The majority of the lumber that the store sells comes from Canada and nearly all of its steel products are made in China, general manager Rieff Anawalt said. Those countries, along with Mexico, have been targeted in sweeping tariffs imposed by President Trump during his second term, sparking a global trade war that intensified this week.

“These tariffs are 100% going to impact us,” Anawalt said. Wholesale reps for the family-run hardware company, which has five locations around Los Angeles County, have warned him to expect prices to go up by April 1 — costs that he said he’ll have to pass on to customers.

“We’re going to see major increases: 15% to 25% across the board in this industry,” he said. “It’ll make COVID prices seem cheap.”

Across California, businesses of all kinds — farmers, automakers, home builders, tech companies and apparel retailers — are reeling from weeks of on-again, off-again tariff chaos as Trump has announced a slew of levies against the country’s top three trading partners, implementing some while modifying, delaying or reversing others.

“It’s a day-by-day soap opera, and just like a soap opera, you get relief, then it heats up again,” said Jonathan D. Aronson, a professor of international communication and international relations at USC.

As a result, business owners “don’t know what’s going to happen,” he said. “They can’t plan. They don’t know how much to produce. They don’t know who their business partners are going to be.”

This month has been particularly tumultuous. On March 4, Trump’s 25% tariffs on imports from Canada and Mexico kicked in, with a limit of 10% on Canadian energy; he also doubled the tariff on all Chinese imports to 20%. All three countries vowed to strike back with their own measures.

The next day, Trump granted a one-month exemption for U.S. automakers on his new tariffs on imports from Canada and Mexico. The day after that, he said he was postponing many of the tariffs on Canadian and Mexican imports for a month.

On Monday, in a blow to farmers in California and across the U.S., China imposed retaliatory duties of up to 15% on American agricultural products including chicken, corn, beef, pork, wheat and soybeans. Then on Wednesday, Trump’s 25% tariffs on all steel and aluminum imports went into effect.

To counterbalance the effects of the tariffs on their bottom lines, businesses may have to overhaul their operations, said Jerry Nickelsburg, faculty director of the UCLA Anderson Forecast.

“The way in which firms react to that uncertainty is to not put all their eggs in one basket,” he said. “So they cut back on how much they would order, which means they’re going to produce less and they need fewer people — or if not fewer people, fewer hours for the people they have.”

The latest volley came Thursday morning, when Trump threatened to place a 200% tariff on wine and liquor from the European Union in response to the EU proposing a 50% tariff on American whiskey. About an hour later, he wrote in a follow-up post on Truth Social that the U.S. “doesn’t have Free Trade. We have ‘Stupid Trade.’”

“The Entire World is RIPPING US OFF!!!” he said.

Bolstering the economy was one of Trump’s core promises during the election, and tariffs are key to his strategy. He threatened to slap tariffs on Mexico, Canada and China on his first day back in office, explaining the decision as a way to crack down on illegal immigration and drugs.

But the escalating trade tensions have pummeled Wall Street for three weeks. On Thursday, the S&P 500 closed in correction territory, ending the day down 1.39%; the index is now 10.1% below its record close Feb. 19. The Dow Jones Industrial Average fell 537.36 points, or 1.3%, closing at 40,813.57.

The fallout for farmers

The prolonged back-and-forth has also unsettled companies, both those that import goods from abroad and those that sell their products to foreign clients. California’s economy could be especially hard hit because of its heavy reliance on trade with China and Mexico, and because of its position as a global agricultural powerhouse.

California farmers grow the largest share of the nation’s food — more than a third of the country’s vegetables and more than three-quarters of its fruits and nuts are grown here — and the state’s fertile ground is a major supplier of produce to countries around the world. Farmers also rely heavily on fertilizer from Canada, which could cost more as the tariffs take hold.

“Farmers in California are going to be hurt particularly badly because almonds, soybeans and things like that are huge exports of the United States,” Aronson said.

