Business owner used 1.8 million credit card points to pay tariff costs

Small businesses facing higher import costs due to the fact that of steeper U.S. tariffs are having to find antithetic ways of handling the added expense.

Facing hefty tariffs connected parts shipped from China, 1 tiny concern proprietor took the deed by redeeming implicit 1.8 cardinal reward points connected his American Express card. Robert Keeley, proprietor of Keeley Electronics, a astir 33-person guitar pedal institution successful Oklahoma City, Oklahoma, told CBS MoneyWatch helium utilized the points, alternatively than cash, to screen the tariffs. 

That antithetic approach, archetypal reported by Bloomberg, highlights the challenges galore smaller enterprises are facing successful coping with higher import duties. 

Keeley's cognition makes pedals utilized to make effects for electrical and immoderate acoustic guitars successful a 17,000 square-foot warehouse successful Oklahoma. But he's been incapable to root 1 of the pedals' cardinal components, a alleged potentiometer from anyplace different than China, starring to ballooning tariff charges.

"We manufacture and physique astir each portion of the pedals successful our factory, including the aluminum enclosures and each the circuit boards," Keeley told CBS MoneyWatch. "I truly emotion manufacturing and giving idiosyncratic a job."

Keeley said his squad has tried to find a supplier of potentiometers, which power voltages, extracurricular of China, but to nary avail. 

"We can't find a root extracurricular of China for our potentiometer, which is captious for our designs," Keeley said. "Even erstwhile we telephone companies successful Taiwan, they accidental they get theirs from China." 

$11,000 recognition paper bill

Tariffs connected the cardinal constituent person surged since the commencement of President Trump's 2nd word successful January, according to Keeley. His concern was connected the hook for tariffs of 25% until March, erstwhile the duties temporarily changeable up to much than 100%. Now the institution pays a complaint of 55% for potentiometers, helium said. 

A 90-day frost connected country-based tariffs, including those successful spot connected China, expires connected July 9. Keeley is hoping the existent complaint volition travel down, but uncertainty lingers. Trade experts besides accidental Mr. Trump could again widen the tariff intermission if commercialized deals are not reached by the deadline.

Keeley's astir caller recognition paper bill, which included shipping and tariff fees, totaled astir $11,000, according to a transcript of the connection viewed by CBS MoneyWatch. Instead of paying cash, Keeley utilized the recognition paper points he'd accrued by paying erstwhile tariff charges with plastic. 

"I decided to usage my points due to the fact that I wasn't redeeming them for different things similar acquisition cards. So I thought it would beryllium clever to use them to my bills for tariffs," Keeley said, noting that the complaint is lone a sliver of his tariff-related cost. "It sounds similar a batch of points, and that gives you a consciousness of however overmuch I americium paying successful tariffs."

Keeley emphasized helium doesn't similar depending connected China for manufacturing his company's wares, saying that amounts to what helium described arsenic a "single constituent of failure." Although helium hasn't yet raised prices for customers to offset the higher costs, the concern whitethorn person nary prime but to bash truthful if stiff tariffs connected Chinese imports stay successful place, helium told CBS MoneyWatch. 

"I privation to marque definite I americium releasing breathtaking products that the satellite wants to buy," helium told CBS MoneyWatch. "If I don't wage attraction to what I'm trying to merchantability and what radical want, past I volition spell retired of business. But for now, I americium successful a unchangeable place." 

• Small Business
• Tariffs
• China