How One Business Owner Is Getting Ahead of Trump's Tariffs

Summary

Podcast Summary: The Journal – "How One Business Owner Is Getting Ahead of Trump's Tariffs"

Introduction In the December 3, 2024 episode of The Journal, hosted by Kate Linebaugh and Ryan Knutson in collaboration with Jessica Mendoza, listeners delve into the intricate world of tariffs and their tangible impact on small American businesses. This episode spotlights Jason Juno, the entrepreneurial force behind Bare Botanics, a skincare company navigating the choppy waters stirred by former President Donald Trump's tariff policies.

Background on Jason Juno and Bare Botanics Jason Juno, the founder and owner of Bare Botanics, has a rich history of entrepreneurship that dates back to his childhood. As a fifth-grader, Jason began flipping iPod touches on eBay, showcasing his innate business acumen from a young age. "I have been selling online since I was the age of 10," Jason shares (00:58). This early start laid the foundation for his later ventures, including the creation of his own products like a travel pillow, affectionately dubbed his "schemes" by his parents.

Bare Botanics specializes in natural skincare products, including scrubs and body brushes. Jason's passion for skincare was ignited during his college years when he battled severe eczema. Dissatisfied with existing products, he ventured into creating his own, leading to the birth of Bare Botanics in 2020. "We made 5,000 units in my apartment... it was mania," Jason recounts (04:48), highlighting the grassroots beginnings of his now-thriving business.

Impact of Trump’s Tariffs on Jason's Business The episode zeroes in on the challenges faced by Bare Botanics amidst the looming threat of tariffs imposed by Donald Trump, who campaigned heavily on the promise of utilizing tariffs to bolster American manufacturing. Trump’s rhetoric on tariffs resonates in the podcast, quoting him directly: "If you screw us, we screw you," emphasizing his hardline stance (00:32).

Jason expresses his concerns: "There’s a real chance here of tariffs going up, and, yeah, we would be totally impacted," (01:07). The primary source of anxiety stems from the importation of body brushes from China, a product category heavily reliant on Chinese manufacturing. With Trump advocating for increased tariffs—potentially up to 60%—Jason anticipates significant cost escalations. "It makes that much of a difference. So to have a product that's now getting hit with a 60% tariff and to raise prices accordingly, that's really scary," he explains (07:12).

Jason's Response to the Tariffs Faced with the imminent threat of higher tariffs, Jason took proactive measures. On election night, sensing the shift in political winds, he immediately placed a substantial order with his Chinese suppliers to stockpile inventory. "I started messaging my suppliers... place a big order," Jason details (01:42). This strategic move aims to secure a year's worth of inventory, allowing Bare Botanics to navigate the tariff-induced price hikes without immediate disruption to their supply chain.

However, Jason remains wary of the long-term sustainability of this approach. "I did what I could do as a business owner and I stocked up. It's not going to last forever, but it gives me a little bit of reprieve," he reflects (15:47). The possibility of having to raise product prices—from $9 to $12 for body brushes—introduces concerns about consumer response and potential hyperinflation in low-priced goods (13:43).

Broader Implications for Other Small Businesses Jason's predicament is emblematic of the broader challenges faced by small American businesses amid shifting trade policies. While some companies diversify their manufacturing bases or move production domestically, Jason finds himself constrained by the non-existence of domestic suppliers for specialized products like body brushes. "The dry brush industry does not exist here... it's just a brush," he laments (11:21), underscoring the limitations small businesses face in adapting to sudden policy changes.

Moreover, the blanket tariffs across multiple countries diminish the feasibility of switching suppliers without incurring exorbitant costs. "China is offering a consistent quality product at a consistent price. What's the point of switching?" Jason questions (12:05), highlighting the economic deterrents to altering established supply chains.

Conclusion The episode paints a vivid picture of the ripple effects that national trade policies can have on individual entrepreneurs. Jason Juno's experience with Bare Botanics serves as a case study on resilience and strategic planning in the face of uncertainty. As tariffs loom, Jason's story underscores the delicate balance small business owners must maintain between operational sustainability and adaptability. The broader takeaway emphasizes the need for nuanced policy-making that considers the diverse landscapes of American businesses, ensuring that the pursuit of economic nationalism does not inadvertently stifle grassroots entrepreneurship.