The state also accounts for about 85% of wines produced in the United States and is home to thousands of grape growers and wineries, many of them small and generations-old. The Wine Institute says the industry supports employment for more than 420,000 Californians and generates $73 billion in economic activity in the state. Canada is the largest market for California wine.

A flurry of activity at the ports

Some L.A.-area companies have been stockpiling inventory to get ahead of expected price hikes tied to the tariffs, said Stephen Cheung, chief executive of the Los Angeles County Economic Development Corp.

“A lot of them were hit pretty hard during the last trade war with China,” he said, “so they knew better than to wait and hope for the best.”

That has been reflected in shipping data from the ports in Long Beach and Los Angeles, which continue to record huge numbers thanks to several months of front-loading cargo ahead of Trump’s inauguration.

The Port of Long Beach moved 765,385 twenty-foot equivalent units, or TEUs, in February, a 13.4% increase from the previous year. January’s year-over-year growth was even larger: 952,733 TEUs — a unit of measurement based on the volume of a standard shipping container — were moved, representing a 41.4% increase.

After Trump launched a trade war with China during his first term, the Port of Long Beach lost about 20% of expected Chinese cargo in 2019, Chief Executive Mario Cordero said. That was supplemented by a 10% increase of imports from countries in Southeast Asia including Vietnam, Indonesia and Thailand. He expects the same thing to happen this time around.

In the coming months, Cordero said the local economy could see supply-chain disruptions, similar to what occurred during the pandemic, “if we continue on the path of aggressive and high-percentile tariffs.”

The Port of Los Angeles expects a 10% reduction in volume from last year amid Trump’s tariffs against China, Executive Director Gene Seroka said.

One of the largest seaports in the country, the L.A. port has seen sharp increases in cargo since last summer as businesses stocked up in anticipation of potential Trump tariffs. Just under 10.3 million TEUs, a near record, passed through the port last year.

Those numbers are likely to trend downward as tariffs take hold and the economy adjusts, Seroka said. “Fewer containers mean fewer jobs.”

Economists say it’s difficult for companies to quickly change suppliers, and some may be loath to upend their supply chains given the ever-changing nature of Trump’s trade policies.

Some are trying anyway.

Francesca Grace, an interior designer and home stager in Los Angeles, said tariffs have already affected the availability and price of items including fabrics, wood and other building materials, and smaller decor pieces.

Supply chain delays have extended her project timelines in some cases to three to six weeks from immediate availability, and she’s contending with “at least a 25% rise” in costs for materials from China. As a result, she’s now trying to source all of her products locally, up from 75%.

“While this shift aligns with our values, it will also cause our pricing to increase,” Grace said. “We are doing everything we can to avoid increasing our pricing too much. The last thing we want is for these changes to negatively impact our business or make our designs inaccessible.”

Other businesses say they have little choice when it comes to where they get their merchandise.

“Lumber prices are what they are. There’s no sourcing it somewhere else, so we’re going to have to deal with it as it comes,” said Anawalt, the general manager at the Malibu hardware store. “It’s so beyond my control, there’s nothing I can do. I was panicked at first, but now I’m just going to wait.”

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Trump’s prime-time speech Tuesday was the latest marker in his takeover of the nation’s capital, where the Republican-led House and Senate have done little to restrain the president as he and his allies work to slash the size of the federal government and remake America’s place in the world.

The president’s address, clocking in at a record 99 minutes, added up to a defiant sales pitch for the policies that Trump promised during his campaign and leaned into during his first weeks back in office. Trump pledged to keep delivering sweeping change to rescue the nation from what he described as destruction and mistakes left by his predecessor. He seldom addressed his comments directly to the American people, who are trying to keep up with the recent upheaval, while repeatedly needling the Democratic lawmakers seated before him.

Michigan Sen. Elissa Slotkin, who delivered the Democratic response following Trump’s speech, allowed that “America wants change, but there’s a responsible way to make change and a reckless way, and we can make that change without forgetting who we are as a country and as a democracy.”

