--:-- [Scene: A Chicago convention center, hundreds of vendors crowded in. The sound of chatter and background noise fills the air.]
--:-- Host (Ryan Knutson): Hundreds of vendors crowded into a Chicago convention center this week for the country's biggest homeware trade show.
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--:-- Host (Ryan Knutson): We make these insulated vegan leather lunchboxes. These are our car and closet diffusers. All of our pottery has saucers as well as drainage hole to make the perfect homeware plan.
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--:-- Host (Ryan Knutson): The expo is full of businesses showing off their merchandise. Everything from cookware and linens to luggage and vacuums. But this year, the convention has been dominated by one thing.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): There's a lot of talk about tariffs. Everyone's thinking about it. We're telling our larger customers that the tariffs are going to become higher and it's going to affect us.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): I'm a little bit worried. It's a challenge. You know, like, everybody will be paying more. And, you know, there's complete uncertainty.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): These vendors' concerns largely focused on the new tariffs Trump imposed on China yesterday. Many of these companies make products there. And to avoid the tariffs, they're thinking about moving their operations out of China altogether.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): Like Steve Greenspan, CEO of a company that sells home organization products.
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--:-- Steve Greenspan: We're moving significantly more to Cambodia, Thailand, more in Vietnam and Indonesia as well. And you're moving to avoid the tariffs from Chinese imports.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspan: This is influenced by tariffs, absolutely. This is an exceedingly difficult, long-term, disruptive process.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): Welcome to The Journal, our show about money, business, and power. I'm Kate Leinbaugh.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Kate Leinbaugh: It's Wednesday, March 5th. Coming up on the show, Trump's tariffs are pushing companies out of China. Imagine being 12 years old, already having 30 bone fractures, and wondering, why can't I just play like other kids?
--:-- [The sound of vendors talking and background noise continues.]
--:-- Kate Leinbaugh: I'm Leanne, and I was diagnosed with brittle bone disease. Now, I'm running the Bank of America Chicago Marathon for Lurie Children's. So every kid can just be a kid.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Kate Leinbaugh: Join Bank of America in supporting Leanne's cause. Give if you can at bfa.com slash support Leanne.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Kate Leinbaugh: What would you like the power to do? Bank of America. References to charitable organizations is not an endorsement by Bank of America Corporation.
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--:-- Kate Leinbaugh: Why shop at Burlington? Maybe it's the deals that are new each time you drop by. Maybe it's the brand names you'll be shocked Burlington has in store. Or maybe it's the quality of the items, the amazing selection, and the newest trends.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Kate Leinbaugh: If you like to save but also like to stay in style, Burlington is your answer. And the question you'll be asking yourself is, why go anywhere else? Burlington. Deals. Brands. Wow.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Kate Leinbaugh: I called up Steve Greenspawn while he was at that Chicago Homeware Convention. He tried to find a quiet room, but it was hard.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: Steve is the founder and CEO of a company called Honey Can Do. Honey Can Do, that's the name of your company?
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: That's the name of the company. It's a little play off the Honey Do list. So one of our goals is to try and enable folks to do things around the house.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: Nothing makes me happier than seeing a spot that I can organize and make it a little bit more efficient.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: What's your sort of crown jewel of your home organization?
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: I would probably say it's the man cave. I've got everything well organized there. I know exactly where everything is.
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--:-- Steve Greenspawn: I've got a little smoothie station. Then have that down to a science. For protein shakes? Yeah, protein shakes, exactly. I'm a marathon runner and a triathlete.
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--:-- Steve Greenspawn: Steve's company sells products like shelving units, drying racks, and laundry hampers. His customers are major retailers like Walmart Amazon and Home Depot In 2024 he had about million in revenue
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--:-- Steve Greenspawn: How long have you been running this business?
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: So I started Honey Can Do in 2007. I started as a complete greenfield, no employees, no products, no customers, no vendors, no anything, and just built it from there.
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--:-- Steve Greenspawn: To build the business, Steve looked to China, where he developed a network of trusted manufacturers and subcontractors.
