The Daily - Her Business Was Thriving. Then Came the Tariffs.

Episode Date: April 14, 2025

When President Trump raised tariffs against China to an astonishing 145 percent last week, he radically changed the cost of doing business for thousands of American companies.Michael Barbaro speaks to Beth Benike, a small-business owner who fears her business will not survive the tariffs.Guest: Beth Benike, the founder and C.E.O. of Busy BabyBackground reading: Small-business owners say tariffs will squeeze them, and their customers.Trump’s tariffs leave no safe harbor for American importers.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. Photo: Jenn Ackerman for The New York Times Unlock full access to New York Times podcasts and explore everything from politics to pop culture. Subscribe today at nytimes.com/podcasts or on Apple Podcasts and Spotify.

From the New York Times, I'm Michael Bobauro. This is The Daily. Last week, when President Trump raised tariffs against China to an astonishing 145 percent, he radically changed the cost of doing business for thousands of American companies. So much so, in fact, that many of those companies may not survive. Today, the story of one of those businesses. It's Monday, April 14th. All right, it's recording. Okay.

Well, thank you for making time for us. We really appreciate it. How are you doing over there? Oh, not good. Not good at all. You look ever so slightly raw. Yeah. Well, I just talked to my best friend who, from the army we met when we were serving

together. And so I filled her in and, you know, she's feeling hopeless and helpless with me now. We're going to get to why this has been such a trying moment for you because of the terrace. I want to start by having you tell us the story of your company. And just to begin, tell us the name of the company and then tell us the story of how you went about creating this company. So my name is Beth Benike and I am the CEO and founder of Busy Baby. I grew up in southern Minnesota,

the daughter of an entrepreneur. My dad has a small business, he's a welder. So I grew up in his business, and I grew up wanting to have my own business as well. Why, what was it about watching your dad have a business that made you wanna? The freedom. It was the freedom.

It was the being able to leave work and come to my softball games and choose the work he wants to do and turn away the work he doesn't want to do. Being in control of your own destiny. But what he always told me is, you know, you really got to be passionate about what you're doing because when hard times hit, and they absolutely will, if you're not passionate about what you're doing, you're not going to make it. So when I finished graduate high school, I wasn't passionate about anything

other than not going to college. I tried it and it wasn't a big fan and a recruiter called me out of the blue and I ended up joining the military. So I joined the army. I convinced my brother to join the military. So we served together in Europe. We deployed to the war in Iraq and we started in Kuwait before the war started. And so I'd like to bring that around. Now my brother runs Busy Baby with me.

Oh, wow. And we always joke about 20, what's it been like almost 22, 23 years ago when we were sitting in the desert, you know, throwing little rocks at a bigger rock, waiting for something to happen. Did we ever imagine we'd be schlepping baby products out the back of our cars at the state fair? Like, just if you would have told us that in Iraq, we would have just laughed. Well, how did you end up getting from there to Busy Baby?

What's the story of how you go from army to entrepreneur? Yeah, so after the army, it took me a few years to readjust to civilian life. So I settled back in in Minnesota. I found a great corporate job and I met my now husband and we started a family. So I had taken the full three months of maternity leave that my company offered and went back to work.

And when I went back to work, two of my stay at home mom friends took me out for lunch. Their girls were adorable, but a complete distraction the entire meal. Just doing what babies do. You know, they reach for everything on the table, they drop things on the ground. We couldn't finish the conversation, you know. I have two toddlers. I know exactly what you're referring to.