Emboldened after overcoming impeachments in his first term, outlasting criminal prosecutions in between his two administrations and getting a tight grip on the GOP-led Congress, Trump has embarked on a mission to dismantle parts of the federal government, remake the relationship with America’s allies and slap on tariffs that have sparked a North American trade war.

“It has been nothing but swift and unrelenting action,” Trump said of his opening weeks in office. “The people elected me to do the job, and I am doing it.”

Trump, who has billionaire adviser Elon Musk orchestrating his efforts to slash the size and scope of the federal government, said he is working to “reclaim democracy from this unaccountable bureaucracy” and threatened federal workers anew with firings if they resist his agenda.

Musk, who was seated in the House gallery, received a pair of standing ovations from Republicans in the chamber, as Trump exaggerated and shared false claims about alleged government abuse uncovered by the Tesla and SpaceX founder and his team of disrupters.

Trump repeated false claims that tens of millions of dead people over 100 years old are receiving Social Security payments, prompting some Democrats to shout, “Not true!” and “Those are lies!”

Trump spoke at a critical juncture in his presidency, as voters who returned him to the White House on his promise to fix inflation are instead finding economic chaos. All the gains the S&P 500 have made since Election Day are now gone, while consumer sentiment surveys show the public sees inflation as worsening.

Trump seemed prepared to double down on his trade policies, which experts have warned will raise prices for consumers.

“Whatever they tariff us, we tariff them. Whatever they tax us, we tax them,” Trump said. At the same time, he tried to ease concerns about the resulting price increases, saying, “There’ll be a little disturbance, but we’re okay with that. It won’t be much.”

Trump said one of his “very highest priorities” was to rescue the economy and offer relief to working families. He promised to organize the federal government to lower costs on eggs and energy, blaming his Democratic predecessor Joe Biden for the situation and offering scant details of his own plans.

Trump also called for the extension of his first-term tax cuts and additional federal funding for his border crackdown, including for his promised efforts at “mass deportation” of people in the U.S. illegally.

He celebrated his crackdown on migration, saying, “But it turned out that all we really needed was a new president.”

Speaking about his promised tax cuts, Trump seemed to goad Democrats, saying: “I’m sure you’re going to vote for those tax cuts. Because otherwise I don’t believe the people will ever vote you into office.”

The backdrop was the new economic uncertainty unleashed after the president opened the day by placing stiff tariffs on imports from the country’s neighbors and closest trading partners. A 25% tax on goods from Canada and Mexico went into effect early Tuesday — ostensibly to secure greater cooperation to tackle fentanyl trafficking and illegal immigration — triggering immediate retaliation and sparking fears of a wider trade war. Trump also raised tariffs on goods from China to 20%.

Republicans were boisterous as Trump stepped to the lectern in the House, chanting “USA! USA!” as the president basked in the cheers. The GOP lawmakers were jubilant, having won a trifecta of the White House, Senate and House in the elections. However, they face the challenging task of delivering on Trump’s agenda as well as avoiding a government shutdown later this month.

Across the aisle, out-of-power Democrats set the tone early, with most remaining seated without applauding or making eye contact with Trump as he was introduced in the chamber.

After several interruptions, House Speaker Mike Johnson jumped in and called for decorum to be restored in the chamber as Republicans shouted “USA” to drown out the cries from the other side of the aisle. Johnson then ordered Texas Rep. Al Green removed from the chamber.

“It’s worth it to let people know that there are some people who are going to stand up” to Trump, Green told reporters after being thrown out of the chamber.

Other Democrats held up signs criticizing like “Save Medicaid” and “Protect Veterans” during Trump’s remarks, seeking to drive public awareness to elements of Trump’s agenda they believed might offer them a pathway back to the majority.

Some Democrats chose to highlight the impact of Trump’s actions by inviting fired federal workers as guests, including a disabled veteran from Arizona, a health worker from Maryland and a forestry employee who worked on wildfire prevention in California.

