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POLITICO

Trump tariffs sting farmers, businesses from sea to shining sea

Here's a round-up of some of the complaints about Donald Trump’s tariffs heard on Capitol Hill in recent weeks

PUBLISHED : Thursday, 02 August, 2018, 3:14pm
UPDATED : Thursday, 02 August, 2018, 3:14pm

This story is published in a content partnership with POLITICO. It was originally reported by Doug Palmer on politico.com on August 1, 2018.

As US President Donald Trump prepares to continue ratcheting up tariffs, the duties he has already imposed on $34 billion worth of goods from China and around $50 billion worth of steel and aluminium exports from around the world are causing pain across the United States.

That's already prompted Trump to promise $12 billion in assistance to help farmers who have been hit with retaliatory duties on their exports to China, the European Union and other key markets. The aid package has been popular with voters, particularly in rural areas, according to a new POLITICO/Morning Consult poll. But the same poll also showed that most voters in farm states prefer free trade and better access to markets over subsidies.

So far, the administration has no plans to extend that aid to other adversely affected sectors, which the US Chamber of Commerce estimated this week could cost another $27 billion.

Here's a round-up of some of the complaints about Trump's tariffs heard on Capitol Hill in recent weeks:

KANSAS – $361 million of exports threatened by retaliatory tariffs

China’s retaliatory tariffs on nearly all agricultural imports from the United States have hurt Kansas farmers like Stacey and David Forshee, who raise cattle and grow soybeans, corn and wheat on their farm in the north-central part of the state, Republican Senator Jerry Moran (Kansas) said last week during a Senate Appropriations subcommittee hearing.

“All told, it has been estimated that $361 million of Kansas exports are being threatened by various tariffs” imposed by China, the EU, Canada and Mexico in response to Trump’s actions, he said.

NEW HAMPSHIRE – Lost sales of mead, lobster

Moonlight Meadery, a small business based in Londonderry, New Hampshire, “had a deal effectively killed by the retaliatory tariffs on American wine,” Democrat Senator Jeanne Shaheen (New Hampshire) said.

“This is a deal that would have doubled their output. For a small business that meant a lot. But what's happened, they've had to lay off employees and they've also been hit by the increased cost of aluminium because of the tariffs on steel and aluminium.”

Another New Hampshire business, Little Bay Lobster Company, that previously sold 50,000 pounds of lobster to China each week “can no longer find a buyer,” Shaheen added.

After the Trump administration slapped a 25 per cent duty on $34 billion worth of Chinese exports, China retaliated with a 25 per cent tariff that priced New Hampshire lobsters out of the market, Shaheen said.

Another business in her state, Intelligent Manufacturing Solutions Corp., expects to lose a $5 million circuit-board contract to a Chinese competitor because of Trump’s tariffs, Shaheen added.

TENNESSEE – Cancelled home appliance plant expansion

Electrolux, a home appliance manufacturer, cancelled a $250 million plant expansion in Springfield, Tennessee, because of Trump’s decision to impose tariffs on steel and aluminium, Republican Senator Lamar Alexander (Tennessee) said.

Bush Brothers and Company, best known for its canned baked beans, has experienced an 8 per cent decline in its revenue because of higher steel prices. Another Tennessee company that manufactures gas grills is taking a loss on every sale they make to Canada and EU because of Trump’s tariffs, Alexander added.

MAINE – Bleacher manufacturer caught in a price squeeze

Hussey Seating Co., a bleacher manufacturer based in North Berwick, Maine, has seen prices for steel increase 45 per cent over the past year as a result of Trump’s tariffs.

“And the problem is that this small manufacturer has locked in contracts, well before beginning a project that did not anticipate a 45 per cent increase in the cost of steel,” Republican Senator Susan Collins (Maine) said.

Maine’s lobster industry, which is the state’s biggest exporter, has also taken a big blow as a result of retaliatory tariffs imposed by China, Collins added.

To make matters worse, Canada now has a free-trade agreement with the European Union that gives it duty-free access to the EU market, while Maine lobstermen still face tariffs of 8 to 30 per cent, Collins said.

ALASKA – Salmon, cod and shellfish jobs put at risk

China’s 25 per cent retaliatory tariff on US seafood has “clearly rattled my state,” Republican Senator Lisa Murkowski (Alaska) said. The increased duty affects about 40 per cent of the state’s salmon exports and 54 per cent of its cod exports that went to China last year, she said.

“So this is, this is very, very significant to us. We're still trying to figure out exactly what this means, not only to our fishermen but to the processors, the logistics industry, all aspects of the seafood supply chain,” Murkowski said.

In addition, Trump’s threat to impose a 10 per cent duty on another $200 billion of Chinese exports could boomerang back on Alaska.

“Many of our fish and shellfish that are harvested in the state are then processed in China before re-importing back to the United States for domestic distribution. So in many ways, [Trump’s additional proposed tariffs would impose] a 10 per cent tax on our own seafood, which is just a tough one to reconcile,” Murkowski said.

ARKANSAS – Hardwood timber mills losing China sales

Hardwood lumbers mill in the Southern United States are also under pressure because of Trump’s decision to impose tariffs on China. The nation is the largest overseas market for US hardwood timber, but sales “essentially have ceased” since Trump’s duties went into effect, Republican Senator John Boozman (Arkansas) said.

“Prices are in free fall, markets have collapsed, mills will be closing unless the situation is resolved fairly soon,” Boozman said, noting that the hardwood mills are the primary source of employment in many rural communities across the South.

WEST VIRGINIA – Auto supply chain vulnerabilities

Republican Senator Shelley Moore Capito (West Virginia) said she was worried about harm of new steel and aluminium tariffs on a Toyota production facility in Buffalo, West Virginia, that employs 1,600 workers. But the effect could be even worse if Trump follows through on plans to impose automotive tariffs because parts made in the state cross the border with Canada at least two times.

