Pennsylvania exporters brace for the cost of retaliatory tariffs during Trump’s trade war

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Karl Brown has been exporting Pennsylvania-made snack foods abroad for over three decades across 85 countries.

Brown is the CEO of Pretzel Pete and SB Global in the Philadelphia suburb of Hatboro.

Founded in the 1990s, the company has grown to 60 employees. Typically, the federal government promotes U.S. exports through insurance guarantees via the export-import bank, which says it has secured $4.6 million in exports for the local manufacturer over the past decade.

Brown remembers when the U.S. imposed a 25% tariff on imports from China during President Donald Trump’s first term in office.

China retaliated with 25% tariffs on U.S. imports in return, which made a big dent in his business.

At the time, consumers in China had developed a taste for Pennsylvania-made snack products like pretzels and marshmallows. For decades, American-made products had a cachet and sold for higher prices in global markets. But sometimes the price is too high, even for premium products.

“I had developed a very substantial business in China, it was by far our largest market,” Brown said. “As a result of the tariffs, our business to that market dropped by 80%, which was a very significant hit.”

Since then, the company has built a customer base across Canada and Germany.

But now, there’s a 25% reciprocal tariff for goods exported to Canada and 10% tariff for U.S. exports to Germany under Trump’s second term.

“Both of those have been in the cross-hairs and have either implemented or were threatening to implement reciprocal tariffs,” Brown said.

While some companies can afford to relocate their manufacturing facilities to avoid tariffs, it would be difficult for local businesses to find the workforce and raise the capital to manufacture those snack products in markets like Canada.

“The weaponizing of tariffs on our side is the wrong way to go about it,” he said. Instead, there are other trade barriers in the way.

A few weeks ago, the remnants of Brown’s exports to China were cancelled.

The U.S. imposed tariffs up to 145% and China reciprocated with 125% tariffs. That’s a sticky situation because many exports are custom-made for each country.

“We sometimes have to use different ingredients, we almost always have to use different packaging. We have a major cost because now we’re stuck with [that] product,” he said.

And as suppliers, price contracts typically extend between six months to a year, so if the cost of raw ingredients imported into the U.S. goes up mid-contract, the manufacturer eats the cost difference.

For now, he expects to raise prices by at least 10%.

“But if we’re starting to get indications that after 90 days this isn’t going to be solved, then we’re going to have to consider scenarios where we’re going to be facing a lot more than 10%,” he said.

Pennsylvania companies export billions of products around the world each year. According to U.S. Census data, the largest export market is Canada, which represented 27% of all state exports in 2024 totaling $14.2 billion. That’s followed by Mexico, China, the Netherlands and Japan.

The top exports to Canada are computers and electronics, chemicals and machinery.

Businesses exported $634 million worth of sugar and confectionery products to Canada and $87 million to Mexico last year, Census data states.

Companies across the state exported $3.4 billion in products to China in 2024. The top three export sectors were coal and petroleum products, machinery and pharmaceutical products. Pennsylvania businesses also exported $68 million of meat to China last year, according to Census data.

To help facilitate global commerce, especially among small business exporters, there are nonprofit technical assistance centers, such as the World Trade Centers.

Thomas Young is the CEO of World Trade Center of Greater Philadelphia, which represents 150 member companies from life sciences, advanced manufacturing and food processors.

Young said that the large market swings during the trade war have been disconcerting for businesses. About 60% of the local World Trade Center members are exporters and 40% are importers, Young said.

“The volatility of it all is what threw a lot of my members off right now,” he said. But overall, most companies are taking a long-term view.

Some are accelerating their plans to nearshore operations bringing them closer to the U.S. to avoid heavy tariffs, Young said.

“They’re still at that point now where they’re cautiously optimistic about the market, about tariffs,” he added.

Next year, Philadelphia will host the Global Business Forum, where 300 world trade centers from 90 different countries.

“This gives us a chance to have business leaders from around the world, investors from around the world, even some government folks from around the world to Philadelphia,” he said. “A lot of people, our partners, are watching us very closely. They’re watching the United States very closely to understand not just what’s happening around tariffs, but also what’s happening around immigration.”