Trump will destroy my company — maybe yours, too

Demonstrators protesting against the Trans-Pacific Partnership are seen on Pennsylvania Avenue, in Washington, D.C.
Mandel Ngan | AFP | Getty Images
Demonstrators protesting against the Trans-Pacific Partnership are seen on Pennsylvania Avenue, in Washington, D.C.

Presidential polls show that business owners prefer Donald Trump over Hillary Clinton in 2016. Reasons vary, but most believe that Trump, as a successful businessman, will be the best for the economy and entrepreneurship. I disagree.

One of Donald Trump's signature policies in his quest for the 2016 U.S. presidency is to put massive tariffs on all imports, which he claims will create jobs because American companies will close down international facilities and rebuild them back home. As an American entrepreneur who is the founder and CEO of a global business, I believe Trump's trade policy would not only fail but would have unintended consequences that would be disastrous to the American economy.

I am the founder and CEO of GMM Nonstick Coatings, based in Chicago, and a global supplier of nonstick coatings to the $9 billion housewares industry. We supply American brands such as Calphalon, Farberware, KitchenAid, Oster and George Foreman Grills.

When I started the business, GMM manufactured 100 percent of our products in our Chicago headquarters, but in recent years we have been forced to build operations in China and India because every one of our American clients relocated their manufacturing to Asia. We had two clear choices: Go global or go out of business. But if Trump's policies are enacted, we will be subject to an unprecedented 60 percent to 100 percent tariff, making us completely uncompetitive. Obviously, Trump hopes this will motivate me to bring manufacturing back to the United States.

But here's the problem: If I bring my plants back, the cost of my finished product will more than double due to differences in the prices of raw materials. So I will have to double my prices. But American consumers demand the highest possible quality at the lowest possible price. If Trump doesn't believe me, he should visit where most middle-class Americans do their shopping: Wal-Mart.

Trump would discover quickly that Wal-Mart kicks anyone out if their product is priced too high relative to similar competitors. Thus, no entrepreneur is going to waste millions of dollars onshoring when they know they have no chance to succeed. All Trump's policies will do is put my 250 American and international employees out of work and deny the U.S. treasury the taxes I pay each year. Trump would destroy thousands of similar businesses across the United States with his reckless trade policy.

"All Trump's policies will do is put my 250 American and international employees out of work." -Ravin Gandhi, CEO and founder of GMM Nonstick Coatings

Moving beyond cookware and griddles to the broader economy, what will tens of millions of middle-class Americans do when the smartphone they normally pay $300 for is marked up to $575 overnight, or the HD television that used to be $900 is suddenly $1,700? They're simply not going to buy it, and this potential massive drop in consumer consumption could lead to a historic consumer recession worse than 2008. If this happens, no amount of domestic tax cuts would save us.

Worse, does Trump believe that with his provocative tariffs, other nations won't retaliate with impunity on imports of American goods? Someone needs to tell Trump that almost half the revenue of the entire S&P 500 comes from selling to other countries, and he would deal all of these American businesses a crippling blow. He should know enough about capitalism and free trade to realize that the market needs to set the price without external manipulation and that global business works because it increases the overall demand and market size for both the producing and consuming nation. Trump wants to take us back to an isolationist and protectionist era, which is flat out insane economically.

'America is already great'

Trump's trade hysteria also contradicts the most important aspect of America's economy: innovation. Besides running GMM, I am a venture capitalist who has funded a number of high-tech businesses in the United States. In 2012 I was the first investor in a start-up called KeyMe, which is taking a new, digital approach to the $8 billion locksmith industry.

KeyMe employs 60 hardware and software engineers in Manhattan and is in the process of deploying thousands of American-made key-duplication kiosks across the United States. KeyMe kiosks are made in Minneapolis but already have international demand. In a trade war, the company would be hugely hurt in selling the devices overseas. What determines that KeyMe can keep its operations stateside and thrive, while Apple needs to source from China? Again, the answer is something Trump wants to dangerously ignore: capitalism.

Trump should leave U.S. entrepreneurs alone, and our nation will continue to innovate entire new industries that don't even exist today. I'm a political independent; I vote left or right based on policy alone, and I am speaking out because I don't believe America needs to "become great again." America is already great. We have the most dynamic and creative economy and citizens in the world.

By Ravin Gandhi, CEO and founder of GMM Nonstick Coatings