Trump also used his speech to address his proposals for fostering peace in Ukraine and the Middle East, where he has unceremoniously upended the policies of the Biden administration in a matter of just weeks. On Monday, Trump ordered a freeze to U.S. military assistance to Ukraine, ending years of staunch American support for the country in fending off Russia’s invasion.

Trump recited a letter he received earlier Tuesday from Ukrainian President Volodymyr Zelenskyy, saying that the wartime president wants to come back to the table after a explosive Oval Office meeting last week broke down negotiations for a peace deal between Russia and Ukraine. “We’ve had serious discussions with Russia and have received strong signals that they are ready for peace,” Trump said. “Wouldn’t that be beautiful?”

He also announced the arrest of a suspect in the 2021 suicide bombing at the Kabul airport that killed U.S. troops during the withdrawal from Afghanistan.

Trump’s 1 hour and 39 minute speech was the longest annual address a president has ever delivered to Congress, breaking Bill Clinton’s record of 1 hour and 28 minutes.

Watching from the gallery with first lady Melania Trump were guests including 15-year-old Elliston Berry, of Aledo, Texas, who was the victim of an explicit deepfake image sent to classmates.

Other White House guests included relatives of Corey Comperatore, the former Pennsylvania fire chief who was killed as he protected his family during an assassination attempt on Trump last summer.

Republican lawmakers cheered the conclusion of Trump’s address with chants that echoed his words after he was struck in the ear by a bullet: “Fight! Fight! Fight!”

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September started with new tariffs going live.  What has followed and will follow for the month of September is a rally. 

September is predicated on a breather from possible known negatives.  This has left room for positive news to gain traction fueling the rally.  This has set the stage.   

Following the tariff increases, China abruptly said it would not retaliate. 

We then heard from the White House that telephone conversations had occurred and coined as, that they went well. 

It was a short time after this that an announcement of an October meeting between both nations would occur. 

No more news for September is expected on this front, except positive news.  

Next was the Federal Chairman’s Powell position.  First, he was recorded with a firm approach of not raising rates. 

Then he moved one leg and went to neutral, followed by a quarter-point drop in interest rates in July.  Some comments that followed in August left the markets questioning a rate cut in September. A drop in the jobs report, to 130,000 instead of a 150,000, showed truthfully the U.S. economy is slowing for the third straight month.  Powell, on September 6th in Zurich, stated the Federal Reserve remained committed to sustaining the economic expansion. He left investors expecting a conservative rate cut of a quarter percent during the next meeting September 17-18th.

These issues are unresolved, but in a seemingly sidelined state for now. In addition to similar results for BREXIT and Hong Kong’s revolt, it leaves September staged ready to be flat.  A flat market is one that is range bound and bounces between the highs and lows. 

Never really crossing either floor or ceiling.  If you are a passive investor, you will just ignore this period and do nothing most likely. 

If you are an active investor, then a trading strategy should be deployed.  

From my view September will rally to recent highs again, fueled by the Federal Reserve providing a rate drop.  These highs are truly unjustified, in my opinion, when corporations are having to reduce their expectations. I also believe chances are minimal for a deal to happen in October.  Some argue the President needs a deal going into the election. 

Others argue he has to make one this year because he grades himself by the performance of the market.  In my view, though, polling shows the vast majority of Americans believe China has taken advantage of Americans and agree with the President in holding the line against them.  This holds true for bipartisan politicians too. If President Trump understands the people are with him in regards to this issue, why would he resolve it by settling? I don’t believe there will be a meaningful agreement in October.  If there is not one and the leading economic indicators continue to weaken, then be prepared for more volatility. I recommend taking some more profits while September is on stage and picking up some additional bonds before rates continue to be pushed down by the Feds.

If you have questions on a particular company or investment and would like our feedback, contact us at my email below.  Our team will research and respond to you with our recommendations and opinion. 

Andrew F. Kotyuk, CIMA* is CEO and Principal of Alpha Wealth Management LLC

For questions or investment topics, please email me afkotyuk@alpha-wealth.com.

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