With some tariffs being paused, what could that mean for Long Island consumers and businesses? NewsdayTV's Shari Einhorn reports.  Credit: Newsday

This story was reported by Laura Figueroa Hernandez, Lorena Mongelli and Tory N. Parrish. It was written by Figueroa Hernandez.

WASHINGTON — Long Island retailers and manufacturers spent Monday bracing for potential price hikes before President Donald Trump reached an agreement with Canada and Mexico to temporarily suspend his plans to impose a 25% tariff on both allies.

Hours before the tariffs were to go into effect, leaders from Canada and Mexico announced Trump had agreed to a 30-day pause, as they pledged to boost their border security spending. But the threat of a tariff war still sent stocks tumbling on Monday morning and left local business owners weighing the potential impact should Trump decide to impose the tariffs.

"We need long term stability and we need clarity when it comes to trade," said Matt Cohen, president and CEO of the Long Island Association, a nonpartisan group that promotes local businesses.

Cohen, in a phone interview with Newsday, said "at the end of the day" a trade war "helps no one," noting "small businesses and merchants are not going to be able to absorb increased costs without passing them on."

     WHAT NEWSDAY FOUND 

  • The threat of a tariff war between the United States and Canada, Mexico and China left local business owners weighing the potential impact should President Donald Trump decide to impose the tariffs.
  • Some Long Island store owners and managers said they expect tariffs could lead to higher wholesale costs that they will have to pass on to customers.
  • Developers and construction groups on Long Island said they were hoping tariffs could be avoided, noting any future tariffs would lead to price hikes of construction materials like steel and lumber.

A 10% tariff on some imported Chinese goods was still set to go into effect Tuesday, but Trump is expected to speak with Chinese President Xi Jinping in the coming days, according to The Associated Press.

The trio of tariffs was first announced on Friday by White House press secretary Karoline Leavitt. On Saturday, Trump signed a series of executive orders setting a Tuesday start to the tariffs, which he said would be lifted once China, Mexico and Canada  took steps to stop the flow of fentanyl and migrants into the United States.

Canada and Mexico first responded over the weekend by threatening to impose retaliatory tariffs, and Canadian Prime Minister Justin Trudeau on Sunday encouraged a boycott of U.S. products. China’s Foreign Ministry, in a statement posted online Sunday, threatened to take "necessary countermeasures."

As global markets responded with uncertainty on Monday, Mexican President Claudia Sheinbaum and Trudeau  spoke separately with Trump on Monday, each reaching a deal to pause implementation of the tariffs for 30 days.

On Long Island, most store owners and manufacturers interviewed by Newsday said tariffs on imported goods would likely lead to price hikes and higher construction costs.

Abby Gruppuso, head of operations at the Better Man Distilling Co. in Patchogue, said the company has started producing a lavender tequila from an agave spirit imported from Mexico and is worried about a levy on products from there. Gruppuso said the lavender tequila accounts for a large chunk of their wholesale income.

"Those tariffs will most likely have a pretty big impact on our cost to produce, which could be pretty detrimental. But we've already contacted our supplier and we're waiting to hear how they think it will impact everything," Gruppuso said Monday.

Jim Speedling, manager, Pope Wines & Liquors in Medford, was a little more optimistic that a resolution would ultimately be reached.

"I'm keeping abreast of the situation, but right now it's all speculation," Speedling said.

Denis Dagger, vice president and general manager of Smithtown Toyota, said the dealership had a slight increase in sales of cars in January, as customers concerned about the possibility of tariffs raising auto prices bought vehicles earlier than they had initially planned.

Consumers have also been concerned about the potential for rising costs of car components, Dagger said. All Toyota Tacoma pickup trucks are made in Mexico, according to a Toyota Motor North America spokesman.

"So, there’s not only concern but there’s also confusion because the people just don’t know what’s going to be affected besides groceries," Dagger said.

Some Long Island store owners and managers said they expect that if tariffs were to be implemented, it will lead to higher wholesale costs that they will have to pass on to retail customers.

"There’s a lot of products coming from Mexico ... lettuce, tomato, avocado, cucumbers," said grocer David Mandell, whose seven supermarkets include a Locust Valley Market and three Holiday Farms stores on Long Island.

Retailers don’t control where wholesalers choose to source food, so they have no recourse if the wholesale prices rise because of tariffs, he said.

"If the price goes up, the price goes up. It goes up for the customer," Mandell said.

Developers and construction groups on Long Island said they were hoping tariffs could be avoided, noting any future tariffs would lead to price hikes for construction materials like steel and lumber.

"Long Island development costs have always been a challenge, but in this environment — where high interest rates coupled with what may be an even higher cost for raw materials — have the potential to create a chilling effect on new construction — and by extension — the bi-county economy," Kyle Strober, executive director of the developers’ group Association for a Better Long Island, said in a statement.

Michael Florio, CEO of Islandia-based Long Island Builders Institute, said in an email: "At a time when affordability is already a major concern for New York families, added costs will put further strain on prospective homebuyers and slow down new construction."

Marc Herbst, executive director of the Long Island Contractors’ Association, said any potential tariffs are "concerning," because those increases will translate into higher costs for the construction industry as well as the consumer. But he said it also remains to be seen whether domestic production of steel will ramp up and help offset prices.

Christina Boni, senior vice president of corporate finance at Moody’s Ratings, a credit rating agency in Manhattan, told Newsday it may be easier for large retailers to absorb some of the higher costs of imported goods, but it will be a challenge for small businesses. Discount and dollar stores will have a harder time raising prices to offset their rising costs because consumers are going to them for deals in the first place, Boni said.

Because tariffs can be inflationary, they can lead to consumers cutting back on spending, particularly low- and middle-income consumers who are already feeling pressure from higher costs for housing and food, she said.

"They have to make some choices, in terms of they have a finite number of dollars to spend," Boni said.

Cohen, with the Long Island Association, also said potential tariffs on Canadian gas and oil, though only 10%, as proposed by a carve-out included in Trump's executive order, could still lead to a hike in energy costs for Long Islanders already struggling with affordability issues.

The existing Iroquois natural gas pipeline that originates at the Canadian border provides a crucial supply link to Long Island.

"Natural gas, home heating fuel, these are going to be impacted," Cohen said.

Should the tariffs on Canada and Mexico be enacted after the pause, some domestic manufacturers might decide to raise their prices, said Andrew Forman, a professor of international business at Hofstra University.

"One issue is the degree to which a company might be a bit opportunistic and use it as an excuse to raise prices," Forman said in a phone interview. "So you might see a case where a company says, 'OK, well, everybody's of the mindset now that prices are going up because of the tariffs, even when that has directly impacted us, or we're not impacted as much, we're going to raise the prices even more, because people are sort of expecting the prices to increase.' It could be a bit price gouging in that respect."

Hempstead SD considering staff cuts, school closure ... Beetle blamed for tree removal in Dix Hillls ... Romantic winter spas Credit: Newsday

Missing girl suspects due in court ... Hempstead SD weighs staff cuts, school closure ... Trump buyout offer ends ... What's Up on LI

Hempstead SD considering staff cuts, school closure ... Beetle blamed for tree removal in Dix Hillls ... Romantic winter spas Credit: Newsday

Missing girl suspects due in court ... Hempstead SD weighs staff cuts, school closure ... Trump buyout offer ends ... What's Up on LI

FLASH SALE

$1 FOR ONE YEAR

Unlimited Digital Access

SUBSCRIBE NOW >>Cancel anytime - new subscribers only