Exactly. So I just went online. What am I going gonna buy on Amazon? That's gonna make it so my kids not this distraction when he's old enough to join us at the table So I did the search on Amazon My friends said, you know You really need to make sure you have a clean surface to put baby's food on because you never know what they're wiping these tables down With if you put the stuff on the plate the plates get thrown on the ground. I said, well, okay, cool

Yes, we need that but I also want to attach their toys so that they can't throw them on the ground. And nothing like that quite existed? No, no, there's been a million pacifier clips where you can like attach stuff to their clothes. And then there's regular placemats that you can like they had this I think at the time it was pretty much just disposable placemats that you could like stick down to the table. And I wanted something that was going to be reusable. And an idea popped in my head. And that night I went home and I got like silicone caulk

that you use to like caulk around your sink or your bathtub, whatever. And I squirted it into a quarter baking sheet and then I started cobbling together something that might work. That developed into me buying some silicone dog mats off of Amazon and then I started cobbling together something that might work. That developed into me buying some silicone dog mats off of Amazon and suction cups. And then I used another set of my husband's fishing tethers to glue attachment points to the top of the placemat. So now there was a mat where you could put the food and then also these little fishing tether things where I could just change out toys and just hook up the toys.

And because it was suctioned to the table, baby didn't throw it onto the ground. So how do you end up turning this prototype into an actual product? Yeah, I mean, I didn't even know it was called a prototype at the time or a minimum viable product I now know is the term. The most important step was to find a professional who knew how to do that because I certainly did not. or a minimum viable product, I now know is the term. The most important step was to find a professional who knew how to do that, because I certainly did not. We did look for manufacturing in the US,

and because we were at such a small scale, it wasn't a fit for us to be able to start in the US. So we started in China. Just explain that. I mean, why did it feel impractical to start developing products here in the US? It comes down to costs and volume. So it is very expensive to manufacture in the US. Obviously, the cost of labor is very high, but most of the raw material that we use in manufacturing, like for us, we use silicone, which comes from silica, which is not readily available and sourced in the US. So for us to import the raw material was more expensive than importing the product in its finished packaged form. Wow. So that's one aspect of it.

But so for the factories that do exist in the US, they typically have very high minimum order quantities. So you would have to start off with 10 or 20,000 units to make it worth their time to set up the line. I mean, there's a lot of work that goes into a manufacturing line, setting up the machinery. Now you're tying it up so nothing else can get produced, getting the material ready.

China was willing to do a minimum order quantity that first round of a thousand units. Which is a heck of a lot different than 30,000. Exactly. And I'm like, you know, maybe tech startups or other small businesses that get funding, I was bootstrapping. I sold my car. I used my tax return. I borrowed $35,000 from my stepdad.

I still owe him that actually. So I ended up doing a 5,000 unit run because I wanted to do multiple colors. So when I launched the product in 2019, I blasted my entire email list. Probably like old high school boyfriends got an email saying I was launching a baby product. And the initial orders were mostly from friends and family,

but the first time I got an order from someone I didn't know of and then they left me a positive review, I knew that was like, everything was gonna be okay. Next up is a solution to a common problem for babies. So part of my original email list that went out when I launched the product included a Shark Tank producer whose email I had gotten previously when they were looking for veterans to feature on the show.

Hi, sharks. My name is Beth Fimbo. I'm from Rochester, Minnesota, and I'm here seeking $250,000 for 5% of my business, Busy Baby. Wow. That ultimately led me to being on Shark Tank. I filmed during the pandemic in 2020

and then aired in March of 2021. One shark is out, but Lori is interested in Beth's baby placemat, Busy Baby. I'm going to give you an offer. It'll be a little aggressive. I mean, this is incredible. So suddenly you find yourself on the premier television show for small businesses trying to break out and basically have your idea validated by these ultra-rich, successful business people, as you can tell, I was a fan of the show. So I'm gonna offer you the 250,000, but I'd like 20%.

Whoa. Would you be willing to do it for 10%? 10%. No, I think 20% is good. I think 20%... It was the most amazing experience. It was surreal. I would love to do this with you for 15. I can't go past 15.

Well... I just can't. For me, the bottom line would be 18. I can't do it. I can't. Whoa! Good for you, Beth! I know what I've done and I know what I need to. Wow, what an entrepreneur sticks to their guns. And what happened after you were on the show to the business?

