Costs rise for Stormy Kromer as China trade war heats up, company seeking other suppliers

The iconic winter hat worn by your grandpa, the one made famous by pragmatic dressers everywhere is looking for suppliers elsewhere.

Stormy Kromer, the northern Michigan based-baseball style cap with built-in ear muffs is seeing costs rise due to an escalating trade war with China. Its president said the latest tariff has pushed the price of material in their apparel by an extra 50 percent.

"There's not much warning on these tariffs and another challenge is in the apparel business we have to set our prices a year and advance, so we're always trying to play catch up with this," said Gina Thorsen. "We've been able to find a few operational efficiencies that will help with some of those costs but some of those costs are just additional costs."

Thorsen said the extra 50 percent has pushed the end price of the hat over a cost threshold that many consumers aren't willing to contend with.

Stormy Kromer's struggles aren't unique however. It's struggles are emblematic of a larger trend in the local business industry in Michigan - a trade war with the country's top seller has created an uncertain business market. It's one that makes it difficult to predict the flows of future business.

"One of the most challenging aspects of dealing with today's situation is that it's very unpredictable," said Brian Calley, former Lieutenant Governor and head of the Small Business Association of Michigan. 

Calley said the tariffs has pigeon-holed businesses into looking for alternative suppliers as a way to avoid the expense on foreign imports.

"If you're going to have this type of market disruption to deal with some of the long-standing issues like industrial espionage and currency manipulation and copyright infringement and Intellectual property theft - if you're going really go after those things and we're going to have a time of uncertainty because of that, it would be great if the outcome wasn't to just shift production from China to another nearby country," said Calley. 

That's directed the lobbying group in Lansing to collect information from its members and funnel it to policy makers, hoping they can adjust laws to help businesses. For Stormy Kromer, they think they may have found a supplier closer to home.

"In the past few months, we have been in contact with a mill in New England that might be able to expand their capabilities to do what we need," Thorsen said, "so we're actually planning a visit in October to start looking ahead so that we're hoping the next batch of wool that we need we can purchase from them."