High Society

Recreationalists load High Society Paddleboards after a float in Aspen. The boards are made in China and would be subject to President Trump’s new tariffs come December.

For weeks, President Trump has been announcing his intent to impose new tariffs on Chinese imports beginning Sept. 1.

As of Thursday, he has stated that he will delay implementing those fees until December, which means the 25 percent tax placed on the majority of consumer goods would squarely hit ski season and the ski industry.

The Roaring Fork Valley does not have a large amount of manufacturers. The local businesses that make consumer goods are small and specialized and an overwhelming amount of them make outdoor recreation equipment and apparel.

As the president tweets day-to-day and sometimes conflicting updates regarding US-China trade talks, Reggie Charles, the founder of High Society Freeride Co., keeps an eye out for definitive changes in import fees.

“There is no ‘for sure’ one way or another what’s going to happen, so yeah, it does make it challenging,” he said.

While High Society makes its skis and snowboards in Denver, their increasingly-popular paddleboards are manufactured in China.

“We haven't found a place domestically yet that can build the high quality that we look for in paddleboards, so we do it in China because that is where we can get the best products,” Charles said. “It does add some complexities.”

The paddle boards are designed and tested locally and High Society has proudly waved its local flag during 15 years of business.

“I think the consumers in the rest of the country and around the world, when they hear that these products were tested and developed by people that live here, everyone around the world recognizes Aspen,” Charles said. “People can see that there is some authenticity about the products and where they are built and tested and developed.”

U.S. trade law lists 4,000 lines of tariff code, classifying all different types of products that might be imported. The amount of goods expected to be affected by the higher tariffs equal about $300 billion worth of commercial items.

“Every single product has a different class, whether you are selling straws, or plates or paddleboards, the duty rate is different on all of that stuff,” Charles said.

While there is a grace period between Trump’s declarations and the tariffs taking effect, small local companies like High Society don’t have the means to travel to Washington, D.C., and lobby against the hikes.

“We just want to have the best products and if we have to pay more to do that we will,” Charles said.

“The most important thing is we don’t want to cut any of our quality or performance. We don’t want to be subject to it obviously, but we are going to make sure it doesn’t slow us down in what we want to do and making sure we get our customers and our supporters the best stuff. That’s really our ultimate goal and we really just want to stay focused on that.

Setting trade policy used to be the job of Congress, not presidential tweets.”

Keith Maskus, professor of economics at CU-Boulder and a former U.S. Department of State chief economist, said that the power changed hands when it became clear that the various interests of Congressional members did not make for productive negotiations when it came to international trade.

“But to be honest, nobody in Congress ever thought we would have a president like this one,” Maskus said. “So everybody thought that the execution of these laws would be done on a more reasonable and responsible basis.”

On Thursday, amid back and forth between China and the U.S. regarding stalled trade talks, short-term bonds became more profitable that long-term ones — known as an inverted yield curve. This phenomenon has been present leading up to every recession in the United States over the last 50 years.

“There has not been this kind of unilateral tariff increase with retaliation since the late 1920s,” Maskus said.

At that time, the rate hikes were much lower than the 25 percent that are set to begin this year, and the global economy only consisted of a handful of countries. Yet, said Maskus, those tariffs were one of the contributing factors to the Great Depression.

And on the local level, for small manufacturers, there is not a lot of wiggle room for price increases.

These are enormous changes, absolutely enormous changes,” Maskus said. “If you are importing even high-end sportswear, but you’ve got low margins because it’s a competitive industry, an increase in tariffs from 5 percent to 10 percent can drive you out of business.”

Even those who don’t manufacture in China are keeping a close eye on the current trade war. Aspen apparel company Strafe Outerwear manufactures its goods in Vietnam. Yet, Strafe COO Carl Walker said he’s seen talk of new tariffs coming to South Asia as well.

“That’d be devastating,” Walker said. “The type of tariffs that exist in China right now are large enough that our entire margin would be eaten by that. This could crush companies in certain industries.”

Even if increased tariffs don’t come to Vietnam, companies trying to avoid tariffs will.

“We’ve had really strong relationships with manufacturers in Vietnam. For five years we’ve been working with the same people,” he said. “My worry is that some bigger company will be leaving China because of the tariffs, and we could get squeezed out of a good relationship. I hope that doesn’t happen.”

And while many textile factories are set up in the Philippines and Thailand that could mass produce consumer apparel, the specifics of what is needed to produce quality ski gear is another story.

“We make such a specialized product. It’s very technical,” Walker said. “It takes years to get this stuff right, and there is a lot of really special equipment. It’s not like you could just go to any factory and say ‘oh you can make jackets for us now.’”

Walker said his partners need to have seam taping equipment, laser cutting machines and specialized bonding equipment.

“So we don’t necessarily have a situation where we could just move somewhere else. Even though we are not currently subjected to tariffs, that’s how the national conversation is affecting our business right now.”

Consumers remain at risk of seeing increased prices as they shop their winter gear this year, and local businesses are keeping an eye on the bottom line.

“A 25 percent upcharge on a product is enough to make it economically nonviable,” Walker said.

The ever-changing nature of the trade talks between the U.S. and China, the moving target of when the increases may take place and the expanding conversation regarding what countries might be next mean there is little a small shop can do in the meantime.

“Obviously there is a lot of anxiety around that, and we are trying to keep our heads down and keep doing our job, and hope it doesn't get to that point,” Walker said.

Alycin Bektesh is a reporter for the Aspen Daily News. She can be reached at Alycin@aspendailynews.com or on Twitter @alycinwonder.