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--:-- Steve Greenspawn: When I first started getting involved in producing products in Asia, which is the late 90s, early 2000s, China was the place to be. And it was because the infrastructure was there.
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--:-- Steve Greenspawn: It was low-cost labor. And you could do things efficiently, high quality, and you're able to find partners that understand your needs and can make the infrastructure work for you.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: At one point, Steve relied on Chinese manufacturing for about half of his products. And things were going well. Until 2018, when President Trump, in his first term, imposed tariffs on China.
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--:-- Steve Greenspawn: So then, once the initial tariffs hit China in 2018, and even before that when there was the talk about it, We and our subcontractors, our longtime partners in China, started having discussions and made plans to very quickly move outside of China.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: Steve decided to move some production to Vietnam. This is tens of millions of dollars worth of investment.
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--:-- Steve Greenspawn: We're starting with literally a pasture, then building it up from there. You have to train employees that have never made this type of product before.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: You have to build up your entire infrastructure for raw materials as well as the cardboard boxes that the products go into.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: You have to build your transportation network. You have to build your shipping network because now you're going out of new ports in a new country.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: And this is a very, very disruptive thing.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: Steve's challenges went beyond just building out his operation from scratch. Vietnam hasn't had as much investment as China.
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--:-- Steve Greenspawn: And that makes doing business there more difficult. In China, they have a very wide network of multi-lane highways that can bring you just about anywhere that you would need to go.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: In Vietnam, typically it's one highway going from city to city that's two lanes, and you might have a series of trucks that are being slowed down by somebody using an animal to pull them, or it might even be a number of bicycles there that are blocking up traffic.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: And, you know, you might be able to go the same distance in one hour in China, and it might take you four hours in Vietnam to do the same distance.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: So there's an infrastructure difference. Exactly. And then deep water ports. You know, Vietnam does not have the same access, and there's port delays and ship delays and everything else.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: And it's inefficient and causes higher pricing. But it's still cheaper than paying the tariffs?
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: The answer is maybe. In some cases, the landed cost is less expensive than paying the tariffs out of China.
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--:-- Steve Greenspawn: Since 2018, Steve has significantly reduced his reliance on China.
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--:-- Steve Greenspawn: Today, only about a fifth of his production is there. This year, Trump restarted a trade war with China.
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--:-- Steve Greenspawn: In February, he imposed new 10% tariffs on Chinese imports. Yesterday, another 10% tariff went into effect.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: Trump has said these actions are to help stop the flow of chemicals that are used to make fentanyl. China said it would hit back with retaliatory tariffs.
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--:-- Steve Greenspawn: A government spokesman said, quote, if war is what the U.S. wants, be it a tariff war, a trade war, or any other type of war, we're ready to fight till the end.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: Steve now wants to move even more production out of China.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: So as of now, and this process started even before the most recent tariffs were announced, We started expediting moving products out of China very quickly and into Cambodia Vietnam and Indonesia have been the primary targets there
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: You not moving production to the U.S.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: Making these types of products within the U.S., the infrastructure doesn't exist, and we don't have competitive labor to be able to do these things.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: You know, we're talking about, in our case, a drying rack that might retail for under $19.99.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Steve Greenspawn: So it's not even a conversation for our types of products to be made in the United States.
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--:-- Host (Ryan Knutson): Coming up, what all this disruption looks like for the world's second largest economy, China. We'll be right back.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): Make the best I do win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): Whether you prefer talking in person, on the phone, or using the award-winning app, it's nice knowing you have help finding coverage that best fits your needs.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): Like a good neighbor, State Farm is there.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): The new trade war between China and the U.S. is rippling through China's massive manufacturing sector.
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--:-- Hannah Miao: Our colleague Hannah Miao has been talking to Chinese companies about their experience with the tariffs.
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--:-- Hannah Miao: People are definitely confused, fearful, panicked even.
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--:-- Hannah Miao: I've spoken with manufacturers across several different industries. And I think the first reaction is just that they don't know what Trump is going to do next.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: It's really hard to predict his next steps. So what do they say they're going to do? Are they going to, like, move or build new production facilities somewhere else?
