Trade Cases

McCaskill: U.S. Tariffs Costing American Companies and Workers

Written by Sandy Williams

A Missouri senator is calling for the end of the trade war instigated by Trump administration tariffs that are threatening agricultural producers and manufacturers in her home state.

“Missouri jobs and livelihoods are at stake—and I don’t understand the decision to escalate this trade war with no end in sight, risking critical foreign markets and doing lasting damage to Missouri’s economy,” said Sen. Claire McCaskill (D-MO) in a letter to Commerce Secretary Wilbur Ross. “It’s time to end this trade war and provide necessary relief for the thousands of Missouri jobs that are at risk.”

McCaskill criticize the tariff exclusion process as “too slow and cumbersome” and cited numerous instances where tariffs are harming Missouri manufacturers. Companies are facing higher steel and aluminum costs because of tariffs that are cutting into already thin margins, resulting in lost customers and factory layoffs, she reported, offering some examples below.

ABB, a company that manufactures transformers for electrical grids, now pays tariffs on the imported electrical steels it uses, making its products more expensive than its competitors’ and putting 1,100 jobs at risk in Jefferson City.

Rising aluminum costs and insufficient domestic supply is threatening profits and jobs at an Anheuser Busch can manufacturing plant in Arnold, Mo.

Deutsche Precision, a manufacturer of transmission parts using imported specialty steels, filed for 13 product exclusions in May, which have still not been processed. The company is losing its only customer, a supplier of transmission parts to U.S. automakers, due to necessary price increases.

Mid-Continent Nail Corp. made national news as one of the first companies to lay off employees after the tariffs were instituted. Now the company worries it may be out of business by Labor Day. Orders dropped by 70 percent compared to last year after tariffs were imposed on steel the company imports from its parent Deacero in Mexico. Deacero bought Mid-Continent in 2012, expanding the company and doubling the American workforce to more than 500 employees. For a while, the company enjoyed the benefits of cross border trade under NAFTA. The tariffs on Mexican steel forced the company to increase prices to cover the higher cost of its steel input. As an example, tariffs have added $5.50 to a box of nails that Mid-Continent used to sell for $27.

“We’re in a situation where we’re fighting against our own country,” said Chris Pratt, operations general manager at Mid-Continent, to the Chicago Tribune. “It seems like a battle we shouldn’t be having to fight.”

Domino Effect

Some companies are not reeling from steel and aluminum tariffs, but from supply chain disruption and retaliatory tariffs that have been imposed by U.S. allies.

Reduced production at Mid-Continent Nail has resulted in layoffs at a box manufacturer in Missouri. Semo Box Co. in Cape Girardeau counts Mid-Continent as a major customer, normally supplying a tractor-trailer load of corrugated boxes to the company daily. Fewer nails produced means fewer boxes are needed, resulting in the layoff of four workers at Semo.

Proctor & Gamble employs nearly 1,500 people in Missouri making dishwashing detergent, Febreze, paper towels and toilet paper. Canada’s 10 percent retaliatory tax on these products will cut into the company’s profitability due to rising costs and pricing pressure. P&G sales with Canada are around $2 billion annually.

Proctor & Gamble is also being hit by steel tariffs on imported steel used in its Gillette razors made in Boston. P&G imports a type of steel that is not produced in the U.S. Its exemption request, like most, is still pending.

Recreational boats in Missouri and elsewhere will get a double whammy from tariffs, as well. Aluminum tariffs have escalated construction costs and retaliatory tariffs by the EU, Canada and Mexico are expected to impact 69 percent of recreational boat exports. In Missouri alone, the boating industry supports 16,000 direct and indirect jobs.

Nationwide, marine manufacturing supports over 650,000 jobs, according to the National Marine Manufacturers Association. Although nearly all U.S marine manufacturers source their aluminum domestically, escalating costs due to the Section 232 tariffs are damaging the recreational boating industry. The recent tariffs on aluminum sheet from China are expected to create additional cost spikes, says NMMA.

“In an attempt to punish China, the administration is wreaking havoc on the global economy. These harmful policies will have costly effects across American industries, but few are being singled out quite like the U.S. recreational boating industry,” said NMMA’s President Thom Dammrich.

Added Dammrich, “The 650,000 hardworking Americans whose jobs are supported by the marine manufacturing industry depend on free and fair trade. In addition to punishing China, the administration is punishing uniquely American manufacturing industries and has driven up costs for American manufacturers and consumers, antagonized long-standing trade partners, and nearly eliminated our key export markets. It’s time for the administration to recognize the negative effects of its current direction and focus on negotiating substantive trade agreements that truly benefit American businesses, consumers and workers.”

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