“The raw aluminium comes from Canada. It goes to a Toyota plant in Tennessee that makes the engine block. The engine block then comes to West Virginia, where we make, very well, the six-cylinder engines and additions to the transmissions. Then half of those engines go from West Virginia back to Canada, where they are dropped into Lexus RX and then brought into this country for sale,” Capito said.

DELAWARE – Prospect of lost chicken sales to South Africa

After years of pressure, the Obama administration persuaded South Africa to remove barriers to US poultry exports. Now all that progress is at the risk of being lost because Trump hit South Africa with tariffs on its steel exports, said Democrat Senator Chris Coons (Delaware).

“I had a very difficult meeting with their trade minister,” Coons said.

“They’re going to be justified in imposing countervailing duties that may well close the door to this newly opened market for our poultry.”

WASHINGTON STATE – Apples, cherries and pears caught in the crossfire

Not long after Trump imposed tariffs on Chinese-made steel and aluminium, Beijing began insisting on inspecting all shipments of US-produced apples, making it impossible for Washington suppliers to continue to trade, Cass Gebbers, president and CEO of Gebbers Farms in Brewster, Washington, told Congress in July.

While that situation improved after a while, China has boosted tariffs on US apples, pears and cherries to 50 per cent, from 10 per cent previously, in response to duties imposed by Trump. That jeopardises about $130 million in cherry sales, $50 million in apple sales and $1.5 million in pear sales to the Asian market, Gebbers said.

TEXAS – Hitting cattle and dairy farmers at a bad time

“With Texas relying so heavily on trade overseas, we are concerned with the blowback from the administration’s decision to place tariffs on our trading partners,” Russell Boening, a dairy and cattle producers from Poth, Texas, said in testimony to Congress.

“Agriculture is bearing the brunt of retaliation at a time when farmers are already facing low commodity prices, high input costs and unpredictable weather. Net farm income has also dropped 52 per cent in the last five years, making it extremely difficult for farmers and ranchers to continue operating,” Boening added.

MINNESOTA – Three biggest agricultural export markets threatened by tariffs

Kevin Paap, president of the Minnesota Farm Bureau told Congress about how much farmers in his state rely on its three biggest markets: Canada, Mexico and China. In 2016, agricultural and food exports accounted for nearly one-third of Minnesota’s total merchandise exports,” he said. “Specifically, more than 24 per cent of all Minnesota agricultural exports go to Canada and nearly 24 per cent of all Minnesota agricultural exports go to Mexico.”

He stressed that the better course of action would be to expand, rather than contract, trade.

“The current tariffs, continuing back-and-forth retaliatory actions and trade uncertainties are hitting American agriculture from all sides and are causing us to lose our markets,” he added.

“Once you lose a market, it is really tough to get it back.”

MONTANA – Indebted young farmers worried about the future

Farmers just starting out are already feeling discouraged when they see gluts and falling prices. That is going to make it harder to motivate the next generation, several producers have noted.

“For young and beginning farmers like me the stakes are even higher,” said Michelle Erickson-Jones, president of the Montana Grain Growers Association.

“We are often highly leveraged, just establishing our operations, as well trying to ensure we have access to enough capital to successfully grow our operations. Increased trade tensions and market uncertainty makes our path forward and our hopes to pass the farm on to our sons less clear.”

NEW JERSEY – Bitten by South Korean steel quota restrictions

South Korea was one of the few countries that escaped Trump’s new 25 per cent duty on steel, but only because it agreed to restrict its exports to the United States at 70 per cent of the average levels for 2015 to 2017. That has created a huge headache for Micro, a precision medical-device manufacturer based in Somerset, New Jersey.

“Let me be blunt: For Micro, this quota is catastrophic,” the company’s president, Brian Semcer, said in testimony. “Under a best-case scenario, the quota would limit Micro’s steel imports to 70 per cent of our recent yearly average. That would mean a 30 per cent loss of market share and would effectively bar us from helping our customers develop and introduce any new products or expanding our operations in the foreseeable future.”

MARYLAND – Forking out big bucks, and time, for tariff exclusion requests

Companies that rely on imported steel can receive an exclusion from the new steel and aluminium tariffs, if they can prove to the Commerce Department that no domestic steel company can manufacture the product they need. That’s turned out to be a costly and frustrating experience for many manufacturers, including Independent Can Company, a family-owned business based in Belcamp, Maryland.

Company President Rick Huether told Congress his company has spent over $50,000 internally for employees to prepare 40 exclusion request.

“This represents over 500 hours which could have been time spent building the business versus defending the business,” he said.

FLORIDA – Frustrated by government bureaucrats

Other companies complain of their treatment by Commerce Department officials assigned to decide whether their exclusion request will be approved. That was the experience of Sanitube, a family-owned manufacturer based in Lakeland, Florida, that makes stainless steel tubes, valves and fittings for use in the food and beverage processing industry.

After its first exemption request was denied, Sanitube spent three weeks unsuccessfully trying to contact department officials by both phone and emails to find out why, company president Todd Adams told Congress.

Finally, the company asked for help from Democrat Senator Bill Nelson (Florida), which led to a phone call from Matthew Borman, the deputy assistant secretary of Commerce for export administration. Although Borman did explain the mistake the company made in its paperwork, Sanitube still had to start the exclusion process again.

Adams also complained about difficult interactions with one Commerce Department staffer, whom he accused of a “lack of professionalism” because of the way he handled Sanitube's exclusion request.

https://www.politico.com/story/2018/08/01/trumps-tariffs-sting-farmers-businesses-from-sea-to-shining-sea-717555