ABOVE ALL FLOWERS

By David Kaplan

Greetings from the Wizard,

Lots of Economic News

THE FED

There has been a lot of news reporting about the Federal Reserve and interest rates. Finally on September 17, 2025, the Federal Reserve lowered its benchmark rate by a quarter percentage point to a range of 4% to 4.25% and signaled two more rate cuts may be coming by year’s end based on economic reports. 

The Congressional Budget Office has revised its economic outlook, predicting slower growth, higher inflation and increased unemployment this year. The budget office expects the economy to expand 1.4% in 2025, down from 1.9%, with inflation rising to 3.1%. Unemployment is projected to peak at 4.5% by year’s end.

The unemployment rate increased to 4.3% in August (the highest in nearly 4 years). Economists attribute the slowdown to trade policies and immigration crackdowns and policies. The FED saw certain signals of slowing economic activity that outweighed the tariff-driven inflation that kept rates on hold. 

The Fed has seen that hiring by small businesses is no longer driving US job growth resulting in an economic slowdown/downturn. Unfilled job openings in small companies are the lowest since 2020. The seasonal retail hiring is looking like it will be the lowest since the 2009 recession, according to CNBC. There won’t be as much hiring, but there won’t be as much firing, either.

According to information from the University of Michigan: “US consumer sentiment declined in September for the second consecutive month with the University of Michigan’s index dropping to 55.4, the lowest since May and a 21% drop from a year ago. Americans are increasingly worried about job security and inflation, with 65% expecting higher unemployment in the next year. This decline in sentiment follows recent economic data showing a net loss of jobs in June and a revision indicating 911,000 fewer employed people than previously reported.” 

The U.S. national debt has grown at an unprecedented rate over the last 15 years, with government deficit spending currently projected to surpass government revenue growth and economic growth into the future. 

This trend can produce potential problems for both long-term U.S. economic prospects and the global financial markets. Obviously not a great place to be. 

TARIFFS

It is hard to write this without bringing up tariffs so here we go with a tariff section.

Businesses are struggling to set prices amid US tariffs which have led to uncertainty about costs and consumer acceptance. With pre-tariff inventories dwindling, companies are mulling price hikes, but inflation weary consumers and stiff competition make it difficult to determine how much of the added costs can be passed on. “Everyone is struggling to figure out what to do, what’s the right decision, where do we set prices,” said Clifford Thompson, president of Thompson Traders.

Small businesses, including those in the floral industry, have faced challenges adapting to increased tariffs that have raised operational and production costs.  Almost half of small and midsize US companies have seen costs rise more than 20% since widespread tariffs were imposed, according to a survey by cargo booking platform Freightos. According to Freightos, about the same proportion of respondents say they have reduced shipment volumes because of the higher costs. Unlike larger corporations, these firms lack the resources to absorb sudden changes in tariffs and rising costs leaving them more vulnerable to the financial impacts of ongoing trade tensions.

TARIFFS AND LOGISTICS

“We have seen the implementation of reciprocal tariffs across the globe, with several key trading partners being subjected to tariffs higher than the earlier 10% tariffs,” National Retail Federation Vice President for Supply Chain and Customs Policy Jonathan Gold said, in a release. “We also continue to see more sectoral tariffs impacting a wider scope of products. Retailers have stocked up as much as they can ahead of tariff increases, but the uncertainty of U.S. trade policy is making it impossible to make the long-term plans that are critical to future business success.” 

US retailers have been moving holiday imports at least a month earlier than usual aiming to mitigate the risks and costs associated with shifting tariff policies. The traditional seasonal surge in shipments ahead of Christmas has been front loaded with most end of the year goods already moving through the supply chain.

August was the Port of Long Beach’s second busiest August and sixth busiest month in its over 100-year history. This was due to importers trying to beat the implementation of higher tariffs.

Major U.S. container ports handled 2.36 million twenty-foot equivalent units (TEUs) in July, according to the National Retail Federation’s Global Port Tracker. That was a gain of 20.1% from June as retailers brought in merchandise ahead of tariffs set to take effect in August. It was also 1.8% higher year-over-year and the second-busiest month since 2.4 million TEUs in May 2022.

Rising tariffs are resulting in steady declines of import cargo volume at U.S. container ports and are anticipated to decline steadily through the end of this year following the near record summer peak, according to the nation’s biggest retailers. 

The high tariffs from China have resulted in a major drop off of inbound products to the States. September volume at US container ports looks very gloomy.

US port traffic is expected to decline for the remainder of the year as tariffs take a toll on imports. 

As the de minimis law ends the US reliance on imports, the EU has surpassed China in terms of total value and product variety according to a study from Germany’s IW economic institute. The study shows that the number of product groups in which at least 50% of imports come from the EU has risen to more than 3,100 with a total value of $287 billion while China accounts for 2,925 product groups worth $247 billion. 

According to the Wall Street Journal, FedEx expects to take a $1 billion hit to its fiscal 2026 earnings because of recent US tariff changes. The company reported $6.1 billion in adjusted operating income in the previous fiscal year highlighting the significance of this anticipated impact. The loss is largely attributed to the end of the de minimis provision which had previously exempted lower-value packages from tariffs.