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--:-- Hannah Miao: Yeah. Companies are in the process of doing that or were doing it, you know, in the months leading up to the election.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: They're accelerating their efforts. Or if they hadn't bought land yet, for example, they're going to buy land.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: Whatever stage they're in, they're trying to accelerate it if they have the means to move out to Southeast Asia.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: So they're relocating production to Southeast Asia. It depends from company to company.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: Not every company is planning to move all of their production over there, but certainly people I've spoken with are planning to move more of it or trying to get it started.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: You know, it's something they've been wanting to do or had been talking about doing. But Trump's return to the White House and the very rapid way he's escalating tariffs is certainly putting more pressure on them to do so.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: Hannah spoke with a lawyer in southeastern China who works with local manufacturers. and he said his phone has been buzzing with messages and calls from his clients.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: And they're asking him, what do we do about this? You know, if Trump just put another 10% tariff on Chinese imports and a couple of his clients, so one is a manufacturer of electrical transformers and this client was already shifting some production to Malaysia.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: And another was an auto parts maker looking to start moving some production to Thailand. And both of them asked him, can we speed it up? Is there anything we can do to quicken the process?
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: And he described it as companies being in a panic and they're just grasping for any solution.
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--:-- Hannah Miao: If more and more manufacturing leaves China, what will that do to the Chinese economy It certainly be painful and a challenge to work through China economy is quite reliant on exports right now
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--:-- Hannah Miao: But China is also a manufacturing powerhouse It's really hard to replace China.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: They talk to American manufacturers, Chinese manufacturers. They all say that it'll be really hard to be completely out of China.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: China has also been working to become the dominant country for industries like electric vehicles and solar panels and some of the more higher end technology items.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: So that will continue to be an advantage for China.
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--:-- Hannah Miao: Can China's economy absorb this shock? Right now, China's economy is quite dependent on exports.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: It's one of the rare bright spots in the economy and drove a significant chunk of China's economic growth.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: In China's domestic economy, consumer demand is pretty weak. Households are not spending a ton of money.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: After a property market collapse, it has really weighed on sentiment. And in the manufacturing sector, there is overcapacity in many industries.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: And that's why exports have become increasingly important for China's economy. And with the U.S. being a major trading partner, tariffs are definitely hitting China where it hurts at the moment.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: Are Chinese manufacturers worried that if they move their production out of China to Vietnam or Malaysia or Indonesia, say, that the U.S. will then hit those countries with tariffs?
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: Absolutely. This is part of the uncertainty that is going on right now that is making people really scared and panicked.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: And it's just hard to know what to do in this situation.
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--:-- Hannah Miao: So Trump has talked about tariffs that are reciprocal or targeting countries with big trade imbalances with the U.S. Vietnam is high on that list of targets.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: And if one of the goals of these tariffs is to bring manufacturing back to the U.S., but companies are moving to Southeast Asia, are these tariffs having the intended effect?
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: I think that's a question a lot of business owners are asking and economists are asking for sure.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: A lot of the manufacturers I talk to in the U.S. say, we can't really start building this in the U.S. There just there isn't the capacity here to build everything that American consumers want to buy.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: What are you looking for next? What I'm looking for next is if there will be some more negotiation between the U.S. and China and what kind of deal that might look like.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Hannah Miao: It's hard to see what China could offer that would satisfy the U.S. If we buy more U.S. products, is that enough? If we try to cut down on our trade imbalance, is that enough?
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--:-- Hannah Miao: And so it's hard to know where this goes from here. I think it will be when things really start to get painful for the American consumer that there will be a reevaluation.
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--:-- Host (Ryan Knutson): Before we go, we wanted to tell you that we're planning a live event for the show, and we want to know what you think.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): Take our survey by following the link in our show notes and leave your email address to be the first to know when it's happening.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): That's all for today, Wednesday, March 5th. The Journal is a co-production of Spotify and The Wall Street Journal.
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--:-- Host (Ryan Knutson): Additional reporting in this episode by Clarence Lung and Roshan Fernandez.
--:-- [The sound of vendors talking and background noise continues.]
--:-- Host (Ryan Knutson): Thanks for listening. See you tomorrow.
