This business leader says new tariffs are an 'existential threat' to AZ companies

President Donald Trump is — again — imposing tariffs on a number of countries around the globe.

Last week, he announced 50% tariffs on most Canadian goods; Canada is one of Arizona’s biggest trading partners. On Friday, tariffs of 10-12% took effect on more than 80 countries.

The moves come after the U.S. Supreme Court struck down an earlier round of tariffs this year, saying the president did not have the authority to levy them.

Todd Sanders, president and CEO of the Greater Phoenix Chamber of Commerce, spoke to The Show about these new tariffs and how they may affect Arizona and Arizonans

Greater Phoenix Chamber of Commerce

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norights | contributor

Full conversation

MARK BRODIE: Todd, good morning.

TODD SANDERS: Good morning. Thanks for having me.

MARK BRODIE: Thanks for being here. So, what do you make of this new round of tariffs? Both sort of the broad ones that are on more than 80 countries, but also the 50% specifically on Canada.

TODD SANDERS: Well, I think it really comes down to certainty. I think it’s proven, we’ve proven that Arizona businesses really can compete with anyone when the rules are clear. But tariffs and year-to-year uncertainty make it harder for companies to plan, to invest, hire and to keep costs down.

And I think with what we’re seeing on the trade front, at least in the last few years, is on-again, off-again tariffs, which make it really difficult to plan for the next quarter, the next year, and to make long-term plans in terms of investments or hiring.

MARK BRODIE: Was there a sense in the business community that once the Supreme Court ruled earlier this year on the last round that that was it? Or was there maybe a feeling that something else could be coming down the line?

TODD SANDERS: I think there was the hope that that would be it, but certainly the realization that the administration really sees this as one of their principal policy goals, and that they would look for additional avenues to impose tariffs as a foreign policy tool.

MARK BRODIE: So, what are some of the types of businesses, and maybe some of the types of products, that Arizona businesses import here that could be particularly affected by this latest round?

TODD SANDERS: Well, you’ve got to remember that we are in a trade state. Trade last year totaled $100 billion. It’s easy to think that this is just going to be large Arizona companies, but this impacts all companies, large and small, up and down the supply chain.

When you think about, for instance, we’ve talked a lot about TSMC in the last few years, and certainly that is a big story. But a lot of the suppliers, a lot of those businesses that do business with TSMC are small and mid-sized businesses that are impacted by these tariffs.

So, it really runs the gamut, and it also impacts businesses large and small here in Arizona. And, of course, that puts a damper on planning, spending and hiring, which is really at the core of what we’re trying to do here.

MARK BRODIE: What are you hearing from some of your members about what some of those impacts might be this time?

TODD SANDERS: Recently, I joined the governor in D.C. to talk about USMCA, for instance. We had a supplier that has folks here in Arizona, hires people here, does business here, but that has work across the border. For instance, those tariffs, or eliminating USMCA, would essentially put that employer out of business. So, it can be an existential threat for all types of businesses — small, medium and large.

I think a lot of concern about where this is going, and mostly the issue is just the lack of certainty with what they should be planning for, what businesses should be planning for, and what they can expect.

MARK BRODIE: How do businesses try to deal with that? Because I would imagine that even with this latest round, many of, if not all of them, are still not certain of what the landscape is going to be six months from now.

TODD SANDERS: Unfortunately, it’s become a new normal, but I think what we’re losing there is the opportunity cost. Certainly, with a clean runway, with certainty moving forward, businesses are able to plan more effectively and grow more effectively.

So, it’s hard to calculate what it is we’ve lost in this period where companies just are so uncertain that they pull back on capital investments and hiring. Certainly, it’s going to be probably up to folks a couple years from now doing those lookbacks to really understand what those impacts have been.

But certainly, you can feel the uncertainty and the trepidation to move forward when there’s so much opportunity here. When you look at our exports and our imports in Arizona, how much they’ve grown, the Taiwan connection and what that’s meant to our economy, it feels like we could be doing a lot more if we just had some more certainty on the trade front.

MARK BRODIE: Is it safe to say, do you think, that as businesses are dealing with this uncertainty and maybe paying more to import some products, that those costs are going to continue to be passed down at some point to consumers?

TODD SANDERS: There’s no question. I think for a while, as this got started, there was some hope that perhaps the tariffs were going to be more short-term. Businesses tried to absorb those costs, but at the end of the day, those costs will directly impact consumers.

We’re all hearing about the cost of things, we’re looking at inflation moving up and down and impacting consumers. The concern, I think, for the medium and long term is that these costs are going to be hitting consumers where it hurts at a time where everything is more expensive. So, that is certainly something that we’re thinking about and we’re talking about with the administration.

MARK BRODIE: So, Todd, before I let you go, you mentioned USMCA, the trade deal between the U.S., Mexico and Canada. What are you hoping for, and maybe what are you fearful of, as the terms of this trade deal seemingly are in flux again?

TODD SANDERS: It is in flux. I think everyone knows that we did not renew it, but we’re in sort of a year-by-year type of format now. My hope is that we’re able to move back to a trilateral agreement. Certainly, there are things that we can adjust in the agreement going forward.

But I think what we don’t want to see is — and I think the president has sort of headed in the direction of a bilateral deal with Mexico, and then perhaps we’ll see what happens with Canada. These are two huge trading partners for Arizona, so we’d love to see a trilateral agreement that is strengthened, that’s good for Arizona, good for the country, and good for our partners.

MARK BRODIE: What is your level of optimism that that’ll happen?

TODD SANDERS: I think at the end of the day, I’m hopeful that we can get there. There’s obviously a lot of animosity right now between the United States and Canada. There seems to be much more momentum with Mexico. I think last time we saw the same paradigm. I’m hopeful that once the administration is able to come to an agreement with Mexico, Canada can be folded in as well, and we’ll have an agreement moving forward.

MARK BRODIE: All right. That is Todd Sanders, president and CEO of the Greater Phoenix Chamber of Commerce. Todd, thanks as always. I appreciate it.

TODD SANDERS: Thank you.

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