Notable Quotes with Timestamps

• Donald Trump (00:32): "If you screw us, we screw you."
• Jason Juno (01:07): "There’s a real chance here of tariffs going up, and, yeah, we would be totally impacted."
• Jason Juno (07:12): "It makes that much of a difference. So to have a product that's now getting hit with a 60% tariff and to raise prices accordingly, that's really scary."
• Jason Juno (13:43): "And so I fear hyperinflation with low priced goods like these."
• Jason Juno (15:47): "I did what I could do as a business owner and I stocked up. It's not going to last forever, but it gives me a little bit of reprieve."

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This summary is crafted to provide a comprehensive overview of the podcast episode, capturing the essence of Jason Juno's journey and the broader economic implications of tariff policies on small businesses.

Transcript

[Kate Limebaugh]

Jason Juno is the owner and founder of a skincare company called Barebotanics. He sells scrubs and body brushes, and two of his products he imports from China. When did you start thinking about tariffs?

[Jason Juno]

I started really thinking about them probably over the summer when Trump was campaigning. And he loved talking about tariffs, particularly tariffs from China.

[Donald Trump]

The word tariff, properly used, is a beautiful word, one of the most beautiful words I've ever heard. It's music to my ears. We're going to charge them. I'm telling you right now, I'm putting a 200% tariff on, which means they're unsellable. In other words, very simple. If you screw us, we screw you.

[Kate Limebaugh]

Trump believes tariffs will bring jobs and manufacturing back to the U.S. but American business owners are wondering what impact these tariffs could have on their bottom line.

[Jason Juno]

Like Jason, I said there's a real chance here of tariffs going up, and, yeah, we would be totally impacted.

[Kate Limebaugh]

So on election night, Jason nervously watched the returns at a friend's place.

[Jason Juno]

It's election night in America. Voters are having their say, your say, and the countdown is on to the very first.

[Kate Limebaugh]

Once it was clear to Jason that Donald Trump was on track to win, he knew he had to do something right then. What did you do?

[Jason Juno]

I started messaging my suppliers. We got a short timeline here. There's not a lot of time for thinking. And I knew that it'd be morning in China and they would be responsive, and so I started messaging to place a big order.

[Kate Limebaugh]

Welcome. Welcome to the Journal, our show about money, business, and power. I'm Kate limebaugh. It's Tuesday, December 3rd. Coming up on the show, how one American business is getting ahead of Trump's tariffs.

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[Kate Limebaugh]

Bear Botanics isn't Jason Juno's first business. He's been an entrepreneur from a young age.

[Jason Juno]

I have been selling online since I was the age of 10, actually.

[Kate Limebaugh]

Whoa, whoa, whoa, whoa, whoa. What were you doing at 10?

[Jason Juno]

Oh, God. I was. I was flipping ipod touches on ebay. I had figured out I could make some money doing that again at the age of 10. And it was. It was pretty good for a fifth grader until PayPal figured out I was 10 as well and shut me down.

[Kate Limebaugh]

Jason says he also invented his own products to sell, like a travel Pillow, which is now buried somewhere under his bed.

[Jason Juno]

My parents called them my schemes. I would call them my endeavors back in the day.

[Kate Limebaugh]

Did you guys disagree on that? At that age, it was more like.

[Jason Juno]

Why aren't you outside playing? And I'm like, I'm building an empire.

[Kate Limebaugh]

I love that. How did you go from flipping ipods on ebay to deciding skincare was your product?

[Jason Juno]

I graduated college, I took a corporate job, and it was around this time that I used to get really bad eczema during the winter, mainly on my hands. And I was like, you know, I'm. I'm gonna start trying some new products just for me. So I was looking and I came across a bunch of different scrubs from a bunch of different brands. And I was really excited. I'm like, this could really work for my eczema. And so I think I bought like four or five, six different brands. And to be honest with you, I hated them.

[Kate Limebaugh]

Jason looked at these scrubs and he saw a business opportunity. He began experimenting with natural ingredients to make his own products. And he roped in his friends to test them.

