'We're already on thin margins': Minnesota retailers react to the potential global tariffs

NINA MOINI: More US tariffs against China were implemented overnight, and China shot back today with 84% tariffs on US goods. That's in the midst of stocks seriously sliding after President Trump's implementation of global tariffs last week. The severe change in economic policy has rocked financial markets.

But how could these tariffs affect markets here in Minnesota? The President of the Minnesota Retailers Association, Bruce Nustad joins me now. Thank you for being here, Bruce.

BRUCE NUSTAD: Yeah. Thank you, Nina.

NINA MOINI: And also joining us is a retailer, a Minnesota retailer, Scott Farrell. He's the general manager for Down in the Valley record store-- that's in Golden Valley-- and a board member of the Retailers Association. Thanks for being here as well, Scott.

SCOTT FARRELL: Yeah, thanks for having me on.

NINA MOINI: Really appreciate you both. Scott, would you tell us a little bit about the record store?

SCOTT FARRELL: Sure. Down in the Valley, we have two stores. We're independently owned, and we've been in business for 53 years selling music and other things. During the break, I was rocking out to Durry there, a local band that you played before this segment, which was their new single. And they actually shot some of the video here in one of our stores.

NINA MOINI: Oh, wow. 53 years. I mean, that is really incredible. I mean, I'm just curious to know how you feel that the business has been able to sustain so long.

SCOTT FARRELL: Well, one of the things like we'll talk about today, as a record store, there's been some ups and downs over many years and changing formats. And during the digital age, when the iPods came out, we really had to diversify our inventory, which bringing things other than music into our stores. So any long standing record store that you go into, they probably have a segment of other items other than just music. But at the heart of it, we're a record store.

NINA MOINI: How did it make you feel, Scott, just a lot of the economic uncertainty more recently, but when you were hearing about the tariffs that the Trump administration is putting in place? What are you concerned about?

SCOTT FARRELL: Number one, rising prices. We're still dealing with some of the effects of COVID and supply chain issues with rising prices. And we hear it from our consumers, especially vinyl records and some other things, that things are just getting pretty dang expensive out there.

And any added expense has us worried as a small business who works on real thin margins. You can only push those prices and pass along the tariff surcharges that we're going to incur so much. As a small business, we can't just take those on and absorb those.

So they're going to be passed along. And it's going to be a tax on the consumer.

NINA MOINI: And, Bruce, to Scott's point, a lot of small businesses, perhaps like those that you all represent, are really working on thin margins. They don't have a ton of cushion. Could you just give us an idea of what types of different retailers and businesses that you all represent and how, more generally, they could be impacted?

BRUCE NUSTAD: Yeah, it's a great point. I think our small businesses are really concerned-- our large businesses as well. And I think just the retail economy here in Minnesota is, you think back to the Trump tariffs of 2018, the retail economy is different today. Like Scott said, we've been through a pandemic. We've been through some inflation, some supply chain pinch.

There just isn't a lot of wiggle room left in Minnesota's retail economy to absorb, either the supply chain or at the retail level, these real tariff price increases. So I think, like Scott said, inevitably, we're going to see some impact at the consumer level to the pocketbook of Minnesotans.

NINA MOINI: Yeah. And so have you seen the retailers that have already been affected this week because, as consumers might change their behaviors, that's kind of the circle, right? But are you hearing from retailers that they're already feeling a pinch?

BRUCE NUSTAD: Yeah. I think Scott says it better than I do, but I think we have retailers that are already hearing from the supply chain. And those suppliers are saying, you know what? We don't really have much place we can put these tariffs. We're going to have to pass them on to you.

So we've heard a lot of concern. And I used to think we'd see maybe some impact of tariffs like a month or two out. And now, I'm saying, it's weeks, not months.

NINA MOINI: Scott, what do you think about that? Are you feeling direct effects?

SCOTT FARRELL: Yeah. And Bruce and I were on Capitol Hill last week talking in meetings about the tariffs. And I brought, even, some examples of emails from vendors that I'd gotten previous to the April 2 additional tariffs, just to show the staffers in these meetings that this is already happening.

