Colorado businesses are preparing for President-elect Donald Trump to be sworn back into office next week. For some companies, that means planning for potential tariffs on the imported goods they need to make their products.
There is no official guidance yet on the size or scope of those tariffs or what types of products could be exempt. Some goods from China are already subject to high import taxes, a policy put in place by the first Trump administration that President Joe Biden kept in place.
But as Trump makes his return to the White House, he has not wavered on his stance that higher tariffs will be a cornerstone of his incoming administration’s trade policy. That’s pushing businesses to take action.
Take Estes Rockets, based in Penrose, Colorado. The company got its start during the space race in the 1950s. It’s now the country’s biggest manufacturer of model rockets for hobbyists.
“The Estes campus is referred to as the model rocket capital of the world,” according to Chief of Staff Stacy Martel.
The company’s midcentury headquarters sits on 300 acres about 30 miles west of Pueblo. A retro sign out front looks like something out of the Jetsons. The lobby is full of Space Age memorabilia, including photos signed by NASA astronauts, many of whom credit Estes Rockets with fostering their interest in space as kids.
The company’s model rockets range in size from six inches to two feet tall. Some are replicas of iconic vehicles like the space shuttle and Apollo 11’s Saturn V.
Estes manufactures the cardboard cylinder engines that power their model rockets in Penrose. But a lot of critical parts come from China, including the nose cones, fins and the little parachutes that open up when the rockets are coming down.
The company is stocking up on those items now to get ahead of more potential tariffs on imports from China. Estes is waiting on two shipping containers worth of parts that will supply them for the next 12 months, said Heidi Muckenthaler, vice president and general manager at Estes.
Previously, Estes would ship the body of the rockets to China to be assembled with the other parts, and then have it all shipped back to the U.S. Now, they’re focused on packaging the rockets domestically to avoid potential tariffs. That’s what they’ll be doing with all those extra parts.
“We’re really ramping up to bring in that year [of] supply as a backup,” Muckenthaler said. “What do we do next year? We got one year planned.”
Company leaders at Estes feel lucky to have a big warehouse to stockpile inventory.
“We're in a good spot,” Muckenthaler said. “I can't imagine some of these companies that run in small warehouses, how they're going to manage to do this.”
Estes is also working to find local packaging and printing companies.
“We're really working with Colorado companies as best we can,” Muckenthaler added. “One, it's promoting Colorado business. But also it helps with our cost of freight, inland freight, within the U.S. So we've been sourcing up through Denver, in Colorado Springs, in Canyon City, Pueblo.”
Muckenthaler expects that’s going to be more expensive than having it done in China.
“The [cost of] printing is definitely one of our biggest issues. And then the cost of labor here, just in general,” she said.
Ultimately, Muckenthaler would love to be able to make all the parts here in the U.S. But it’s not as simple as hiring people in the U.S. to do it. All of the -- very expensive -- equipment is in China.
“For every single nose cone you see here, there's a mold in China that we can either bring back or we can reproduce here,” she said.
It’s not just the equipment that’s locked up in China. It’s the expertise as well. The industry of making plastic molds moved to China in the 80s, according to Muckenthaler. Much of the skilled workforce that knew how to do it started to disappear from the U.S. at the same time.
“There's young people who are trying to learn from the craftsmen that are getting ready to retire, but there's just a limited amount of people,” Muckenthaler said.
With all the uncertainty, one thing seems all but inevitable: The cost of model rockets is going up this year.
“I would love to say that our costs could be the same, but it's not,” she said.