Fed Ex CEO Raj Subramaniam said during an earnings report that they reduced freighter aircraft out of Asia to the United States by 25% because of the change in tariff policy. E-commerce companies are increasingly turning to foreign trade zones to manage tariffs more efficiently as the US ends the de minimis provision that exempted shipments of $800 or less from duties. FedEx Corp.’s ability to adapt its air network from the U.S. to European markets helped stabilize international shipping volumes as Trump’s new tariffs on e-commerce goods from China pressured consumers. The May 2 cancellation of the de minimis rule, a duty-free exemption for low-value parcels, also sharply reduced airfreight for e-commerce shipments.

In an announcement on Thursday September 25th, Trump unveiled new tariffs on imported heavy-duty trucks, furniture, and pharmaceuticals set to take effect Wednesday October 1st. Trump hopes a 25% import tax on all heavy-duty trucks will increase domestic truck production.

These constantly changing U.S. tariff policies have created havoc with freight markets. As we mentioned earlier, many shippers forwarded overseas orders to beat tariff deadlines and then reduced imports because inventories are high and they are looking to find suppliers outside China — where average U.S. tariffs are 58%. 

In a video briefing for journalists on Monday, DHL executives said they are working overtime helping customers deal with the rising cost, complexity and uncertainty associated with the changing tariff landscape. “For a small business owner, it can be overwhelming. So, we’ve got to be ready to help them mitigate some of these impacts by having advanced customs services, looking at things like foreign trade zones and specialized brokerage options. We have to help them manage the timing of when they owe duty and taxes, how they’re moving inventory around and positioning it for U.S. delivery as it’s coming in” said Greg Hewitt, CEO of DHL Express U.S.

More than three in four US and European companies have seen profit decline because of tariffs and 84% of businesses plan to raise prices to counter the impact, but most say it could be weeks or months before prices change according to a survey by Censuswide and software developer Enable. Nearly half are planning to reduce operations or exit high tariff markets amid ongoing uncertainty. Enable CEO Andrew Butt says, “Pricing agility has become an essential survival skill.”

TARIFFS AND THE COURTS (including the Supreme Court)

Importers are taking a wait-and-see approach after a federal appeals court ruled many of the Trump Administration’s tariffs illegal and that Trump exceeded his authority in imposing many of the tariffs. There is a stay in place until Oct. 14 and a fast-track Supreme Court appeal likely in November. The ruling raises questions about potential refunds of billions of dollars in trade duties. The US Court of Appeals for the Federal Circuit has ruled that the law the administration cited does not give the president authority to impose tariffs. The tariffs will remain in effect while the case plays out, but the decision has added further trade uncertainty potentially delaying corporate investment.

The tariffs, including the “Liberation Day” tariffs affect trillions of dollars in international commerce and have raised the average US tariff rate to its highest level in over a century. 

TARIFFS, INFLATION, AND THE FLOWER BUSINESS 

Inflation and uncertainty created by President Trump’s tariffs are problems for the Flower industry.  They have even affected domestic growers as even plant material, machinery, and packing materials are subject to tariffs. Most of these items are not produced in the US and are unlikely to be manufactured in the US in the future.

Constant economic uncertainty stemming from unclear tariff policies is inhibiting US companies’ ability to make strategic decisions and long-term investments. Experts stress that this unpredictability undermines business confidence and could slow economic growth as both businesses and consumers face an unstable economic environment. One European flower exporter stated on social media that their US sales could be down as much as ten million Euros due to exchange rates and tariffs. This will force companies to search for other markets to make up for these sales or downsize.

As prices increase due to inflation influenced by tariffs, consumers tend to buy less floral products other than for major occasions and events. This hurts the day-to-day impulse business.

CONCLUSION

The Flower business is an economy very much influenced by tariffs, exchange rates, freight costs, immigration policy, and inflation as well as labor costs. The US flower industry depends on imports for the majority of its product. Uncertain Government policy leads to havoc with growth and investment. 

Most of the custom brokers nationwide are charging a percentage of the tariffs due to the cost of handling and cost of money. This is putting a lot of stress on flower importers.

It is very apparent that the Trump Administration has figured out how to manipulate Wall Street and exchange rates. It’s not clear if this is the best way to help Main Street.

On September 25th, the Trump Administration announced new tariffs as high as 100% on certain products going into effect in October leaving even more uncertainty with businesses. Stay tuned.

We are into a government shut down that may last longer than everyone would like to see. We hope this does not hurt the flower business.There is also a National Strike in Ecuador as well a small political issue within Colombia. On September 27th, the U.S. State Department said it was revoking the visa of Colombian President Gustavo Petro who had traveled to New York for the United Nations General Assembly annual meeting.

On a lighter note, there are rumors that the NFL may extend the season by one more game in the future making the day after the Super Bowl President’s Day. This should help Valentine’s Day and give the country the (double) holiday they have been lobbying for (The day after the Super Bowl!).

Thanks for reading my rants,

The Flower Wizard

To contact David Kaplan (also known as the “Flower Wizard” or “Floradamus”) at Above All Flowers

Email: aboveallflowers@mac.com

Call 401-486-0525