[Jason Juno]

We made 5,000 units in my apartment, and we had these, like, tiny little walkways in between all the boxes that I had bought of the various ingredients and packaging. And I mean, it was. It was mania.

[Kate Limebaugh]

Jason started selling his products on Amazon in 2020. After a couple of months, he moved production out of his apartment and into a warehouse. He hired a team, and then two years in, he was able to quit his corporate job. And how do you feel about this business that you've built?

[Jason Juno]

Pretty crazy. This was something I wanted, I think since I was maybe the age of 10, if not earlier, and to look back and reflect how far we've come. It's pretty cool.

[Kate Limebaugh]

As Jason's business has grown, he's added more products like body brushes. And people are into body scrub brushes. This is a thing?

[Jason Juno]

Yeah. Dry brushing.

[Kate Limebaugh]

Dry brushing. I'm not a dry brusher. So what's the.

[Jason Juno]

Maybe you should start, Kate. And if I may add, I would add a moisturizer after that, and your skin's gonna look never better.

[Kate Limebaugh]

Jason had built Bare Botanics to be a made in America company. But there was a problem. He couldn't find a U.S. supplier for the brushes.

[Jason Juno]

So I actually looked for domestic suppliers, and it doesn't really exist for brushes especially. They're a low priced product and the industry is based in China and there's tons of suppliers to pick from. So I just started looking online and I eventually found our brushes. Supplier.

[Kate Limebaugh]

And how important are your body brushes for your business?

[Jason Juno]

The products serve an important piece in the company for bringing new customers in the door. They are popular and they serve as a gateway to learning more about the brand and buying other products.

[Kate Limebaugh]

On the campaign trail over the summer, Trump was Talking about levying 60% tariffs on goods imported from China. That would mean paying an extra $60 on every $100 worth of goods. Jason began to worry about what that added cost would mean for the brushes he imports from China.

[Jason Juno]

As a seller on Amazon, it is, it is brutally competitive. This product retails for $9. We can raise the price by $0.50 or lower it by $0.50, and you will see a difference in sales. It makes that much of a difference. So to have a product that's now getting hit with a 60% tariff and to raise prices accordingly, that's really scary.

[Kate Limebaugh]

And so in your mind, did you come up with a, what would you call it, Like a break glass plan?

[Jason Juno]

Yeah, I knew it was going to be close. And looking at our manufacturing lead times, it's about 30 to 45 days to get these products produced. It's about 45 to 60 days to get them on a boat shipped to America. So let's just call it three months. If I figure out who wins the election on election night first week of November and place an order right away, we're looking at about the first week of February that they could potentially get to me. So I think in the event Trump wins on election night, I need to order them right away.

[Kate Limebaugh]

And so on election night, Jason was sitting at his friend's apartment watching CNN with a big bag of Chick Fil? A. You've got Chick Fil? A?

[Jason Juno]

Yeah.

[Kate Limebaugh]

What's your order there?

[Jason Juno]

Oh, gosh. Well, I eat a tremendous amount of food because I work out all the time. So here we go. A Chick Fil? A deluxe large fry, eight piece chicken nuggets, no sauce, and a vanilla milkshake.

[Kate Limebaugh]

Oh, wow. Okay. As the preliminary results were coming in, Jason said it became clear to him that Trump was going to win.

[Jason Juno]

And I'm like, I'm done here. So I finished my Chick Fil A and I think I left the repost at like 9:30.

[Kate Limebaugh]

Jason left to send that message to his supplier in China. That's next. When Jason got home on election night, he put in an order for 20,000 body brushes. And how long will that order last you?

[Jason Juno]

I'd say about a year.

[Kate Limebaugh]

And then you're going to have to buy brushes again from China with these proposed Tariffs.

[Jason Juno]

Correct.

[Kate Limebaugh]

Are you worried about that?

[Jason Juno]

I'm less worried about buying because I've been paying tariffs this whole time.

[Kate Limebaugh]

Typically, Chinese goods are subject to an average 15% tariff.

[Jason Juno]

The actual process of the tariff is not new to me or scary, but I'm more concerned on how the market will react and what buying a year's worth of inventory means for me at least, is it gives us the benefit of time.

