{"id":6546,"date":"2026-09-20T19:13:32","date_gmt":"2026-09-21T02:13:32","guid":{"rendered":"https:\/\/abovecloud.xyz\/?p=6546"},"modified":"2026-09-20T19:15:35","modified_gmt":"2026-09-21T02:15:35","slug":"its-awful-how-tariffs-soaring-fuel-costs-and-higher-interest-rates-are-squeezing-american-companies","status":"publish","type":"post","link":"https:\/\/abovecloud.xyz\/?p=6546","title":{"rendered":"\u2018It\u2019s awful\u2019: How tariffs, soaring fuel costs and higher interest rates are squeezing American companies"},"content":{"rendered":"
\n
\n \t<\/i> Read Time:<\/span>6 Minute, 54 Second <\/div>\n\n <\/div>\n

Fewer, pricier flights. Freight surcharges. Manufacturers hoarding inventory. Even bankruptcy.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

For American companies large and small, the combination of tariffs imposed under President Donald Trump<\/a>\u2019s trade policies, surging fuel prices from the Iran war and, now, rising interest rates is forcing executives to make tough choices.<\/p>\n\n\n\n

Allen Eden has been holding onto extra inventory for his 25-person business, the Original Saw Co.<\/a> in Britt, Iowa, which makes industrial power saws for wood and metalwork, as he grapples with spiking prices for aluminum, steel and essential parts.<\/p>\n\n\n\n

One example: A \u201clittle bracket\u201d used for his saw motors more than doubled in price this summer, surging to $87 from $42, he said.<\/p>\n\n\n\n

\u201cIt\u2019s awful,\u201d Eden, 56, told CNBC. \u201d[I\u2019m] just trying to keep more of the stuff around because I don\u2019t know if we can get it down the road.\u201d<\/p>\n\n\n\n

It\u2019s a three-way squeeze for businesses across manufacturing, transportation<\/a> and retail: Tariffs<\/a> are making raw materials and goods more expensive. Higher fuel prices<\/a> are pushing up the cost of making and moving them. And rising rates<\/a> are making it more expensive to finance the inventory and equipment businesses need to keep running. <\/p>\n\n\n\n

While few sectors are completely insulated from these pressures, middle-market manufacturers are caught in a particularly tight vise. Rising steel and fuel costs are forcing them to pass at least some of those expenses on through higher prices, helping feed the stubborn inflation<\/a> of the past few years.<\/p>\n\n\n\n

But to wrangle inflation, the Federal Reserve\u00a0raised interest rates<\/a>\u00a0for the first time in three years and signaled another hike is possible this year. That makes it more expensive for businesses to finance inventory and borrow for growth at the same time that higher input costs and\u00a0record prices for diesel<\/a>, which is used for trucking, squeeze margins.

Price increases for Eden\u2019s saws, sold both to megaretailers like Home Depot<\/a> and directly to small- and medium-sized manufacturers, look inevitable, the business owner said.<\/p>\n\n\n\n

The pain isn\u2019t being evenly distributed. Smaller companies typically rely on shorter-term lending, meaning Fed hikes pass more directly into their costs, JPMorgan Chase<\/a> global strategy head Dubravko Lakos-Bujas said in a Sept. 14 note.<\/p>\n\n\n\n

But regardless of size, capital-intensive sectors like manufacturing and equipment suppliers, logistics firms including trucking fleets, and commercial real estate also suffer more in a rising-rate environment, according to Lakos-Bujas.<\/p>\n\n\n\n

\u201cThe combination of higher rates and higher fuel prices means that sectors with heavy exposure to both are first in the line of fire,\u201d said Gregory Daco<\/a>, chief economist at EY-Parthenon, the global consulting arm of Ernst & Young.<\/p>\n\n\n\n

\u201cAny type of manufacturing is going to be disproportionately exposed to higher fuel prices,\u201d he said.<\/p>\n\n\n\n

Rising fuel and commodity costs have strained both material makers and the retailers they serve.<\/p>\n\n\n\n

Mark Costa<\/a>, CEO of industrial giant Eastman Chemical<\/a>, said in May that the one-two punch of interest rates and inflation was forcing his industry into a corner. Eastman makes the plastics, additives, and other materials used in products as diverse as medical devices, animal feed, and car windshields.<\/p>\n\n\n\n

\u201cEveryone had their back against the wall and had no room to absorb these increases,\u201d Costa said<\/a>. \u201cEveryone is very quickly raising prices faster than I\u2019ve ever seen in 20 years.\u201d<\/p>\n\n\n\n

On the retail side, unexpected pressure from energy and raw materials costs will \u201cfully offset<\/a>\u201d the benefit of $730 million in tariff refunds, Home Depot CFO Richard McPhail said last month.<\/p>\n\n\n\n

\u201cThere\u2019s just so much uncertainty right now. \u2026 You think inflation, interest rates, fuel prices,\u201d McPhail said<\/a> last week at a conference.<\/p>\n\n\n\n

