CEO: New tariffs could sink US model train industry

Added On June 23, 2019

The CEO of a U.S. import firm has warned that Washington's threatened tariffs on remaining Chinese imports would sink the U.S. model train industry and force bread earners in hundreds of families to lose their jobs.
President and CEO of Broadway Limited Imports Bob Grubba made the remarks in a recent interview with CNC.
The United States in May raised additional tariffs on 200 billion U.S. dollars' worth of Chinese imports from 10 percent to 25 percent, and threatened to levy extra duties on more Chinese products.
SOUNDBITE (English)BOB GRUBBA, Broadway Limited Imports:
"If we were to have the 25 percent tariffs imposed on this product, if we couldn't find a way around that, it would probably put us out of business. And I think the same is true of most of the companies in our industry."
Grubba has been working with his partners in the coastal city of Qingdao in China's Shandong Province for almost 20 years. He told CNC that Chinese manufacturers have contributed a lot to his model train business.
SOUNDBITE (English) BOB GRUBBA, Broadway Limited Imports:
"This whole industry, almost everything in the industry is manufactured in China. Because it's got a lot of precision parts that are very small. It takes a lot of hand labor, not a lot of machinery. And in the U.S. the labor rates are too high. It's too expensive to do."
Grubba said most of these companies have a "profit margin in the range of 30 percent". If they were to pay a 25-percent tariff, they would left in a very difficult position.
SOUNDBITE (English)BOB GRUBBA, Broadway Limited Imports:
"If we were to have a 25 percent tariff on that, we would raise the price to over 1,000 dollars. We don't have the profit margin to absorb that. 25 percent is about, you know, we only make maybe 30 percent on the whole thing. And that's got to pay for our salaries and our rent and you know all that stuff. "
Grubba said although the model train industry is fairly small in the United States, many people's livelihoods rely on it.
SOUNDBITE (English)BOB GRUBBA, Broadway Limited Imports:
"There are probably 1,000 hobby stores in the U.S. that sell this type of product. Well, each of those, you know, they're also not big businesses, but maybe they've got five to ten employees apiece. So that's another, you know, 5,000 people that, you know, I think those hobby stores would probably close. "
Grubba said the idea to relocate production out of China is also unrealistic.
SOUNDBITE (English)BOB GRUBBA, Broadway Limited Imports:   
"It takes a long time to develop that expertise. And we need to have factories that have the workers and the workers stay there. You know, some places the worker turnover is, you know, every few months there are new people, we need people stay for a long time. "
Grubba said he hopes the U.S. and China could resume normal trade relations in the near future.
SOUNDBITE 6(English)BOB GRUBBA, Broadway Limited Imports:
"China's economy has continued to rise and the U.S. economy has continued to rise because we're trading together. If something harms that trade, it is bad on both sides, and both sides start to go back into recession. And I don't know how the recession affected people around the world, but it looked like it was bad around the world."