Tucked in the corner of a small strip mall behind the Target on U.S. Route 15-501, Durham restaurant Neo-China has been operating for about 35 years.
But to owner Jordan Wang, 36, the building of his family’s restaurant has been decades more in the making, starting all the way back to when his grandmother and other relatives fled China at the tail end of the civil war in the late 1940s.
“We had to immigrate from China to Taiwan, then from Taiwan to here (in the U.S.), and that was a process that took years of hard work and grinding,” he said. “Each of the family members would work in a different Chinese restaurant — the only opportunities they had as immigrants at that time. After that, my grandmother said, well, we’ve collected enough experience, we can pool it together, and create our own restaurant.”
Wang was just a year old when Neo-China opened, and his family designed it to look like an art gallery, full of unique paintings and sculptures done by one of his uncles. Wang said he began working at the restaurant when he was 12, after he tried asking his father for an allowance. Two years ago, he purchased the restaurant, hoping to continue the family legacy.
However, the recent tariff imposed on Chinese imports has presented challenges greater than Wang said the restaurant has ever experienced, even compared to the 2008 recession and the COVID-19 pandemic.
“We’re already getting hit in the inventory,” he said. “I may have to discontinue water chestnuts. They’ve already almost doubled in price, so I had to buy extra at double [the cost] so I don’t have to pay quadruple later. And then when I run out of that, that’s it. Unless prices come back down.”
The cost of Chinese soy sauce brands Neo-China depends on, like Koon Chun and Pearl River Bridge, have also gone up. Wang said that his relatives worked hard to create the sauces that they use in their dishes and it’s not something he’s willing to compromise on.
“If we are trying to create a brown sauce out of substitutes, it’s not going to be right by a long shot, “ he said. “Soy sauce is as complex as wine. There’s light, there’s dark, there’s aged, there’s new. It’s not just something you slap into something.”
Wang is trying to weigh what his best options are, and he hasn’t increased prices of menu items. But between labor, inventory, and other operation costs, there seems to be no good path forward.
“There’s not much we can do, unless we are very rich and have stores of resources to buffer these times, but we are just like everybody else in this choppy water and this rickety boat,” Wang said. “It’s a terrible spiral. Like, I have to cut something, which means what do I have to do? I have to cut an employee? That’s not what this is supposed to be about either. I’m supposed to be creating jobs.”
Small businesses are under a lot of pressure
In early April, President Donald Trump announced his “Liberation Day” tariffs, which imposed tariffs on virtually every country. Some trading partners, including the European Union, China and various countries in Asia, were going to be hit with reciprocal tariffs at higher rates, until the Trump administration put them on a 90-day pause. The only exception was the tariff on China, which jumped to 145%.
Andrew Greenland, an assistant professor of economics at North Carolina State University, said that small businesses like restaurants and grocery stores are especially vulnerable to the impact of these tariffs.
“If I’m a grocer, I can’t stockpile fresh blueberries, or whatever it is that I’m going to be selling – those are going to expire,” he said. “There are some sectors of the economy that are going to have a much harder time dealing with inventories, holding those things, keeping them fresh.”
He added that eventually there are going to be products that are no longer profitable to import, which means that businesses will have to drop those items because they can’t afford it.
“That’s the bad news of this process,” Greenland continued. “There’s this stated goal of putting tariffs on in order to promote domestic production. But we don’t have domestic production of water chestnuts, not in the quantities that people need. Like, we can’t produce coffee anywhere except in Hawaii. Tariffs are really poorly thought out policy if what you think you’re going to do is use them as a way of promoting job growth.”
Restaurants tend to operate on small profit margins — an average of between 3 to 5%, according to data from Toast. Greenland noted that the rising costs of imported goods will pass onto consumers, but consumers are likely to want to spend less and eat at home if they are concerned about the economy.
“There are a lot of smaller businesses in and out of this sector that are going to be faced with higher costs and contracting demand,” he said. “And the reality is, that can mean job loss, it can mean loss of access to goods and services and it can mean businesses closing down.”
The tough choices that lie ahead
In recent decades, there’s been a tremendous growth of Asian restaurants and grocery stores across North Carolina, as a reflection of the state’s growing Asian population. In the Triangle alone, there are now more than a dozen Asian supermarkets and small grocery stores, compared to the 1990s when there were roughly three to four places where Asian immigrants could find culturally specific goods. And many of them are grappling with the uncertainty that surrounds this trade war.
Along with Neo-China, multiple small business owners told WUNC that their distributors have begun charging them higher prices for Chinese imports. Chilton Sheppard, a manager at David’s Dumpling and Noodle Bar, which is located near the N.C. State campus said that a case of oyster sauce used to be $30 – now it’s $80. They also use plastic to-go containers that also are shipped from China.
“We’re just toughing it out,” Sheppard said. “We aren’t looking to increase prices at the moment, but looking into switching (sauce) brands to ones we can get domestically.”
Some, who rely on products that come from countries that would face reciprocal tariffs, have also been told to expect higher inventory prices in the coming weeks.
Mack Libago, owner of the Filipino grocery Oriental Store in Raleigh, primarily orders products from the Philippines, which would face a 17% tariff. He doesn’t want to raise prices for his customers — many of them, he said, also send money back to their families overseas.
“I can’t do anything about it. I have rent and bills to pay. My costs are fixed,” Libago said. “I hope (Trump) changes his mind. But I’m just going to wait and see.”
For Neo-China owner Jordan Wang, the tariffs could force him to make an incredibly difficult choice.
“On the labor front, on the business front, and then on the incoming sales front, I’m being hurt on all three,” Wang said. “So on all three fronts, I may have to close my business.”
“I was born here. I was raised Chinese, but I’m American. Living in America is not supposed to be a struggle,” he added. “My parents already did that.”
If you are a business owner with thoughts about the increased tariffs, we’d like to hear from you. Please reach out to Eli Chen at elichen@wunc.org.
