Back to Trump’s Long Game: Tariffs. Everyone Hates Them, Right? Wrong.

If you need a distraction from recent headlines about nuclear annihilation, scroll to the end of this column to watch a crazy animal video.

Meantime, I guess Iran’s nuclear threat has been obliterated/destroyed/suffered a setback/TBD, and there’s a cease fire with Israel less than 72 hours after American B-2s dropped bunker busters.

Next!

Maybe we can get back to talking about President Trump’s long game: Tariffs.

Here’s what I didn’t expect.

I recently chatted with Scott Edgeworth at a gathering of executives in Las Vegas, and he kept mentioning tariffs. I assumed he hated them.

He loves them.

I was confused. I thought the entire business community hated tariffs.

It’s been nearly three months since “Liberation Day,” when Trump announced a slew of new duties aimed at making it more costly to import lower-priced goods into the United States. The point was two-fold — level the playing field for American manufacturers and/or use the tariffs as leverage to negotiate better trade deals.

Almost everyone in Corporate America has been having a cow about it, saying the administration’s policy raises the risk of recession.

But for Scott and his colleague, Jesse Bugarin, “This is very good.”

The two men work at Cannon Security Products, a privately-held company based in Las Vegas that makes safes. Jesse has been there for over three decades, working his way up from sweeping the floors to company president. Scott first joined as CFO in 2013.

Their products cost anywhere from under $200 to a few grand. As for business, well, uncertainty, fear and crime are positive catalysts. “With instability, sales sometimes increase,” Scott says. “We’re kind of anti-recession.”

They may be anti-recession, but they’re definitely pro-tariff.

Cannon used to manufacture in California, but the state “found every which way they could to tax us,” Jesse says. In 2010, they moved manufacturing to Mexico. Scott says nearly all of the material still comes from the U.S. — like most of the steel. That means the safes are not subject to the current tariffs (yet). And while the labor force in Mexico is local (and less expensive), Scott says the management team on site is American.

Even so, Cannon still hasn’t been able to compete with cheaper imports. While company sales top $100 million a year, profits are much lower. It’s a business with tight margins.

They blame China.

“It’s been challenging for us with China, how they cheat,” says Scott. “They diluted the industry from a quality and cost standpoint…the security standards have gone down.”

It wasn’t always like this.

Cannon has been around since 1965, but it wasn’t until chains like Costco and Walmart began selling its products that Cannon management noticed Chinese knockoffs popping up. “At some point we started traveling to China to understand what was going on,” says Jesse. “Very quickly, we saw that there were back-door deals with [the Chinese government] where they would give anywhere from a 10% to 15% tax credit to their manufacturers. So effectively, you could sell the product at a slight loss and still see a profit.” (Meantime, Cannon is purchasing two small Chinese firms that the company plans to move into its own operations or to another country.)

During the first Trump administration, a 25% tariff was slapped on Chinese imports, but even then, “We couldn’t compete,” Jesse says. To make matters worse, a lot of manufacturing simply moved to Vietnam or Malaysia to avoid the tariff.

That’s supposed to change under Trump 2.0, where new tariffs penalize pretty much everyone.

The Cannon executives are especially pleased that the administration has ended the so-called “de minimus” exemption for goods from China and Hong Kong. Under that system, imports under $800 were duty free. Guess how much a lot of Chinese safes cost? “They would put them on a big ship and call them all $799 each,” Scott says.

That’s no longer the case, though the situation remains fluid. It’s hard to keep up with which tariffs are in place at any given moment. Right now, Chinese safes imported into the U.S. face a total tariff of about 55%, and that’s a price Cannon says it can compete with.

Of course, higher tariffs mean you the consumer will probably pay more for a new safe, depending on how much of the extra cost is passed along by the manufacturer, exporter, importer or retailer.

But Scott and Jesse believe they finally have a fair shake.

And they believe two other things.

First, they claim their safes are safer. For example, last year the Consumer Product Safety Commission warned that the fingerprint biometric reader on two brands of safes made in China didn’t work, meaning anyone — including a child — could access what you have inside, like a firearm.

Second, it’s not just more patriotic to buy their safes, they say it’s actually more beneficial to the U.S. economy. Even though the safes are put together in Mexico, most of the materials come from the U.S, and Jesse says that means most of what you pay for the safe returns to America. But when you buy a safe made in China, he claims that “somewhere between 40% to 80% is going back into China.”

The two men remain watchful, though. “Trump can change his mind from one second to the next,” Jesse says.

It’s a very uncertain world. A little scary, too.

Of course, fear is good for safe sales.

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Cannon sent me a bunch of corporate videos, but this one stuck out. It’s the story of Del, a Cannon employee, who lost his mobile home in a fire. But the candy inside his Cannon safe (for his grandkids) didn’t even melt. Priorities!

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A couple more notes unrelated to safes or tariffs.

Welcome to several new readers who discovered my column thanks to a recommendation from superstar baker Dorie Greenspan, who also happens to be a fabulous human being. Dorie’s Substack inspires me to bake — though my English muffins remain a work in progress — and her writing transports me to Paris. Alas, I have no recipes to share here, but I did once make my own bacon. It was delicious.

Finally, here’s the aforementioned crazy animal video. This column talked about fear and the unexpected. Well, watch what happens when a grizzly bear is set free in the wild.

🐻🐻🐻🐻🐻