Asian grocers navigate ever-changing tariff landscape on imported goods
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Many of the best business ideas come from those who see a need and fill the void to meet that need. That’s what led Sook Nam, 41, and her husband Yella Hensley, 51, to open an Asian specialty foods store in North Mankato.
Before they opened Seoul Foods four months ago, she and others in the growing Asian American community in and around Mankato had to drive more than an hour each way to Rochester or the Twin Cities to stock up on staples they use every day.
“I knew people were just tired of driving to get just basic needs,” Nam said. “So, I thought, why not? We could just try and open it, and see how it works.”
Nam, who is Korean American, focused initially on stocking foods, spices and other items from Korea, but demand for items from China, the Philippines and Vietnam led Nam and Hensley to broaden their offerings.
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“We started off so small, you can’t see now but we started off on two shelves on each side,” Hensley said of the grocery store. “Our freezer was super empty. We spaced everything out to make it seem more full.”
The store’s offering’s have been expanding ever since, but now, President Trump’s trade war and hefty tariffs on foreign goods threaten its very existence.
About half of Seoul Foods’ inventory comes from Chinese suppliers — things like rice, spices and teas. And those goods will be subject to the Trump Administration’s 145-percent tariffs, making Nam and Hensley very nervous.
Hensley said the tariffs haven’t affected them too much—yet. But, there are signs that the prices of some of their more popular items, such as mango ice cream, could skyrocket.
“So, I called the supplier, (and asked) ‘How many can I get?’ And she was like, ‘ I only have a few cases left, and the next time they come, they’re gonna be 125 percent higher,’” Hensley recalled. “Imagine if you’re selling $15 for three and they (more than) double it, 125 percent…you’re not even buying those…because no one’s gonna pay over ten dollars for an ice cream.”
And Nam said this tariff uncertainty adds another layer of anxiety to her business planning, because they don’t have the ability to buy in bulk ahead of time and store goods.
“It is basically just buy as needed,” she said. “And if we’re not able to get an item, whether it’s due to being just cost effective, or it’s just not available, we just unfortunately will go without and find something else to replace it with.”
A greater uncertainty
The uncertainty of Trump’s tariff wars makes it more difficult for small business owners to plan ahead. The Trump administration may yet dial back its 145-percent tariffs on Chinese goods but it’s not clear if and when that would happen, nor by how much.
Regardless of what happens, it will be difficult for small business owners to come out unscathed. Carlisle Ford Runge, an economics and law professor at the University of Minnesota, studies international trade policy. He said tariffs can cause a couple big effects on businesses that import products.
“One is to buy ahead or to buy forward,” Runge said. “And that is problematical because you have to carry lots of inventory at cost. And the other is to ‘wait and see.’ This is what economists refer to as the hold back problem.”
He said when businesses ‘wait and see’ what happens, they might end up paying substantially higher prices once the tariffs take effect. For small, independent stores like Seoul Foods, the tariffs will likely shrink their already slim profit margins. And if they raise their prices to cover the sharply increased costs, they may lose customers.
Runge added either way, tariffs disrupt the normal flow of commodities, goods and services in the economy “and the disruption will lead to greater uncertainty, and this will just broadly speaking, will afflict the economy with a sense of anxiety, which is going to lead to contraction.”
“This is more like a wave coming in the front door, and the way they deal with it is that they have to pay higher costs for their goods,” Runge said. “So it’s not a question of anything but raising the cost of them doing business. Many of the Asian grocery stores are relatively small businesses. … This is a pretty straightforward problem, which is that huge cost increases are coming into the supply chain.”
‘Take your problems as they come’
Seoul Foods is still growing, despite the uncertainty. Word of mouth helped the small grocery reach a broader client base. Customers seek out Nam and Hensley to request specific items to keep in stock, which helps them know which ingredients and staples are in demand.
“Our inventory is on our shelves, and we’re still building shelves,” he said. “So instead of stockpiling, we’ve just been growing our inventory as it goes, and Mankato has been a blessing to us.”
Seoul Foods regular Sean Asplen noticed inflation hitting stores around the Mankato area. He adjusted his shopping habits and swapped out different ingredients to help cut costs.
“I saw ribeyes at the grocery store for $18.99 a pound, actually,” Asplen said. “So it made me switch to the New York strip for $12.99 a pound. But things have definitely gone up. I heard from some people about [Seoul Foods] that it was a cool place to check out, and they got a lot of different food from a lot of places, and the prices are very reasonable.”
Even if tariffs were to go into effect and he sees it reflected in prices, Asplen plans to keep shopping at Seoul Foods.
“So you know, even if that goes up a little bit, I’ll continue to do my best to support local and help these guys out,” Asplen said. “They may have a good business, and I do what I can to keep the little guy alive.”
Owners Yella Hensley and Sook Nam said they are hoping to avoid passing any higher costs to their customers. But Hensley said they can’t plan too far ahead — which is frustrating. He said for now they’re trying to avoid letting fear direct their business decisions.
“You can’t move forward as if there’s tariffs,” Hensley said. “You take your problems as they come.”
