Uncertainty colors local businesses' reaction to potential trade war

As nations exchange tit-for-tat tariffs across international borders, Illinois farmers, manufacturers, brewers and other business owners are caught in the uncertainty of how President Donald Trump’s aggressive trade stances could affect their industries.

Many right now are in a wait-and-see mode. Joliet still brandishes the nickname “City of Steel and Stone,” a title nostalgic of its once booming industry.

Steel is one of the first products in the tariff crosshairs, and manufacturing leaders expect to feel the effects of tariffs if implemented.

Mike Paone, executive vice president of the Joliet Region Chamber of Commerce and Industry, said the steel and automobile industry “relies pretty heavily on Mexico and China for parts.”

“The magic question is always, ‘Who absorbs the cost?’” Paone said. “Does that company absorb it and find other ways, or is that a straight pass to consumers? Obviously, it’s going to be felt somewhere.”

In Kane County, manufacturing company CEO Jim Sauber said the effect on the automotive and manufacturing industries is different from others in that although tariffs on some materials and products can be avoided by supplementing and substituting with other supplies, there is no substitute for steel or aluminum.

Sauber Mfg. Co., located in Virgil, manufactures and distributes products for the utility industry, including parts, equipment, trailers and vehicles. Last year, the company used more than 1.2 million pounds of ferrous steel, as well as considerable amounts of other types of steel and aluminum, all of which could be subject to tariffs this year, Sauber said.

Tariffs potentially could affect several aspects of Sauber’s business, from costs of materials to a decrease in demand from Canadian customers. He added that there are many types of steel used in the automotive and aerospace industries that are only made in other countries.

Tariffs of 25% on Canada and Mexico are expected to go into effect March 12, and additional “reciprocal tariffs” are expected to be imposed on all trading partners of the U.S. as soon as April 2. Hours after the initial announcement, Canada and Mexico ordered retaliatory tariffs on a variety of American goods, including many products shipped to U.S. farms.

Colin Kuehl, a political science professor at Northern Illinois University in DeKalb, said what’s good for politics isn’t always good for business. He expects tariffs to create headaches for local business owners who rely on imported goods to manufacture steel, build homes, fix cars or stock grocery shelves.

“The reason we’re buying these goods from China, Mexico and Canada is because they can produce them the most cheaply, the most efficiently. If we put this tax on them, they’re going to be more expensive,” Kuehl said. ”It’s hard to make long-term business decisions when you don’t know your cost in a few months on a key supply you’re importing.”

Leadership with Kunes Auto Group, a car dealership company that has 40 locations including in Sterling, Morrison, Mount Carroll and Oregon, said it is difficult to plan for what the tariffs could mean.

“Tariff conversations continue to be in flux,” said Scott Kunes, chief operating officer of Kunes Auto. “Without final facts, it’s hard to plan for what’s next. Our teams continue to focus on the impact of current interest rates and how that affects our customers' ability to finance their vehicles.”

Kendall County saw mill owner Dan Nicholson has owned Nicholson Logging and Lumber in Yorkville since 1986. Although his business primarily serves domestic consumers, he expects that the tariffs will touch every facet of the market’s supply chain.

Nicholson does not import timber from Canada directly, but he remanufactures products that originally were exported from Canada. Although he expects a great impact on the industry, he believes the tariffs will have a positive long-term effect.

“All costs are borne by the consumer, and as far as the products coming out of Canada, prices will go up on certain things,” Nicholson said. “I think there’s long-term benefits. Let’s make it a level playing field with the subsidized Canadian lumber. I think then the free market will settle many things out. The role in government is not to create any profit in any industry because it’s not sustainable.”

Food chain

David Isermann, president of the La Salle County Farm Bureau, said local farmers rely heavily on exports for their income – particularly grain, corn, soybeans and cattle – to markets across the globe.

