When a tariff bill for almost $11,000 arrived without warning, Robert Keeley reached for one of his last financial lifelines and cashed in 1.83 million American Express reward points to pay it.
“It’s like a needle pin holding back a crack in the dam,” said Keeley, who runs Keeley Electronics, a guitar-pedal manufacturer with 35 employees in Oklahoma City.
Keeley’s scramble is part of a broader reckoning for America’s smaller businesses, which are being whipsawed by volatile trade policies. Another blow could land on July 9, the deadline President Donald Trump has imposed on other countries to secure trade deals with the U.S. to avoid higher tariffs.
The stakes are especially high for manufacturers with fewer than 100 employees, which account for 93% of the roughly 240,000 U.S. industrial firms. Unlike global conglomerates, these companies often lack the cash reserves, lobbying muscle or supply-chain flexibility to absorb steep tariff hikes or pivot production.
Among those feeling the pressure are a tight-knit group of guitar-pedal manufacturers like Keeley, who run boutique businesses that build the stomp boxes that shape the sound of music. The niche industry offers a window into the economic toll of tariff whiplash on smaller firms.
Painful Twist
To survive, pedal builders are doing something unusual in a competitive business: turning to one another for help.
The alliance was started by Julie Robbins, 46, chief executive officer of EarthQuaker Devices in Akron, Ohio. To avoid layoffs among her 35 workers, Robbins tapped the company’s credit line. But she fears that strategy won’t hold and is considering moving some production overseas — a painful twist, given the tariffs were meant to bring jobs home.
Trump, speaking last week at the NATO summit in The Hague, said the levies are spurring manufacturers to reshore production. “Factories are being built because they don’t want to pay the tariffs,” he said. And some large companies have promised to invest in domestic manufacturing. Apple Inc. alone plans to spend more than $500 billion in the U.S. over the next four years.
But small manufacturers tend not to have the deep pockets or flexibility needed to rebuild supply chains. Many, like EarthQuaker, rely on imported components. The company sources circuit boards, resistors and transistors from China for pedals used by bands including the Black Keys and Guided By Voices.
Read More: Trump Says He Doesn’t Expect to Extend July 9 Tariff Deadline
In early May, as tariff rates spiked, nearly 50 people joined the second meeting of the Pedal Builders Support Group, double the turnout of its inaugural call. The rules were clear: no talk of pricing or anything that could be considered collusion. One participant joked that the group sounded like a mini-OPEC.
“OPEC jokes are fine,” Robbins quipped.
The guest speaker that day was Shawn Phetteplace, campaigns director at Main Street Alliance, a lobbying group for small-business owners. He described how Trump’s first-term trade team included some moderate voices. Today’s administration, he said, is “much more kind of economically nationalist.”
Funds Gone
Soon, the conversation turned personal.
Jon Cusack, 55, runs a pedal manufacturer in Holland, Michigan, that builds delay, reverb and other stomp boxes for his brands and other firms. He said he spent $200,000 on inventory before tariffs took effect, draining his savings.
“I’ve gotten to the point where my slush funds are all gone, and I still am facing several tariff bills coming up,” said Cusack, whose 30-person company had revenue of $3.9 million last year. “Can we survive three months, six months, you know, a year? My next step is to mortgage the house, and I really don’t want to do that.”
It’s unusual for rivals to share their struggles with one another, but members of the support group are all dealing with the same problem and are part of a tight-knit community, said Zoom participant Josh Scott, who owns Kansas City-based JHS Pedals. He employs 42 workers and had about $10 million of revenue last year.
Scott, 43, who also runs a YouTube channel popular with guitar players, has used his platform to explain how tariffs work. He wrote a recent Substack post reminding consumers that “American businesses pay the tariff” — a cost that eventually gets passed along to customers.
In mid-May, Robbins traveled to Washington to testify before the U.S. Senate Committee on Small Business and Entrepreneurship, telling lawmakers that “without immediate relief from the tariffs and ensuing trade war, U.S. manufacturing companies like mine will not survive the summer.” She founded EarthQuaker with her husband, musician Jamie Stillman, in 2004.
She told the committee that before this year’s tariffs she bought blank printed circuit boards from China for $1.40 each, compared with $20.70 to $31.19 for domestic alternatives.
“That is not a viable option and would push our prices up far beyond what the market will bear,” she said. “And that is just one of the components that we use.”
Read More: Trump Tariffs Aimed at Reviving Manufacturing Are Doing Opposite
During the Pedal Builders Support Group’s next Zoom meeting, EveAnna Manley, president of Manley Laboratories Inc., shared her own cost-cutting tactics. Her Chino, California, company makes pre-amplifiers, equalizers, microphones and other equipment for recording studios.
“We put all our employees down to 30 hours a week, and that’s the baseline they can stay at and still keep their health care,” said Manley, 56. With the factory now only open Monday to Wednesday instead of five days a week “we can save a few dollars on air conditioning,” she said.
Keeley shared his own story in the group’s message thread, explaining how he used Amex credit-card points to pay May and June tariff bills totaling $10,987.48 on circuit boards from Golden Shine Electronics (Weng Yuan) Co. in China and other imported components shipped via DHL.
“I wanted to share the only ‘play’ I had in combating the tariffs,” Keeley, 55, wrote the group in mid-June.
Read More: Maker of Nirvana’s Guitar Sound Copes With Trump’s Tariff Chaos
At a follow-up Zoom meeting the next week, frustrations boiled over. For nearly two hours, participants exchanged ideas on how to raise awareness about the impact of tariffs on small U.S. manufacturers.
“They are just convinced that we can just start building transistors and resistors and inductors and capacitors,” Cusack said. “I’m supposed to be able to become an expert in every single one of those fields and manufacture all of my own products? They don’t understand what it takes to do all of that.”
Robbins agreed that the perception gap has made it harder to get traction with lawmakers and the public.
“I don’t think any of us are willing to go down without a fight,” she said. “And I think we all view this as, you know, a threat to our survival.”
Politics8 years ago