Trump's Tariffs Could Boost A Surprising Billion-Dollar Industry

As President Donald Trump‘s tariffs shake up domestic industries and rip up longstanding trade agreements with countries near and far, a certain billion-dollar industry might ultimately find itself in the green.

If you guessed the cannabis industry, go to the head of the class.

Derek Chase, CEO of Los Angeles-based FLORA+BAST, contends that the unintended consequences of tariffs could push businesses toward more eco-conscious, locally sourced solutions. Chase quite likes the idea of developing home-grown solutions.

"Having more domestic options is a positive consequence of this extra tax layer and makes our USA-made goods more price competitive since our competition will likely want to raise prices to maintain profitability," he told Benzinga.

"But yes, since we love our Mexican suppliers and only aim to grow that part of the business, the 25% does pose higher costs for us. That said, the cost of packaging v. the price of our goods is a much smaller ratio than someone selling, say, peanuts," Chase said.

Trump's 25% across-the-board tariffs on Mexico and Canada were enacted on March 4, though they were paused two days later until April 2. Then, on March 12, Canada retaliated to Trump's steel and aluminum duties by imposing 25% tariffs on over $20 billion worth of U.S. goods.

"The short-term costs for a lot of businesses will be greatly impacted, but we believe this will bring more manufacturing back to the states and provide more options for eco-conscious businesses, especially those using glass," Chase said in an interview.

George Sadler, CEO of Gelato Canna Co., says the tariffs will not negatively affect his business any more than any other business.

"Everyone will be affected so we will be on a level playing field. Most of our manufacturing products and final packaging are made in the United States. It will be the end user, the consumer that will feel the increase. We can only absorb so much in this volatile cannabis market."

JPMorgan Chase JPM CEO Jamie Dimon, who recently indicated that the largest bank in the U.S. "probably would" provide banking services to marijuana businesses if/when federal laws permit, said this week that the economy is in a “soft landing” phase, "but there's a lot of turbulence out there."

Despite the turbulence, Derek Chase remains optimistic. "All in all, it's a good thing — short-term price pressure should force businesses to look at domestic options and for businesses to sprout up in categories where they could not compete historically."

Now Read:

• Elon Musk, Ted Cruz Joke About Cannabis On Podcast: Should I ‘Pull Out A Joint’ To Boost Ratings?

Photo: Shutterstock