Thank you for your time. Fantastic job. Good luck to you. Thank you guys. I am rooting for you. Thanks. I just, I'm very confident in myself and my plans and what I'm doing and I really think I can do it. I just wasn't willing to give up 18%. and myself and my plans and what I'm doing, and I really think I can do it.

I just wasn't willing to give up 18%. The weekend we aired, we had about six weeks worth of sales in three days. It's unreal. We sold so many busy baby mats. It was just amazing. And for those who don't have the mat, how much does this cost?

What are you charging people? We have a line of products that range from $10 to $30. But the hero product, the one everybody knows from Shark Tank, that runs $30 retail. So what does your business look like pretty much up until a week or so ago? Just how big has it gotten? I think lifetime sales were over $15 million.

Wow. There's my brother and I full time, and then we have three other full-time employees and then we just brought on two part-time employees to help us. I was just named actually less than a month ago, the SBA gave me a wonderful award. Small Business Administration, Federal Small Business Administration. Yep. Small Business Administration awarded me Small Business Person of the Year for Minnesota.

Mazel tov, that's fantastic. And then this past November, we launched in Walmart for the first time. And then just last month, we launched in Target. For a business our size, that's massive. Huge. It was years of effort to get there. I mean, how are you financing all of this?

Because the former retail reporter in me knows that this is expensive. And said you you don't have outside investors This is a great fully owned business by you. So how are you paying for all this product? so I think what a lot of people don't know is You make a contract with the retailers you agree to a certain price that they're gonna pay for your product And then it's a risk for me agree to a certain price that they're going to pay for your product. And then it's a risk for me. We don't know how it's going to sell, but we know we have this contract and it lasts

a year and we've made the guarantee that we're going to supply them with product for this year. And so I had to take out additional loans to cover that cost. So I have SBA loans through my bank, but because I already had other debt, I had to leverage my personal property as collateral to get the loan. I just want to make sure I understand this. So in order to finance the amount of product required to be in these major national retail chains, you take out loans that are in part personally guaranteed with your house as a form of collateral.

Yep. Big deal. Big deal. Big risk. Big risk. And every small business that eventually ends up in one of those retailers, it's the biggest risk. Okay.

So now, of course, I want to turn to the subject at hand, which is the tariffs. You've been experiencing all the success over the past many months. So I'm curious, what do you think to yourself when Donald Trump is elected and starts to talk about what he describes as liberation day, tariffs that he's promising are gonna rebalance global trade. What are you thinking and what are you doing, perhaps, to prepare for them?

I mean, we expected the tariffs. Up until that point, we haven't ever paid tariffs. Our product falls into a category that hasn't had tariffs. We pay tax and duty, but we haven't had tariffs to date. So we knew that was gonna be a new thing for us, falls into a category that hasn't had tariffs. We pay tax and duty, but we haven't had tariffs to date. So we knew that was going to be a new thing for us, and we budgeted expecting reasonable tariffs of 20 to 30%. But you budgeted for those.

Yeah, we knew that was coming. An overwhelming number of people voted Donald Trump into office, and he talked nonstop that that was something that was going to happen. So we expected to have tariffs. Never in a million years would I expect that tariff would be 145%. Never. Which is what it is right now.

Yeah. That's what it is today. Now let's just give it a couple hours. It might be something else this afternoon. Well, in a word, what has it been like for you and your business for that 145% tariff to become your reality? It's devastating. I cannot bring this product into the US now. I don't have that kind of money. And what that means then is if I can't bring in that product and I run out of what's in my warehouse now, then I no longer have revenue coming into my business. And what that means is I can no longer pay my employees. I can no longer pay my loans to which my house is leveraged against. And in about six months, I could very, very possibly lose my home. We'll be right back.

Beth, walk us through the logistics of what it started to look like immediately after the tariffs go into place. Yeah. I currently have two to three months worth of product in my warehouse. We just finished production of another two to three months of product. It was supposed to get on a ship two days ago from China to the U.S. from China to the U.S. And that was the day that tariffs jumped up to 54 percent.