More than 20% of U.S. farm income comes from exports, according to the American Farm Bureau Federation. In 2024, the U.S. exported more than $30 billion in agricultural products to Mexico, $29 billion to Canada and $26 billion to China.

“Canada and Mexico are our top two trading partners for most agricultural goods,” Isermann said. “If these tariffs were reinstated, it could hurt us both ways.”

Isermann said the uncertainty surrounding the continuation of the tariffs has created a sense of unease among local farmers.

“We haven’t really seen the immediate impact of these new tariffs yet,” Isermann said. “Right now, we’re in a period of wait and see, but it’s definitely a nervous time, and we’re still hopeful things can stabilize.”

Not all farmers share Isermann’s sentiments toward the tariffs. Will County farmer David Kestel pointed to the new warehouses in Joliet as a reason why he is OK with the new policies.

“I don’t think there’s very much American-made product in those warehouses,” Kestle said.

Although Kestel expects the tariffs will lead to lower grain prices in the short term, he said he is willing to live with that if it means fairer trade and more support for American manufacturing.

“At the end of the day, it all boils down to fair trade,” Kestle said. “President Trump’s not going to let them walk all over us.”

Ottawa business owner Tom McDonell, owner of Polancic’s Meats and Tenderloins, also is taking a wait-and-see approach. He said agriculture is the backbone of the food industry, and rising produce prices already are affecting his business.

“Anything that hurts agriculture or grocery stores is going to impact us,” McDonell said. “Inflation was already a problem for food, so I don’t think anybody wants to see the situation get worse.”

With the tariffs being temporarily suspended, McDonell hopes they are part of negotiations that could lead to a favorable market outcome.

Kuehl at NIU said it’s likely that increased tariffs will have the biggest effect on the poorest people. He said the less expendable income one has, the less they’re going to be able to afford when prices increase for items they need.

Cannery row

Other potential effects are less obvious. One of the most common uses of aluminum is packaging, including soda and beer cans. There are more than 300 craft breweries in the state of Illinois, according to the Illinois Craft Breweries Guild, mostly in the Chicago area. Although large beverage producers likely will increase prices as a result of the new tariffs, small local businesses such as craft breweries likely will see an impact to their already thin margins.

“The proposed tariffs would be detrimental to Illinois craft breweries and other small businesses that are already navigating a period of tremendous economic uncertainty,” Illinois Craft Brewers Guild President Ray Stout said. “Since the pandemic, our members have seen record price increases across their supply chains, and levying additional tariffs to key production inputs like aluminum and barley will further test their already razor-thin margins.”

Ripple effects

Not every business expects an immediate hit from the tariffs, although most do foresee an eventual impact. St. Charles pre-owned car dealership owner Brian Rudowicz expects his business to feel secondary effects of the tariffs, if any.

“I think it’s primarily going to affect the new car business first, and then, if it lasts, it’s going to trickle down to the used-car business,” Rudowicz said. “Depending on how long it lasts, you’ll see less rebates, less incentivized finance rates and a shortage of inventory.”

Rudowicz said if the tariffs affect the new car business and create a shortage, that would in turn decrease the used-car inventory, increasing demand and sticker prices. He said he expects to see a similar effect to that of the chip shortage that slowed automobile production lines a few years ago, leading to car owners holding on to their vehicles longer and sending used-car prices soaring.

“As a business owner, there’s really nothing we can do to react to this,” Rudowicz said. “You can’t go out and buy a bunch of inventory and hope that things change or don’t change. You just kind of have to wait and see what happens and hope for the best.“

Despite the potential disruption to his industry, Kane County mechanic Minor Mobley, who owns Excel Automotive Repair in St. Charles, is in full support of the president’s plans to ramp up taxing on imports.

“I believe in the tariffs,” Mobley said. “If it has to get worse before it gets better, I understand that. Is it something that I want? No, but the reality of it is our country is a mess, and so we have to hit the reset button, and the only way to do that is to make sure that countries around the world are paying their fair shares to the American people.”

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