Jay Aldebert on Fox 32 Chicago

ANCHOR: Let's talk about what's going on with the US and Canada. They're throwing tariffs at each other again and somehow, yes, your wallet is caught in the middle of all of it. Jay Aldebert spends his days keeping businesses from panicking over stuff like this. He's joining us now to help us make sense of what's going on. How you doing, Jay?

JAY ALDEBERT: Good, how are you doing?

ANCHOR: I'm good, I can't complain. Okay, so what actually changed here because one day this wasn't a story and now it is.

JAY: Absolutely. It started off with obviously there was some specific items that the US wanted a little bit more cushion on. Canada wanted it as well. It was heading towards an agreement and then there was some pretty big issues that obviously threw it off. The result of which is now we're in a tit-for-tat tariff war.

ANCHOR: So walk me through this like I'm five. When the US and Canada slap tariffs on each other, who's actually writing that check?

JAY: So it is a game of hot potato to be honest. It's not centered as one. Where does the check get paid? A product is imported into the United States, a tariff is slapped on it at 50 percent. It's being paid by the importer. We'll start there. The importer then sends it out to a distributor. As they sell it to a distributor, they add a little bit of margin. So it's not just that 50 percent tariff, it's the margin that they decided to sell the distributor. Distributor then sells it to a supply house, they've added a little bit of margin. So by the time it gets to the individual that probably is going to have to pay for this, it really is going to be the small, medium-sized business owner. And if they have contracts or escalation contracts that actually can pass it on to the consumer, those are the two areas. It's either going to be the small business owner that's going to pay the check on all of this finally, or it's going to be the consumer that consumes it.

ANCHOR: So there's really no way around any of this and companies are just stuck eating that cost?

JAY: It's going to have to be offsetting costs that are going to help out the situation whether that's increase of labor productivity, looking at your overhead to trim. Those are the areas that you're gonna have until some legislation comes out that allows on the state level or obviously on the federal level that's going to give them some sort of ease. Yes, there is no way of steering around it other than offsetting.

ANCHOR: So if I see a higher price tag next week, is that this or am I just blaming tariffs for everything now?

JAY: That's the most interesting part. When you see these types of situations, it doesn't mean that domestic products say we're going to keep our price where it is. We can still edge up a little bit more margin and I would be instructing my clients if I was being honest, edge up our pricing just a little bit more while staying competitive against those Canadian imports.

ANCHOR: And you talk to small business owners all day. Are they freaking out right now or have they just gotten used to this by now?

JAY: They're freaking out to be honest. We go through 10 to 12,000 companies a year. That's a big volume overall. And as a result, that's new clients. Monday morning we were fielding calls at all levels, in all departments, "What am I going to do next?" Even if they have been working with us for a period of time, this was quite a shock to them.

ANCHOR: So free advice to small business owners out there, should they be waiting on some deal to save them or plan around this for good?

JAY: Based off a couple of decisions that were made in this particular tariff war, the 338, people can look up what that is, but it's a tariff law that came out. It's from the 1930s, it's 100 years old or almost 100 years old, and it's never been used. That surpasses Congress in terms of approval based on adding tariffs or taking them off, only the president can do that. Using that particular law in itself shows that this is going to be a long-term battle and it's not just going to be cured around the corner. So they should be making decisions now and taking strategy now.

ANCHOR: A long-term battle. So what does this actually look like day to day? What are they doing differently? What should they be doing differently?

JAY: You referring to small businesses or consumers in general?

ANCHOR: Well both, we got time, let's talk about both.

JAY: If I may, I'm going to start with the consumers because I've talked a lot about small business. If you have a decision of buying specific things like cars, appliances, holiday goods, even renovations in your home, I hate to say it, the decision should be made now before bigger tariffs and expansion of tariffs occurs. If you're doing any types of renovations, lock in with your contractors the pricing now, pre-tariff and pre-ship of those materials. Read the contracts. Don't be pushed in as a consumer into having to pay a higher price just because the contractor says to you, hey, my prices are higher. Look at the contract and see if there was an elevation clause in it. If there isn't, don't be pushed into paying that. And question the suppliers of anything when they're going to raise their prices. That's on the consumer side.

ANCHOR: And then on the small business side?

JAY: Small business side is obviously somewhat the opposite. Reprice anything. Small medium-sized business owners specifically in manufacturing and construction and the trades, they put out these bids and these bids usually say, hey, this is valid for 30 days, this is valid for 60 days. The ability to reprice those right now is what you've got to do since they're not signed off on, and put a price validity on them for seven days only. That's first step. Second step, look at where the biggest costs are coming from. Just to give you an example, Chicagoland takes in about 30 percent of all building here in terms of use of lumber is with a Canadian product. Looking at where they can get to the front of the line right now and if they have the cash flow, increase their inventory to at least give them a cushion for a period of time.