I have somewhere. Give me a second. I want to pull out my numbers so I can tell you specifically the effect. All right. We're going to do a little math. So for us, that meant instead of the $30,000 hereiff we had budgeted for, it now was $85,000. And how much is the product itself worth? The product itself is worth $158,000. So suddenly you're faced with a potential $80,000 tariff on about $158,000 worth of goods.

Do I have that right? Yeah, $85,000 for the 54%. And we don't have that, but we have good margins. We could survive that. And we thought, well, maybe we can do a GoFundMe. Because maybe right now in this political climate, people would be willing to give us 20 bucks to help us get through this so that we don't have to raise our prices or go out of business.

Mm-hmm. It wasn't devastating yet. The next day, when it went up to 104%, that math is $164,000. And at that point, the tariffs are going to cost more than the value of the goods, right? Yep. So that no longer makes business sense for me. I would have to double the price of my products. People are not going to pay double the price of my products.

And especially my people. I'm selling my products to new moms and dads. They're buying diapers and formulas and other things that are about to get a whole lot more expensive for them. It's already hard enough to be a new parent and to buy all the things you need to buy that you're not used to buying. People are only going to buy what they need. Okay.

I shudder to ask this. What happens to the tariff cost you would bear once the tariffs go from 104 to 145%? $229,000. Just the tariff you would pay on $158,000 worth of product. And we would have to come up with that in the 30 to 40 days it takes for the product to get to the US. Wow. And I can't get any more loans.

I'm fully leveraged. I have my house on the line already. I can't get more loans. Yeah, I mean that's just- I can't come up with that kind of money. That's an astonishing number. Once it hit over $100,000, there was no way we could afford

to import our products anymore. And that's when we decided to just abandon it in China until we could figure something out. Right. So the products are currently sitting at my factory. They've graciously offered to store them for us at no cost until we can find a new direction. I mean, at this point, you have this product over there in China. You have, I think you said several months worth of inventory here in the US.

So you're kind of in a face-off with the administration. You know, who breaks first? The tariffs or you? Well, here's the thing. I'm not in a face-off with the administration because I'm not a player in the game. I'm a pawn. There's literally nothing I can do. And I was coming up with strategies, but then any strategy I came up with,

I'm afraid to execute it because the policy changes every 24 to 36 hours. I mean, what would be one strategy that you thought about pursuing? One strategy, which I have now since learned is illegal. But what a lot of people are talking about and are recommending is export your products to a different country, repackage

them and then reimport them to the US. Basically take your product from China, send it to Indonesia, Thailand, then import it to the US. But you still have to make a change to it. You have to make a physical change to the product, the packaging. So we were thinking, well, we have some friends, personal friends that live in Australia. We could send it to Australia. We could then have them help coordinate repackaging and then import it from Australia.

And with the 90-day pause, we'd only pay 10% tariff. But that is country of origin fraud. So instead I'm pivoting, I'm shifting gears, I'm going to try to find a way to sell it in another country. There are babies all over the planet. I unfortunately cannot sell it to Americans once I run out of what's in my warehouse right now, unless something changes, obviously. So I'm going to start looking for ways to sell it overseas.

Have you contemplated doing what these tariffs are fundamentally and explicitly designed to force you and everyone to do? And I'm guessing by your reaction that something about that isn't so practical. But what it's supposed to do is encourage you to start manufacturing in the United States. Yep. That's what it's supposed to do. I have gone very deep down the research rabbit holes for my options for producing in the U.S. We did try to produce in the US initially, once we got started and had market validation,

we did work with a company in Minnesota to try to produce it here. There are some nuances to our type of manufacturing. We have compression molding, which is a different kind of manufacturing machine than typical. We have the requirement to be a clean facility because our products go in babies mouth. Right. So it has to be a sterile facility. It can't just be any old factory. So now I have two options. I'm very fortunate that I have a 10,000 square foot commercial space in my building that's available for lease. I could build my own factory in there. Like I own the building. I could build my own factory in there.

