Hartford Business Journal

26 HARTFORDBUSINESS.COM | MAY 5, 2025 material comes from the bark of trees only planted in Malaysia and China," he said. "So, even the raw materials, we don't have 50 years or 75 years to plant these trees that don't exist here in the States." The long timeline on orders neces- sitated by shipping goods from Asia has meant even more uncertainty. "It takes three to six months for products to come into our factories because it's coming from overseas," Zaheer said. "And by the time that they hit the port, these containers could cost us 50% more, 75% more. In the instance of China, it's 145% more." Zaheer is concerned that the fallout from the costs and the uncertainty may include shortages of vital equip- ment at hospitals and labs, similar to what happened at the height of the COVID-19 pandemic. He said he's seen hospital systems looking for new contracts on some goods, but supply companies are reluctant to quote on business that they're not certain they can fulfill at a predictable price. 'Less-than-ideal' situation For other small and midsize busi- nesses in Connecticut, the issue is with exporting finished goods else- where in the world. In 2024, Connecticut exported goods worth $17.4 billion, almost 5% of the state's GDP. The state's biggest trading partner is Canada, followed by Germany, Mexico and China. The federal government estimates that exporting supports 50,000 jobs in Connecticut. And not all of that activity is driven by major companies. Some 4,680 small and midsize businesses are involved in exporting, representing almost 50% of the total value of exports in Connecticut. Lou Auletta, the CEO of Bris- tol-based Bauer, said that the first and immediate impact of tariffs on his busi- ness was related to $4 million worth of test equipment the company had in process for two customers in China. Bauer makes aerospace compo- nents and test equipment. This year, it was named the U.S. Small Business Administration's National Exporter of the Year in Connecticut. "On a Friday, and only five days before the escalation in tariffs on U.S. imports to China was to take effect, both customers insisted we ship the equipment, which was about 90% complete," he said. Auletta said he had to put a full crew to work through the weekend to disassemble, package and load the equipment onto trucks and onto a flight from New York on April 10th, to avoid the imminent tariffs. "We will now spend significant time and cost on-site in China to complete these projects, and we will need to negotiate additional compensation with these customers, in addition to making sure we get paid in a timely manner for the expedited shipment," he said. Bauer doesn't buy directly from overseas suppliers, but some of the components it obtains through distributors are sourced outside the U.S. Those have been subject to tariff surcharges and price increases. Auletta says he's had to challenge and negotiate because not all the extra charges he's seeing are justi- fied. But he certainly expects material cost increases. "Overall, the situation is less than ideal, but we'll figure it out, like we always do," he said. "At what cost and how long it will take, remains to be seen." Bauer employs 110 people and reports about $35 million in annual revenue. Auletta said he will not consider job cuts if tariffs end up impacting profits, but will take measures and continue current initia- tives to reduce costs. Auletta says the overall uncertainty is his biggest concern. And he's expecting that some new orders will get delayed as that uncertainty is worked out. 'Not a good idea' Other businesses have either been able to avoid any significant impact so far, or they're still in "wait-and-see" mode. Simtech is an aerospace company based in East Granby that distributes mostly U.S.-manufactured military aerospace components that go into fighter aircraft — including the C-130, F-16 and Black Hawk — sold to NATO-allied countries in Europe. "Most of our product is exported out of the U.S. under either a Commerce Department license or a State Department license," CEO Richard Leite said. "We haven't seen any immediate effect of the tariffs on our business." He said the intense focus that the Trump administration's moves have brought to the issue of tariffs doesn't mean it's a new challenge for businesses. "There always are tariffs, but the kind of tariffs we've come upon are anywhere from 1 to 3%," he said. A typical situation might involve a bearing or other small part that the company orders from Europe, which unexpectedly turns out to have a small tariff associated with it. "You bought them for $100,000. Now you've got to pay $3,000 in tariffs before you receive the goods. You can generally work with that on your margin. You're not going to bill the customer. You're going to eat it," he explained. "Obviously, if tariffs go much higher than that, then it becomes more of a challenge." He said, for the moment, Simtech is not taking any action ahead of the tariff threat, and is hoping within 90 days there's more clarity on what the regime will actually involve. "Tariffs are generally not a good idea," he said. "And especially not with countries like the UK, and coun- tries that have similar economies like ours, where it's a pretty level playing field." Connect with us today! 860-448-4295 NMLS #402928 ChelseaGroton.com/GrowThatBiz We work tirelessly to offer innovative business products, services, and digital tools - all with a hands on approach and commitment to the community! Doesn't your business deserve the best? WHAT DOES CT EXPORT? TOP EXPORTS TOTAL VALUE Aircraft parts $5B (gliders, balloons and powered aircraft) Machines and apparatus $999M Unspecified commodities $1.76B $673M Gas Turbines $616M Aircraft parts for spacecraft, $385M UAVs, and ground equipment WHAT DOES CT IMPORT? TOP IMPORTS TOTAL VALUE Planes, helicopters, and/or spacecraft $2.86B Refined petroleum $2.37B Silver $1.95B Unspecified commodities $1.76B Gas turbines $596M Source: U.S. International Trade Administration Tariffs Continued from page 25

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