make sure that we are well prepared for a reduction in business, which we know is coming.”