I actually made tariff flash cards, if you believe it or not, but it was kind of a fun way to show, not very fun thing, but just showing that, hey, this is already impacting, whether it be turntables and speakers-- those things are already going up in price, collectibles. Just got an email today from a company that sells puzzles, playing cards, Monopoly games-- those are all going to be going up. And it's a little unnerving as we start to, believe it or not, plan for the holiday season already.

NINA MOINI: Wow. No, I believe it planning for the holiday season. Bruce, so all of you went-- you went as well, Bruce, to talk to Congress and members of Congress. And I'm just curious how that felt to the both of you, really, but I'll start with you, Bruce-- because sometimes it feels like federal policy or policy that's coming straight out of the White House, sometimes people in the state feel like, well, what can we really do about that?

Did you feel like it was a fruitful visit, or did it feel more of just to say they did it? Or how did that feel?

BRUCE NUSTAD: Yeah. Well, Scott and I planned our visit to Capitol Hill months ago, so we didn't know it was going to be so perfectly timed--

NINA MOINI: Oh, there you go.

BRUCE NUSTAD: Relative to the tariff announcements. And I think sometimes people get a little disillusioned with DC. I felt like our time there was well worth it. We talked to Republicans and Democrats.

And, honestly, the tariffs issue is a little less about politics than it really is about policy. And I think we found that folks on both sides of the aisle were kind of receptive to the practical element of tariffs and how they might impact Minnesotans. So it was well worth the time.

NINA MOINI: OK. And, Scott, how did it feel for you to be there?

SCOTT FARRELL: It was an unreal experience, number one. And anybody that can participate in that government process, I would say jump at the opportunity because you get to see, in real life, what that really entails. And what I experienced was folks on the other side of the table really taking in what we were saying and understanding the issues that we're facing.

And I think there's a lot of folks that I would say agree with us and maybe some confusion on their part as they sort out how this is all going to shake out. But one thing is they all say that they stand behind small business and retail in general. So I'm hoping that they can get something together to alleviate some of the issues that we think might be happening.

NINA MOINI: And, Bruce, what might that look like, things that could alleviate problems for people? And what are you suggesting that your retailers do?

BRUCE NUSTAD: Yeah. Again, I think we keep hearing from retailers it's going to be tough to absorb price increases. So that kind of takes us right back to the policy. I think our hope is that this latest round of tariffs, although we certainly believe in free trade and balanced trade, that they can be resolved really, really quickly.

And Scott said it exactly right. Believe it or not, small retailers are already planning for the holiday season. So we really need some quick resolution to this. So that would be my hope, anyway.

NINA MOINI: Do you mean policy wise or getting rid of the tariffs? If that wouldn't happen, what else could happen? Could there be some supplemental help to businesses? Or what would you be willing to explore?

BRUCE NUSTAD: I've heard a little bit of talk around, like, what could we do to help the sectors that are being touched by the tariffs-- we haven't really much thought about that, to be honest, because that seems like, when you're starting to create another problem to fix a problem, that seems a little confusing, a little daunting, and it also sounds expensive. So I think we'd just prefer to see a resolution to the tariffs. If the tariffs are going to bring some of our trading partners back to the table and craft some new deals, let's hope that happens in weeks and days versus a longer period of time.

NINA MOINI: Yeah. So you're saying if you were to get some sort of supplemental help, it wouldn't come right away, so that could create more problems. What about from the side of consumers?

What do you suggest, and I'll throw this to you, Scott, what do you ask of consumers right now? Because they might be already changing a lot of behavior. They're being told to save. People are facing uncertainty with their retirement accounts and whatnot. So what do you say to consumers?

SCOTT FARRELL: Just hang in there with us. We're going to do our best to keep those prices as low as possible. And also, I think just to say, support your independent businesses in your communities, because that's the last thing that we want to see go away.

And I know how tough it is for small retailers and Main Street, we don't want those things to go away. So I think whatever penny pinching you have to do, maybe you can spend with those small businesses on what you can afford to actually spend your money on non-essential goods.

NINA MOINI: Sure. Scott and Bruce, thank you both so much for coming by. Really appreciate your time.

SCOTT FARRELL: Thank you.

BRUCE NUSTAD: Thanks, Nina.

NINA MOINI: That was Minnesota Retailers Association Bruce Nustad and board member and Down in the Valley record store manager Scott Farrell.