Business owner used 1.8 million credit card points to handle tariff costs

Small businesses across the United States are feeling the pinch of higher import costs due to the steep tariffs imposed by the U.S. government. In order to handle the added expense, some entrepreneurs are getting creative in finding ways to mitigate the impact.

One such small business owner, Robert Keeley, the owner of Keeley Electronics, a guitar pedal company based in Oklahoma City, found a unique solution to cover the tariffs on parts shipped from China. Keeley redeemed over 1.8 million reward points on his American Express card to offset the hefty tariff charges. This unconventional approach highlights the challenges faced by smaller enterprises in dealing with the rising import duties.

Keeley’s business specializes in creating effects pedals for electric and acoustic guitars, operating out of a 17,000 square-foot warehouse in Oklahoma. However, the company has been struggling to find an alternative source for a key component of their pedals, a potentiometer, which is only available from China. This reliance on Chinese suppliers has led to escalating tariff costs for Keeley Electronics.

Despite efforts to explore other options for sourcing the potentiometers, Keeley and his team have been unsuccessful in finding a non-Chinese supplier. The tariffs on this essential component have increased significantly since the beginning of President Trump’s second term, reaching as high as 55% for Keeley’s business. The uncertainty surrounding future tariff rates adds further pressure on small businesses like Keeley Electronics.

In a recent credit card statement, Keeley faced an $11,000 bill that included shipping and tariff fees. Rather than paying cash, he decided to use his accumulated credit card points to cover the charges, emphasizing the significant impact of tariffs on his business. While Keeley has not yet raised prices for customers to offset the higher costs, he acknowledges that it may become necessary if the tariffs on Chinese imports remain in place.

Expressing his concern over the dependence on Chinese manufacturing, Keeley stressed the importance of diversifying supply chains to avoid a “single point of failure.” Despite the challenges posed by tariffs, he remains focused on delivering innovative products that cater to customer demand. As the small business continues to navigate the complexities of the current trade environment, Keeley remains optimistic about the future of Keeley Electronics.

The story of Robert Keeley and his unique approach to handling tariff costs serves as a reminder of the resilience and adaptability of small businesses in the face of economic challenges. By leveraging creative solutions and remaining agile in a shifting landscape, entrepreneurs like Keeley are finding ways to sustain their operations and thrive in a competitive market.