$100,000. Now, do I have to pay a 145% tariff on top of that to get the machinery to be able to manufacture? Right now, probably. So now we're doubling my cost to even set up manufacturing. But let's just say I don't. Then I have to find somebody with the expertise to set up the manufacturing and to run the manufacturing. But because this type of manufacturing doesn't really exist in the US right now, there's no expertise in the US to set this up for me. Now we have to talk about the cost of importing the raw material. The silicone, right. And the tariff on top of that.

Then we have to talk about the downtime I have. So I told you I got two to three months' worth of product in my warehouse right now. It will take 12 to 18 months if I had the money if I had the expertise to get this set up Now that's just one production line. I actually have eight products and with one production line. I can do 100 units per day. I Sell more than that. Wow So I would have to buy multiple production lines for that one product now I have eight other products or seven other products beyond that. So just the pure cost.

Okay, let's just for that scratch that idea. You're saying that it's just totally impractical. Financially, logistically, and in the end, my product is going to probably have to be three times more expensive for the consumer. So I guess I'm better off paying the tariff because that's less. So let's scratch that idea. Let's say magically we find a factory in the U.S. that has the exact machinery, the clean environment and access to the raw material,

which is still imported and tariffed. And they're willing to work with me. Awesome. Let's do it. The first step is to create molds. That process takes four to six months in itself for one mold and cost me somewhere around 100 to $120,000. Wow. So you tell me how I'm supposed to do this? How am I supposed to do this? And now you're cutting off all my income.

I'm hearing you say that domestic manufacturing of the kind that this is intended to encourage is simply financially impractical for you. When you cut my legs out from under me with no notice, and I can't even save money or seek investment or come up with any kind of plan, I can't even sell the products I've already paid to have made in the US because I can't afford to bring them into the US Nobody can afford to this quickly

Move to the US with manufacturing. We don't have the infrastructure. We don't have the raw materials. We don't have the expertise It feels like you have learned as a small business person some pretty valuable lessons about the nature of free trade that are very much at odds with what they are proposing here. And I wonder how you would articulate those lessons. You know, it's just none of it makes damn sense. My husband's a farmer. We grow corn and soybeans. He's out planting today. Minnesota is really good at growing crops. We have great soil. We have intelligent farmers. We have great equipment. China is really, really good at manufacturing. I love my team in China. We send each other gifts. They send me videos. They love making my products. We have a great relationship. I would love for every country to do what it is best at and be able to thrive on what

they're good at. I honestly don't think that we can bring manufacturing to the U.S. and be good at it. We already have enough, hard enough time with the businesses that are currently here finding good workers. Who's going to work in these factories? I'm going to ask you a question that I imagine might sound insensitive, but I think to do justice to what the president claims he's up to, I do need to ask it. And it's that if you listen to him carefully and those around him, what they're saying is that the system

we have now is broken and that fixing it in their estimation so that it becomes a country where manufacturing flourishes is going to involve some real short-term pain. You obviously are that short-term pain. And so how do you think about the idea that on some level, the president might know that a business like yours needs to suffer to get to where he thinks, not everyone even thinks it's possible, but where he thinks the country should go and can go? It reminds me very much of basic training in the military. When you go through basic training, they break you down. And then they build you back up and you're stronger because of it.

In theory, that's a great difficult but great way to do things in certain circumstances. However, this is not short-term pain. This is immediate death to thousands of small businesses. So let's say that the tariffs remain in place for some time. We don't know that for sure. We're talking to you on Friday. Oh my goodness, are you okay? I'm just looking at the screen and seeing that you're not okay.

I'm not okay. I'm scared for my friends. I'm scared for myself. Like they don't understand this is certain death for us. It is certain death for so many of my friends and myself. Not in the literal sense of, actually no, I'm not going to say not in the literal sense because the very first thought that came to me when he announced the 104% tariff was at least I have life insurance so that there's a way my family can still

have a home. And I immediately caught myself. And that's why- Wait, I can't even contemplate what I think you're just saying. Yeah. No, you- You're saying that- It's a dark place.