[Kate Limebaugh]

Across industries, US Companies have been making preparations for these tariffs. Some are stocking up like Jason is. Some are moving production out of China like makers of Nerf guns and semiconductors. And some are trying to bring production into the US like the company that makes Sharpies and Yankee candles. But Jason says he's stuck.

[Jason Juno]

I've tried to get these sourced domestically, and the dry brush industry does not exist here. I can't. If I physically want to get these produced in America, I have to import them. And if you want to put a really high tariff in place, it almost feels like a punishment because I have no other choice.

[Kate Limebaugh]

One of the aims of tariffs is to encourage domestic manufacturing. Might a 60% tariff do that?

[Jason Juno]

Sure, if that domestic manufacturing exists. Well, I'm telling you, the body brushes I have tried to source, and it just doesn't happen in America right now. They may seem like an easy product. It's just a brush. You know, it's just a wooden brush with some bristles and an elastic strap. But you need highly specialized machines to do so and skilled labor. And so if that doesn't exist, my options are just to go to a different country. And that really doesn't solve the problem.

[Kate Limebaugh]

Well, it reduces the reliance of the world on Chinese manufacturing of scrub brushes.

[Jason Juno]

Yes, it does. But then when there's also a blanket tariff on the board of 10 to 20%, they've floated for any other country. And China is offering a consistent quality product at a consistent price. What's the point of switching from a supplier that I've built integrity with over the course of the last several years and trust and have consistently delivered for me and my business?

[Kate Limebaugh]

Are there other steps that you could take?

[Jason Juno]

We could try to get these made elsewhere. Maybe I find a hole in a wall supplier in North America. There's options, but the path of least resistance is we stay with our supplier, we pay the damn tariff, and we raise prices. Unfortunately. And I don't want to be caught in the middle of a trade war. I'm not going to sacrifice the health of my business for some silly trade war. So we will see what happens. And if we have to raise prices. I don't want to raise prices, but we will.

[Kate Limebaugh]

Last week, Trump said on his first day as president he would enact new tariffs. He said he'd put 25% tariffs on goods from Mexico and Canada and add a new 10% tariff on Chinese goods. But Jason worries that the tariffs could go higher, like to the 60% level Trump campaigned on. If so, Jason would have to raise the price of his brushes from $9 to $12.

[Jason Juno]

And so I fear hyperinflation with low priced goods like these.

[Kate Limebaugh]

Hyperinflation is a big word.

[Jason Juno]

That's a 33% hike from 9 to 12.

[Kate Limebaugh]

What's your sense of, like, how big a toll these potential tariffs could take.

[Jason Juno]

On your company if we had to stop selling? These brushes and gloves will be okay at the end of the day. We are unique amongst Amazon brands in that we make most of our products ourselves by hand in Madison, Wisconsin. We're very insulated from importing and the logistics that come with that. That being said, our strategy is kind of blown up and we'd have to kind of go back to the drawing board.

[Kate Limebaugh]

A spokesperson for the Chinese Embassy said that trade cooperation with the US Is mutually beneficial and that, quote, no one will win in a trade war. And you said you don't want to be in the middle of a trade war. Do you feel like you are? You and other small businesses?

[Jason Juno]

I do. I'm not a big corporation. I'm a small business owner from Madison, Wisconsin. I happened to make a really good body scrub and it turned into a little skincare empire that I'm at the top of. But I'm not some massive corporation and I'm doing the best that I can to maintain the health of the business. I didn't ask for this. I don't want to be in this. And here we are talking to you about the potential impacts of a tariff on my business.

[Kate Limebaugh]

And is the takeaway that we all need to be stocking up right now?

[Jason Juno]

I don't know.

[Kate Limebaugh]

You're supposed to say yes and then everybody buys your products.

[Jason Juno]

I don't know what to expect. It's uncertain, it's scary. And at the end of the day, I did what I could do as a business owner and I stocked up. It's not going to last forever, but it gives me a little bit of reprieve.

[Kate Limebaugh]

Well, Jason, thanks so much.

[Jason Juno]

You're welcome. Happy to be here.

[Kate Limebaugh]

That's all for today. Tuesday, December 3rd. The Journal is a co production of Spotify and the Wall Street Journal. Special thanks to Hannah Meow. For her help with this episode. Thanks for listening. See you tomorrow.