ANCHOR: And a question I just got from my cousin. What should we be watching for next?

JAY: My biggest concern is that, and obviously it's the bylines that I'm seeing in the media, when Carney indicates this is a war, and then Trump says on the back, okay, well if you're not going to get in line, we're going to take it elsewhere. Now, he can't raise the 50 percent, that's the max obviously based on that tariff law. But the expansion of what's included in the tariffs can happen, and that's concerning. Illinois and Canada, they're their biggest trade, Illinois and Canada is the biggest import-export relationship overall. And right now only affects about four to five billion of goods, which is still a big number, that's flowing into Illinois. If they expand what that tariff law 338 covers, that could have a big impact and that's my concern.

ANCHOR: All right, Jay Aldebert, thank you for breaking this down for us, making it make sense. And I gotta say if people see me rockin' a vest tomorrow, you influenced that.

JAY: I appreciate it.

ANCHOR: Rockin' it, rockin' it my man.

ANCHOR LAUREN SCAFIDI: On January 1st. We're checking back in with Jay Aldebert, small business expert and Chief Growth Officer of International Services Incorporated. Thanks for joining us again.

JAY ALDEBERT: This is fantastic. Nice to be here.

ANCHOR: Yeah, you bet. So when we talked to you last week, these tariffs were just still a threat. Now we're about three days in. What have you seen?

JAY: Obviously, there's concerns already. When you're looking at what's happened already in Illinois and the price of materials, it's already increased on Sunday based off the announcements on Saturday.

ANCHOR: So let's talk about Chicago really quick, specifically. Why is it uniquely vulnerable to these tariffs and who ultimately swallows the higher costs here?

JAY: So, when you look at the trade between Canada and Illinois specifically, but we'll go with Chicago, it's a large portion. When they say there's 20 billion dollars worth of goods and tariffs they're going to put on, it's 20 billion dollars of items. Illinois and Canada have a trade of about 20 million in terms of exports, but imports are about 64 billion. So those are big numbers when you talk about it. How it's going to affect Chicago specifically is there's two sides of this. There's the consumer and then there's obviously the business owner. If the business owner can pass that cost onto the consumer, they will. If they can't, they have to eat it themselves. And that's a big concern.

ANCHOR: And what about small businesses? How do these tariff hikes hurt small businesses that don't even buy or sell across the Canadian border directly?

JAY: It comes down to who they work with directly. Is it the individual consumer? Then, obviously, they can pass. If you take manufacturing, I'll just take that specifically, two big manufacturers in Illinois specifically are John Deere. There is a whole bunch of small manufacturers, roughly about 20,000 of them, that are going to be supplying small, medium-sized parts to those big manufacturers. And as a result, they're the ones that are going to have to eat the margin on the impact of importing those particular materials.

ANCHOR: So do you have any advice for these people? What practical steps really should companies be taking today to protect their margins?

JAY: Look to other areas that you can raise prices. If it happens to be in labor, add a few points there. But really look at labor productivity. Look at a lot of your cost structures themselves that you may have see as being bloated. Look at where you can actually make cuts in that area as well.

ANCHOR: And what kind of lens should they be looking at this whole thing through? Do you think that these leaders should start just treating these tariffs as a kind of permanent thing, rather than waiting on a new trade deal or what?

JAY: When you look at what happened with China in the first administration, it took about 18 months for the tariff wars, we'll call them wars, to stop. In this particular case, using a tariff law that hasn't been around for a hundred years, that can actually sidestep Congress in terms of a vote, and it only can be taken off by the president, then it's in a position where you're going to see it being a long haul.

ANCHOR: So with that in mind then, when does a business start to rethink its suppliers and its pricing versus just kind of staying the course?

JAY: So again, there's an issue with that, thinking about your suppliers. Sometimes it's not a decision of whether I'm going to buy American or Canadian, there's just not enough supply. So looking at some of the areas you can cut costs on, taking domestic product or specifically in the state of Illinois is obviously a great measure. But it's got to be immediate. You gotta look at any bids you have out there, the validity of those. A lot of times there's an expiry after 30 to 60 days. They gotta put them in a position where they pull those back for repricing as fast as possible.

ANCHOR: And my last question for you, just kind of looking at the bigger picture here too, can these tariffs have an impact on hiring here?

JAY: I think it's going to have an impact, because if you're in a position where all of a sudden the tariffs are eroding margin, then you're going to make decisions about how many employees you can employ at this particular time because there's lost orders. That's one of the areas. There's margin erosion. That's another area. Those are all big decisions that small medium-sized business owners are going to have to make far before Ottawa and Washington specifically realize the impact.

ANCHOR: All right, lots to look at here. I'm sure this will not be the first time that we're talking. This isn't the first time. This is like the second time that we're talking with you in two weeks but I'm sure it'll be again soon. Jay, thank you so much.

JAY: Pleasure speaking with you.