ANNE D'INNOCENZIO
6 min read
NEW YORK (AP) — Toy robots that teach children to code. Sneakers made in America. Mold-resistant kitchen gadgets.
The three items are among new products that have gotten stuck in the pipeline due to President Donald Trump's unpredictable trade policies, according to the brand founders behind the stalled items. They say that instead of fostering U.S. innovation, Trump’s tariffs are stifling it with extra costs and unexpected work.
At Learning Resources in Vernon Hills, Illinois, Made Plus in Annapolis, Maryland, and Dorai Home in Salt Lake City, research and development have taken a backseat to recalculating budgets, negotiating with vendors and tracking shipments in the shifting tariff environment.
“If we don’t have enough cash to cover just the restocks of the things that we know we need, do we want to take a risk on this new thing when we don’t know how well it will sell yet?” Dorai Home founder Kelsey O’Callaghan said.
O’Callaghan started the eco-friendly home goods company with a stone bath mat and now offers about 50 kitchen and bathroom accessories, which are made in China with a non-toxic material that dries quickly. New launches are critical to increasing sales and attracting customers, she said.
As Trump increased the tariff on Chinese goods to 20% and as high as 145% before reducing the import tax rate to 30% for 90 days, Dorai Home postponed introducing new merchandise. O'Callaghan said she had to lay off the CEO as well as the head of product development, who helped the company jump on new trends.
“I haven’t really put the time or the emphasis on (innovation) because I’m covering too many other people’s roles,” she said.
The company paused shipments from China in early April but resumed some on a staggered basis after the president's rate reduction. On Wednesday, Trump touted progress in U.S.-China trade talks.
With details still sketchy and a deal not finalized, entrepreneurs interviewed by The Associated Press said they viewed the tariffs war as an ongoing threat.
Tariffs and American innovation
The potential stunting of innovation follows an economic slowdown during the coronavirus pandemic, when companies also had to put projects on hold. Some experts think the on-again-off again tariffs may have more enduring consequences because they rewire markets and upend business strategies.
“When executive attention shifts from innovation to regulatory compliance, the innovation pipeline suffers. Companies end up optimizing for the political landscape rather than technological advancement,” economists J. Bradford Jensen, a nonresident senior fellow at the Peterson Institute for International Economics, and Scott J. Wallsten, president of the Technology Policy Institute think tank, wrote in an April blog post.
