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Tariff tussle touches local companies

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Washington's tough tariff talk on steel and aluminum will have – and already has, in some cases – an impact on midstate companies.

In March, President Donald Trump said he would impose a 25 percent tariff on steel and a 10 percent tariff on aluminum imports, a move that initially excluded U.S. allies. Late last month, Trump imposed tariffs on those same allies, provoking threats of retaliation against American companies.

Tension continued following the G7 Summit in Canada earlier this month. A displeased Trump took to Twitter after Canadian Prime Minister Justin Trudeau refused to back down from plans to retaliate.

Trump has said tariffs are necessary to change a global trading system that allows other countries to take advantage of the U.S., which runs a trade deficit with most counties.

The tariffs will affect many of the 375 companies represented by the Manufacturers’ Association of South Central Pennsylvania.

“We have members that make products that get packaged in steel cans. We have members that deal with rolled sheets of aluminum,” said Todd Willman, a spokesman for the association. “You’re dealing with everything from tanks to motorcycles to steel girders that go into bridges and components that go into railcar assemblies.”

The price of steel already has gone up between 30 percent and 40 percent since the tariffs were first announced, said Paul Nathanson, spokesman for the Washington, D.C.-based Coalition of American Metal Manufacturers and Users.

Businesses are also struggling to get quotes on the steel they need. And the lost business to overseas competition could threaten jobs. 

“The U.S. is becoming an island of high steel price, resulting in customers simply importing the finished part,” he said. “So if the president wanted to help manufacturing, this is the exact opposite way of doing it.”

Steel coalition

The Coalition of American Metal Manufacturers and Users was formed in response to the steel and aluminum tariffs introduced earlier this year. The Washington, D.C.-based coalition is comprised of eight organizations:

  • American Institute for International Steel
  • Associated Builders and Contractors
  • Industrial Fasteners Institute
  • National Tooling & Machining Association
  • North American Association of Food Equipment Manufacturers
  • Precision Machined Products Association
  • Precision Metalforming Association
  • American Wire Producer Association

The coalition formed in April to ensure that steel and aluminum users had a voice in the tariff debate, Nathanson said.

One such voice is that of the Follett Corp., which is headquartered in Easton. The 70-year-old company makes ice machines, ice dispensers, ice-storage bins and medical-grade refrigerators for use in the food-service industry. As a result of the tariffs, the company expects to see an increase between 12 percent and 15 percent increase on its steel costs by July 1, said Steve Follett, company president and CEO.

Follett Corp. will likely increase prices or add surcharges to make up the cost.

“It’s a pretty major issue for us,” Follett said. “We saw increases even before the retaliation.”

Unintended consequences

Following the March proposal, the Trump administration offered up tariff exemptions to the European Union (EU), Canada and Mexico. After a compromise could not be reached last month, Trump revoked the concessions. As a result, the EU retaliated with tariffs of its own on a number of U.S. goods, beginning July 1.

Among the U.S. goods that would be affected are motorcycles, which has sparked some concern from companies like Harley-Davidson Inc., which has an assembly plant in York County.

“We believe a punitive, retaliatory tariff on Harley-Davidson motorcycles in any of our major markets would have a significant impact on our sales, our dealers, our suppliers and our customers in those markets,” Harley spokesman Michael Pflughoeft said in a statement.

The EU also plans to add tariffs on cigarettes, juices and bourbon – totaling $3.3 billion worth of U.S. goods.

The impact on local producers depends on how much of their costs are made up by aluminum and steel, said Keystone Research Center labor economist Mark A. Price. Though the tariffs do introduce uncertainty, that tends to be the nature of business, he added.

“It doesn’t mean that capital lays idle, it just makes other investment opportunities more attractive. So I would tend to discount claims that uncertainty is hurting the broader economy now,” Price said.

Nonetheless, he suggested, the administration’s aggressive approach could wind up causing harm. “Only more time will tell how this works out,” he said.

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Emily Thurlow

Emily Thurlow

​Emily Thurlow covers York County​ for the Central Penn Business Journal. Have a tip? Drop her a line at ethurlow@cpbj.com. Follow her on Twitter @localloislane.

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