Who is losing out from Trump’s tariffs?

The US-China trade dispute is starting to have consequences.

By Redacción MXN Saturday, April 14, 2018 comments

The US-China trade dispute is starting to have consequences.


US tariffs on foreign steel and aluminum went into effect last month. China’s retaliatory duties on more than 100 US imports, including pork, fruit and wine, kicked in soon after.


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Further tariffs on $50bn worth of the each country’s products are in the offing, as the Trump administration presses China on state subsidies and practices it says encourage intellectual property theft. The White House has threatened even more.


Economists expect the dueling taxes to have a relatively limited impact on the overall US economy. But they say the measures will touch most parts of the country and lead to higher prices for everything from televisions to vitamins.


For certain industries like agriculture, aerospace and manufacturing, the effects could be severe.


So how are US companies handling a looming trade war?


Roadtec: ‘Unanswered questions’


For some firms, the measures are welcome. Companies such as US Steel have announced plans to expand their operations, bringing on hundreds of workers.


Their customers – many of them manufacturers located in the Midwest – are worried, however.


They say US tariffs have already increased demand for domestic steel – which accounts for the majority of the metal’s sales in America – driving up prices for firms reliant on steel-based parts.


The proposed tariffs, which include taxes on hundreds of Chinese-made parts and equipment, promise more pain.


At Roadtec, a growing 600-person Tennessee company that makes asphalt paving machines, suppliers are already asking 40% more, says the firm’s marketing director, Eric Baker.


He says the firm is still trying to figure out how to best address the higher costs.


“There’s a lot of uncertainty right now,” he says. “I think the biggest question is how long this is.”


Seneca Foods Corp: ‘Absorb the cost’


Hundreds of firms have asked the Commerce Department for exemptions from the US steel and aluminum tariffs, including Wisconsin-based Seneca Foods Corp.


The firm, which makes its own cans to support a large fruit and vegetable processing business, started importing coils of tin-plated steel just a few years ago, after domestic supply became uncertain.


Leon Lindsay, Seneca’s vice president for sourcing, says he is not sure where he will buy coils now, given the uncertainty about how the US tariffs will affect other markets such as Europe.


In the meantime, a Chinese shipment from an order of 11,000 metric tons, placed last summer, is due in port in the next few weeks and faces the new 25% mark-up.


“The stuff we’re asking for exclusion [for] is on the water. It can’t go back, so we’re the ones that will probably have to absorb the cost, which is significant,” he said.


Hsu Ginseng Farm: ‘This comes up with every customer’


Farmers are also bracing for a hit.


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Will Hsu, whose father started a ginseng farm in Wisconsin more than 40 years ago, was in China last week, meeting with clients and sales staff.


“This comes up with every customer that we meet with. This comes up with our staff,” he said. “They’re worried about how they’re going to pass on that price increase.”


It’ll be very good’


President Trump has said he is confident that confronting China will lead to a stronger US economy, and tried to reassure those who are worried.


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“It’ll be very good when we get it all finished,” he said this week.


The people whose livelihoods are caught up in the dispute are hoping the president is right.