You're saying that the darkest possible thoughts briefly go through your head when you contemplate what it would mean to lose all this. Yes, because there's nothing more important to me than my family and my kids and them having a place to live. And even though this was not a mistake I made in my business, so two years ago I made some business mistakes just because I'm a new business owner and entrepreneurship is hard.

And so a couple of years ago I got into a dark place and I sought help and I got help. And since I went through that two years ago, I made sure that I have developed a network of people to reach out to. People I can talk to, people I can commiserate with, people I can lean on, medication that I can take should I need it. I am afraid for all of the small business owners that are doing this on their own, who don't have someone to lean on or the coping skills, because this is like the biggest tsunami that just came out of nowhere

and crushed our entire country for small business owners. I am okay. But now I'm worried about everybody else who doesn't have that. The question I was going to ask you before you got justifiably quite emotional was whether or not you have at all prepared yourself, not just financially, but just kind of emotionally, for what it would mean to have this amazing business that you have built from scratch go away if that does happen. No.

I'm not prepared for that. I'm not even allowing myself to consider that. I'll find a way. Because I refuse to be a victim. Yeah, I refuse to be a victim. Yeah, I refuse to be a victim. I refuse to quit and I refuse to fail. And I'm not going to teach my kids to be a victim or to give up.

I'm going to show my kids that you just have to adapt and overcome. There's always a way. There's always a different thing you can do. You're never stuck. It's hard. It sucks. But it's a great lesson for them to

learn as well. And how do you think this is going to end? I think it's going to end with us learning new things and new ways to do business. What I'm visioning is we're going to learn how to do international distribution and more babies around the world are going to get to have our products. And then eventually this is going to work out where we're going to have a global company. It's not going to just be, you know, my American small business. I'm going to have a global brand. So as much as it hurts right now, that's my goal.

I'm going to figure this out. And in the end, I will have a global brand. I hope. You'll have a global brand but maybe not an American one. Maybe not. Beth, I really appreciate you making time for us. Thank you. Thanks for having me. Over the weekend, at the urging of big tech companies, the Trump administration said that it would exempt smartphones, computers, and other electronics from its tariffs against China. Hey, team, New York Times, the daily.

This is Beth Benaki with just a follow up to our conversation from the other day. Shortly after, Beth sent us a voice memo. You know, I'm spending all my time and energy right now trying to figure out how to bring manufacturing back to the US. But companies like Apple and Microsoft, who are in probably the best position to be able to do just that, to be able to bring manufacturing back to the US, they no longer have any motivation to do so. They're exempt from the tariffs. It's not going to affect them.

So what motivation do they have to bring manufacturing to the US? It's very disheartening to see that announcement today and see that big corporations don't have to worry about the tariff. They're fine. They don't have to pay it. But the rest of us do. We'll be right back. Here's what else you need to another day. On Sunday, Secretary of State Marco Rubio said that the United States has sent 10 more members of gangs to El Salvador, suggesting that the White House is doubling down on its controversial strategy of deporting hundreds of suspected gang members with no due process. The administration has portrayed those deportees as violent criminals or terrorists, but court papers have shown that the evidence on which the government has acted was often

little more than whether they had tattoos or had worn clothing associated with the criminal organizations. And Elon Musk is drastically reducing his estimate of how much money his Department of Government Efficiency will save U.S. taxpayers. In the past, Musk has said that his team's work could shrink the next fiscal year's federal budget by $1 trillion. Now, Musk anticipates saving about 85% less than the original estimate. Today's episode was produced by Olivia Natt, Will Reed, and Stella Tan. It was edited by Mark George, contains research help from Susan Lee, contains original music by Pat McCusker and Rowan Amisto, and was engineered by Chris

Wood. Our theme music is by Jim Brunberg and Ben Landsferk of Winterley. Special thanks to Jessica Chung and Claire Tennesgetter. That's it for the Daily. I'm Michael Boborio. See you tomorrow.