Keeley Electronics Tariff Shock: 1.83 Million Credit Card Points Save Business

Small businesses across the United States are grappling with the escalating costs of U.S. tariffs, forcing them to adopt unusual and often challenging strategies to stay afloat. A stark example is Robert Keeley, owner of Keeley Electronics, an Oklahoma City-based guitar pedal manufacturer, who recently cashed in 1.83 million American Express reward points to cover an unexpected $11,000 tariff bill.

Keeley Electronics

Keeley’s company, employing around 33-35 people, found itself blindsided by the hefty tariffs on critical components imported from China. “It’s like a needle pin holding back a crack in the dam,” Keeley told CBS MoneyWatch, illustrating the precarious position many small manufacturers face.

He opted to use his accrued credit card points, rather than cash, highlighting the extreme measures businesses are resorting to.

This $11,000 bill, which included shipping and tariff fees, represents only a fraction of his total tariff-related expenses.

They just released the new Manis Overdrive, which is already getting rave reviews online! Robert’s pedal designs are some of the most highly respected in the business, and so this latest news is pretty shocking.

Keeley Manis Overdrive at Andertons

Keeley Manis Overdrive at Sweetwater

Keeley Manis Overdrive at Thomann

America’s small businesses

This predicament is part of a wider struggle for America’s small businesses, particularly manufacturers with fewer than 100 employees, which constitute a staggering 93% of the roughly 240,000 U.S. industrial firms.

Unlike global conglomerates, these smaller companies often lack the financial reserves, lobbying power, or supply-chain flexibility to absorb significant tariff hikes or readily shift production.

Keeley’s reliance on Chinese imports, specifically for a crucial component called a potentiometer, underscores the challenge. Despite efforts to find alternative suppliers, he notes, “We can’t find a source outside of China for our potentiometer, which is critical for our designs.”

While he currently hasn’t raised prices for customers, he acknowledges that it may become unavoidable if the stiff tariffs persist.

EarthQuaker Devices

The niche industry of guitar-pedal manufacturers, including Keeley Electronics, offers a unique insight into the economic toll of trade policy shifts.

To survive, these boutique businesses are even forming alliances and leaning on each other for support. Julie Robbins, CEO of EarthQuaker Devices in Akron, Ohio, for instance, has tapped her company’s credit line to avoid layoffs among her 35 workers.

She’s even considering moving some production overseas, an ironic outcome given that tariffs were ostensibly designed to bring jobs back to the U.S.

President Donald Trump has asserted that the levies are spurring manufacturing reshoring, with some large companies like Apple Inc. pledging significant investments in domestic production. However, small manufacturers typically lack the resources and agility to rebuild complex supply chains.

Many, like EarthQuaker, depend on imported components, sourcing items like circuit boards, resistors, and transistors from China.

July 9th Deadline

The looming July 9 deadline for President Trump’s imposed trade deals adds another layer of uncertainty, with the potential for further tariff increases if agreements are not reached.

For businesses like Keeley’s, the future remains uncertain, forcing them to find creative and often desperate ways to navigate the turbulent waters of international trade.

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