Nearly 70% of Hawaii businesses have been “significantly” affected by President Donald Trump’s tariffs, and 27% have been “moderately” touched, according to preliminary results of a survey still being conducted by the Chamber of Commerce Hawaii.
Jimmy Chan, general manager and owner of Kalihi’s Hawaiian Chip Co., increased prices after Trump returned to the White House and expects to do it again in July, when tariffs will boost the price of every single clear polypropylene bag he uses from China by nearly 15%. He’s also bracing for higher costs to bring in glass bottles from China for the company’s “Raging Volcano” hot sauce.
The next price increase will go into effect just when Chan hopes to increase sales to tourists.
But the tourism industry already has seen a drop in visitor arrivals, notably Canadians angry at Trump’s initial Canadian tariffs and continuing threats to make Canada America’s 51st state.
Canadian visitors have dropped from about 7% of all tourists to “at least” 4% during a traditionally slow time of the year when every visitor counts, said Jerry Gibson, president of the Hawai‘i Hotel Alliance.
“There are obvious ideological and political” reasons for the decline in Canadian travel, he said. “It’s become noticeable. It’s not a good time to be losing business.”
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At the same time, Gibson said, government-related travel to Hawaii has fallen a whopping 50% since Trump took office and began slashing both federal spending and the federal workforce through Elon Musk’s new Department of Government Efficiency.
“They do a lot of travel here because there’s a lot of government work here,” Gibson said. “We definitely miss that segment of our industry.”
Hawaii’s visitor industry generally counts June 15 through Aug. 15 as its busy summer season.
“We’re right on top of summer, but we’re not getting a lot of reservations right now,” Gibson said. “It could be a function of wait and see.”
Maui, in particular, has been hit by the drop in both Canadian and government travel while the Valley Isle rebuilds from the August 2023 wildfires and its economy continues to struggle, Gibson said.
“For Maui,” he said, “it’s significant.”
The Chamber of Commerce survey represents a small sample of just 26 respondents as of Tuesday, but it reveals an overwhelming effect of the tariffs on island businesses that has broader implications for Hawaii’s economy.
Sherry Menor-McNamara, CEO and president of the Chamber of Commerce Hawaii, said the early results reflect “the uncertainty that we’re hearing every day that has people holding off making decisions. It’s across the board — not knowing how to proceed in these uncertain times.”
Nearly 70% of the respondents reported that the tariffs have them planning to cut back on business spending, which will ripple through Hawaii’s economy — just like the sluggish visitor arrivals do.
A drop in tourism, Gibson said, has a “rainbow effect to restaurants to tourism activities to banks and everything else.”
Like the Hawaiian Chip Co., just under 90% of the respondents to the survey reported that the tariffs have affected their supply chain costs and product pricing.
Another 40% said the tariffs have affected “customer demand or purchasing behavior.”
Most businesses, or nearly 67%, told the Chamber of Commerce that they plan to cut back on capital investments or expansions, followed by over 44% that plan to reduce marketing and advertising and over 38% that expect to reduce hiring and staffing.
Chan has found less expensive clear bags to buy from Taiwan.
But he’ll need to invest $1,000 for each of eight “plates” in order to emboss every new bag with his company logo and product descriptions.
At the same time, Chan faces additional costs and questions over his plans to expand the company’s existing retail sales operation inside its Republican Street factory to further increase sales to local residents, who make up the bulk of the business.
“I’m trying to stay ahead,” Chan said. “But the tariffs have just compounded the situation.”
He’ll have to boost prices another 5% to 10% in the summer, but worries about how much local families can afford to pay for his chips and sauces.
“We’re trying not to make it too crazy and palatable for our customers,” he said. “But when you keep piling everything else on, at what point does the camel’s back break?”
Business owners like Chan prefer to know what to expect.
But uncertainty over the tariffs — especially the 145% increase Trump imposed on China — means “it’s kind of hard to predict what will happen,” Chan said.
“So we’re going to tread water as best we can through this,” he said. “We’ve decided to go very conservative here. Unless we absolutely need it, we’re going to hold off on purchasing and do our best not to borrow. And that sets off other motions in the economy.”
The tariffs have just added to the broader global economic uncertainty under Trump — including the stock market, which dropped again Tuesday after Trump blasted the chair of the Federal Reserve for not reducing interest rates, which affect home and auto sales and all other forms of borrowing.
Business people in Hawaii who once cheered Trump’s election and his promise to lower prices immediately after resuming office, Chan said, “are keeping quiet at this point to see if this storm passes.”
Jack Sinanaj, co-owner of Empire Steak House, opened his ninth high-end restaurant — atop the Ilikai Hotel & Luxury Suites — in January just as Trump took office.
Even though there are other Empire Steak House restaurants, including in New York and Tokyo, Sinanaj was still stunned at how much everything costs in Hawaii, especially because of the islands’ reliance on imported goods.
“Over here,” he said, “everything’s 30% to 40% more than even New York.”
Now because of the tariffs on China, in particular, Sinanaj saw the price of each takeout bag he imports more than double.
He called them “good-quality” bags that are embossed with the restaurant logo and used to cost him $1.25 each.
Now he has to pay $2.75 each.
There are also higher import costs for pricey wines and high-quality, extra-virgin olive oil the restaurant imports from Europe.
So far, Sinanaj has absorbed the cost of the tariffs without passing them on to customers.
But he hopes the summer tourism season will create a boom for his new restaurant.
Asked about sales so far, Sinanaj said, “it’s declining and we just opened this year.”
Leigh Tonai, CEO of Hawaiian Island Creations, said the tariffs could cause even more damage to Hawaii businesses.
“I would say that the full effects of the tariffs have yet to be felt,” Tonai said. “If this thing continues, it would be devastating.”
After Trump imposed the 145% tariff on China, Tonai immediately halted all shipments of clothing, apparel, bags, surfboards, bodyboards and paddles from China.
“We have a ton of product sitting in China,” he said. “It’s not just us.”
Hawaiian Island Creations’ 17 stores have enough inventory to perhaps last through the summer, Tonai said.
“We’ll be OK for the next two to three months,” he said. “After that it’s going to be a big problem for inventory. There are things that only China can offer.”
Even if the standoff with China gets resolved soon, what happens after that will create new problems for Hawaii businesses that rely on Chinese imports, Tonai said.
With so much inventory stockpiled in China, a resolution to the tariff situation will suddenly release a flood of goods arriving by ship in Honolulu, he said.
“It’ll be a nightmare with a backlog of inventory at the ports,” Tonai said. “There’s a lot of chaos right now, and it’s going to get worse.”
TAKE THE TARIFF SURVEY
To participate in the the Chamber of Commerce Hawaii tariff survey, visit surveymonkey.com/r/5DXRYRY Opens in a new tab.
Respondents do not need to be members of the Chamber of Commerce Hawaii.