<\/a>Supply chain holes<\/h2>\n\n\n\n

Among those hardest hit are manufacturers in the domestic automobile supply chain. <\/p>\n\n\n\n

Lucerne International<\/a>, a privately held auto parts maker based in suburban Detroit, stopped manufacturing operations in the U.S. and canceled plans last year for a $50 million aluminum forging plant in Michigan.<\/p>\n\n\n\n

\u201cThe onset of the Trump tariffs 2.0 has just really torn holes in our global supply chains and increased costs significantly,\u201d Lucerne CEO Mary Buchzeiger<\/a> said, citing higher costs for raw materials, including aluminum, as well as finished parts.<\/p>\n\n\n\n

Buchzeiger, whose firm still manufactures overseas, said she has shifted U.S. operations to warehousing, distribution, and tariff-mitigation solutions for other companies, which offer \u201cmuch better margins.\u201d<\/p>\n\n\n\n

\u201cThere\u2019s no doubt that there\u2019s margin pressure for suppliers,\u201d Paul McCarthy<\/a>, CEO of vehicle supplier trade association MEMA, said. \u201cSome of it, we try to absorb \u2026 and then some of it does have to be passed on.\u201d<\/p>\n\n\n\n

Growth, as measured by earnings before interest and taxes for the top 100 auto suppliers, fell last year to 4.2%, down from more than 6% in 2021, according to consulting firm Berylls by AlixPartners<\/a>. Among the top 10 automakers, that figure is 5.2%, down from nearly 8% in 2022.<\/p>\n\n\n\n

Not all auto companies have managed the additional costs. Spanish auto parts maker Grupo Antolin, which supplies components to automakers including Ford<\/a>, GM<\/a>, Volkswagen and Stellantis<\/a>, filed for Chapter 15 bankruptcy<\/a> protection in the U.S. in July. The company cited tariffs, higher raw-material and energy costs, and supply-chain disruptions as reasons for its restructuring. <\/p>\n\n\n\n

<\/a>Divide in corporate America<\/h2>\n\n\n\n

Better off are the giants of the corporate world, like the tech and finance companies that fill the S&P 500<\/a>. These firms typically have more cash reserves and take out long-term debt, insulating them somewhat from the sting of higher rates.<\/p>\n\n\n\n

Most larger companies can thrive until borrowing costs rise much further. The pain would hit when the yield on the 10-year Treasury bond reaches 6%, up from around 5% now, according to JPMorgan\u2019s Lakos-Bujas, who cited 80 years of data.<\/p>\n\n\n\n

Borrowing costs are expected to stay higher for longer. Persistent inflation, which forced Warsh to raise the benchmark Fed rate against Trump\u2019s wishes<\/a>, along with heavy borrowing from the U.S. government, is keeping upward pressure on rates.<\/p>\n\n\n\n

Across corporate America, companies are grappling with these shocks in different ways. The divide comes down to one question: Who has pricing power?<\/p>\n\n\n\n

Some industries have learned they can readily pass higher costs on to consumers, while others are caught in a catch-22: If they raise prices too much, they risk destroying demand.

Airline executives last week boasted of higher fares as customers keep booking trips, especially abroad, allowing them to pass increased fuel costs on to travelers. Airlines scaled back growth plans, cutting less profitable flights even after the collapse of Spirit Airlines<\/a> this year.<\/p>\n\n\n\n

Fewer flights can mean pricier airline tickets, and fares were up more than 23% in August from last year, according to the latest inflation read. Yet even strong demand has its limits.<\/p>\n\n\n\n

\u201cThe consumer has been incredibly, incredibly resilient,\u201d United Chief Financial Officer Mike Leskinen<\/a> said Wednesday during a Morgan Stanley conference in Laguna Beach, California.<\/p>\n\n\n\n

\u201cBut there\u2019s some marginal routes that don\u2019t make sense in a higher fuel environment. So we cut them,\u201d Leskinen said. \u201cYou should see us continue to … behave that way.\u201d<\/p>\n\n\n\n

Much of corporate America remains resilient despite higher fuel and financing costs. Profit margins<\/a> for major companies hover near historic highs, propelled by strong productivity gains, labor costs that have stayed in check and surging artificial intelligence investment that is driving growth.<\/p>\n\n\n\n

But a risk of Warsh\u2019s efforts is that higher rates don\u2019t directly address the root causes of inflation: the Iran war, the Trump administration\u2019s tariffs, and the AI boom, which has driven up the prices for everything required to build and run data centers, from electricity to memory chips, copper, and land.<\/p>\n\n\n\n

Raising rates to tap the brakes on the U.S. economy could slow it down too much, or send stocks into a tailspin, said EY-Parthenon\u2019s Daco.<\/p>\n\n\n\n

\u201cThe economy is resilient, but it\u2019s exposed to growing pockets of risk,\u201d he said. \u201cA shock could materialize faster than we all think.\u201d

Reprinted from NBC<\/p>\n

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