Why Trump's tariffs tack an extra $350 onto the price of this high-end outdoor grill

The grill manufacturer's decision to increase prices marks one of several instances of how consumers in Texas and beyond are already starting the feel the effect of Trump's trade war.

WASHINGTON — How does President Donald Trump's decision to impose tariffs on $48 billion in imported steel and aluminum result in a high-end outdoor grill costing hundreds of dollars more? Scott Grugel can explain.

Grugel is president of Middleby Residential, an outfit that includes California-based Lynx Grills.

Rising steel costs are forcing Lynx, a maker of premium outdoor kitchen goods, to increase prices on its products by 3 to 12 percent starting Aug. 1, marking one of several instances of how consumers in Texas and beyond are starting to feel the effect of Trump's trade war.

A Lynx Professional 27-inch propane grill that now sells for about $3,000 would cost upwards of $350 more.

"While I don't want to be the first to raise prices, we need to protect our gross margin but also the employee base that we employ," Grugel wrote in an email to distributors and retailers.

With more tariffs in the offing — potentially covering hundreds of billions of dollars in goods — let's take a closer look at why Lynx is in this position, why it's increasing prices by those amounts and what it all could mean for consumers.

A Lynx Professional 27-inch propane grill that now sells for about $3,000 would cost about $350 more.
A Lynx Professional 27-inch propane grill that now sells for about $3,000 would cost about $350 more.(Lynx Grills)

How did this all begin?

In March, Trump enacted import tariffs of 25 percent on steel and 10 percent on aluminum, increasing the price of those products coming into the U.S. In June, the U.S. went further by ending exemptions for Mexico, Canada and the European Union.

The president has defended the action on national security grounds, saying that "if you don't have steel, you don't have a country."

So Lynx got hit by import duties on the materials it uses?

Not directly, since the company doesn't actually use imported steel in its products.

Why is it feeling an impact then?

Tariffs on a given good provide domestic producers of that good the opportunity to also increase prices while still maintaining a competitive advantage. So in the wake of the steel tariffs, for instance, steel prices in the U.S. have also spiked.

"The domestic suppliers were basically given an open avenue to raise their prices as well," Grugel said.

Is Lynx upset about that dynamic?

Grugel said it's "understandable to a certain degree" that U.S. steel companies responded the way they did. But he nevertheless called the whole situation "unfortunate."

Can't companies like Lynx just eat the added cost?

Businesses can sometimes serve as a buffer that limits the pain consumers may feel from tariffs, which are taxes pocketed by the Treasury. But taking that approach doesn't mean the cost to the business disappears. It could instead show up via reduced hiring, investment and wages.

Why did Lynx settle on the price increases it did?

Middleby Residential covers a half dozen manufacturing companies — "all impacted to one degree or another" by the tariffs, Grugel said.

Some of those companies have decided to absorb the hit for now, in part because their products feature smaller amount of steel. But Lynx's luxe grills include some products in which those now-pricier raw components represent "more than half of the entire bill of materials," Grugel said.

"You can't absorb that," he said. "It will destroy you."

What does that mean for consumers?

Tariffs take time to trickle down to consumers, thanks to factors like bureaucratic hoops, supply chains and product inventories.

The increased prices on Lynx's raw materials went into effect July 1, meaning "we're already basically bearing the brunt of it," Grugel said. But the company must give its customers — retailers like Starpower in North Texas — advanced notice of any price increases it wants to pass along.

So those price hikes won't show up for consumers until Aug. 1.

What's the bottom line?

Many shoppers are not in the market for a $3,000 grill — and thus, are not going to feel that particular tariff burn.

But prices for washing machines have also spiked of late, due to import levies on those products. Price increase notices are also going out for other steel-heavy appliances like refrigerators and oven ranges. And future tariffs pledged by Trump would cover a much wider sweep of products.

The extent to which those consumer hits add up will depend on the duration of Trump's trade conflict and whether the president can fulfill his promise to secure better trade deals.

Tom Benning. Tom covers the intersection of business and government in Washington. He came to D.C. in 2016 from The News' Austin bureau. He has also previously worked in Dallas, covering everything from City Hall to transportation to former President George W. Bush. He is a graduate of the University of South Carolina. @tombenning
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