Confusion surrounds the Trump tariffs

By |  April 2, 2018

President Donald Trump began to impose tariffs on imported steel and aluminum within the last several weeks in an effort to protect domestic trade.

The tariffs, of course, have been a point of contention on both sides of the political aisle, putting a 25 percent tax on steel imports and a 10 percent tax on imported aluminum.

Certain allies are temporarily exempt from the tariffs, including Canada and Mexico. But a deadline of May 1 that coincides with the deadline to finalize a new NAFTA deal means imported steel coming from key sources could soon be taxed.

China is likely to be one of the countries most affected by the U.S.-imposed tariffs. Additionally, China is now subject to tariffs on about $60 billion of its goods that come into the United States.

Regardless, a number of U.S. industries will undoubtedly be affected if the steel and aluminum tariffs become a mainstay – including manufacturing.

“Our industry has been consistent and clear about the negative impact that import tariffs on steel will have for equipment manufacturers and their employees,” says Dennis Slater, president of the Association of Equipment Manufacturers (AEM), whose organization represents more than 950 companies and more than 200 product lines in the construction, mining, agriculture, forestry and utility sectors worldwide. “The mere threat of tariffs or quotas has already contributed to higher steel prices, disrupted business operations for equipment manufacturers and caused uncertainty in the business climate.”

Potential effects on aggregate producers

The aggregate industry, which is dependent on steel resources and imports, would also feel the effects of the steel tariff. The final impact of the 25 percent tax, however, is still to be determined.

“We’re concerned because what we do is steel,” says Mark Krause, general manager of McLanahan Corp., which makes aggregate-processing equipment. “Because we’re a global company, how does that affect our global business? We don’t understand all of that yet either. We’re cautiously optimistic that cooler heads will prevail at the end of the day, and that it’s more of a negotiation tactic than anything. We’ll see and react, but it will definitely affect this industry.”

An increase in the price of steel would likely lead to product price increases, as costs would be passed down to customers and potentially generate some uncertainty in an aggregate industry that’s built some positive momentum in recent years.

“I don’t think it’s a good idea,” says John Bennington, washing product manager at Superior Industries, of the tariffs. “That obviously is going to impact the customer. [The price of] steel is going to go up, and they’re going to have to pay more for the equipment.

“The double whammy is there’s a fairly large amount of steel used in road construction, so any amount of money we’re spending on roads, part of it is going to get eaten up just in paying the tariff for steel that was already there,” Bennington adds.

Equipment manufacturers aren’t the only ones scratching their heads over these tariffs. A variety of trade associations are pushing back against the tariffs, as well.

“We’re always concerned whenever tariffs are used as a penalty against imports,” says John Gould, vice president of supply and chain customs policy at the National Retail Federation. “Tariffs are passed along and are essentially taxes paid by the U.S. consumer.”

So it should come as no surprise that AEM’s stance is in opposition to the president’s approach.

“The equipment manufacturing industry is profoundly disappointed at President Trump’s actions to advance import tariffs on steel and aluminum,” Slater says. “These ‘Trump Tariffs’ will put U.S. equipment manufacturers at a competitive disadvantage, risk undoing the strides our economy has made due to tax reform, and ultimately pose a threat to American workers’ jobs.”

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