Two Sides to Trump’s tariffs

NASHUA – From Pittsburgh to St. Louis, long-dormant steel mills are showing signs of life – and members of the United Steelworkers believe President Donald Trump’s 25 percent tariff on foreign imports is a major reason for the renewed sense of hope in the Rust Belt.

In New Hampshire, however, the story is quite different. Nashua-based W.H. Bagshaw Co. Inc. buys approximately 50,000 pounds of steel per year, turning the raw material into pins, needles and other machined parts.

“So far, our customers are working with us in passing charges onto their customers, but I think we’ve just been lucky so far,” company Vice President Adria Bagshaw said.

“What’s been hardest about this is the disruption to business,” she continued. “We had to have a lot of meetings, and correspondence with our vendors and our customers, and we also had to work internally on how we’re going to account for all of this.”

Amherst-based Williams and Hussey Machine Co. Inc. is also feeling the pinch. The firm produces profile knives for woodworking professionals.

“We don’t have the resources – we don’t have that clout to weather the storm. That increase has to be passed on. Either you absorb it, or you pass it on,” company President and CEO Steve Carter said.

The Winners

In late-February, Trump announced plans to impose 25 percent tariffs on steel imports, as well as 10 percent tariffs on foreign sources of aluminum.

“The steel and aluminum sectors have been under attack by predatory trade practices. For too long, our political leaders have talked about the problem, but have largely left enforcement of our trade laws up to the private sector. This is not what hard-working Americans want from their government. They expect national security, the foundation of which is built with steel and aluminum, to be protected,” United Steelworkers International President Leo W. Gerard said shortly after Trump announced the tariffs.

Less than a week later, Pittsburgh-based U.S. Steel Corp. announced plans to restart a blast furnace in Granite City, Illinois. The company said this would put 500 steelworkers back on the job.

“The president’s strong leadership is needed to begin to level the playing field so companies like ours can compete, win and create jobs that support our employees and the communities in which we operate, as well as strengthen our national and economic security,” U.S. Steel President and CEO David Burritt said.

“We are committed to ensuring the steel industry remains a fundamental part of American manufacturing because American manufacturing is stronger with American-made steel,” he added.

Meanwhile, along the Ohio River near Steubenville, Ohio, India-based JSW Steel has announced plans to spend $250 million to restart a mill that has been cold for nearly a decade.

The issue of tariffs blurs typical political alliances, as well.

“This welcome action is long overdue for shuttered steel plants across Ohio and steelworkers who live in fear that their jobs will be the next victims of Chinese cheating. President Trump must follow through on his commitment today to save American steel jobs and stop Chinese steel overcapacity from continuing to infect global markets,” U.S. Sen. Sherrod Brown, D-Ohio, said in March about Trump’s tariffs.

The Losers

As the oldest pin manufacturer in the U.S., Bagshaw is doing its best to endure the higher costs of metal, according to company President Aaron Bagshaw.

“I think the more people who are pained by it, the more action we’ll see,” he said regarding opposition to the tariffs.

Between the extra meetings and administrative work taking them away from growing their business in the way they would prefer, Adria Bagshaw said she and Aaron must now focus on other issues.

“Aaron and I would normally spend time on improvement work and growing the business, but instead, we’ve been stuck in meetings, so it has diverted our attention from doing valuable improvement work,” she said.

Carter, meanwhile, said small businesses such as his will get hit the hardest. To help minimize costs, he now buys flat sheets of steel that are then cut in-house, rather than buying bars of steel.

“Tariffs are on everybody – that’s it,” he said. “So, it’s the buying power. Who’s in a better position to deal and absorb this tariff problem?

“We slap a tariff on them, they turn around and slap a tariff on that, and who gets hurt in this? My feeling is, small businesses,” Carter added.

According to the U.S. Chamber of Commerce, $29 million worth of New Hampshire exports are threatened by the metal tariffs. Furthermore, officials said 184,000 jobs in New Hampshire are supported by “global trade.”

“If our trading partners respond in kind with a full set of tariffs of their own, New Hampshire’s manufacturing, technology and construction sectors will incur significant harm,” New Hampshire Business and Industrial Association President Jim Roche said.

Beer and Aluminum

New Hampshire businesses are not alone in being faced with the tariffs’ burden.

“We thought the solution did not fit the problem, frankly,” said Jim McGreevy, who is CEO of the Washington, D.C.-based Beer Institute.

This lobbying organization represents the beer industry before Congress. McGreevy said by their estimates, these tariffs are a new $347 million tax on the U.S. beer industry. He said the majority of the aluminum used to make beverage bottles and cans comes from outside the country.

“More than 40 percent comes from Canada,” McGreevy said. “This was an immediate impact on our industry. We are in a very competitive industry with 5,000-6,000 brewers competing, but all competing with wine and spirits, and they’re mostly not in aluminum cans and bottles, where beer is.”

Last year, American brewers purchased more than 36 billion aluminum cans and bottles. McGreevy said one of the biggest concerns right now is the increase in the Midwest Premium, which is supposed to cover the logistical costs of moving metal into and in North America, much like a shipping and handling fee. From Jan. 1 to July 9, he said the Midwest Premium increased 135 percent, which is far more than the 10 percent tariff would warrant.

“We think tariffs have exacerbated the structural problem in setting the Midwest Premium,” he said.

McGreevy said numerous members of Congress agree with him. He appreciates U.S. Rep. Annie Kuster, D-N.H., being one of those 32 members that signed off on a letter to Attorney General Jeff Sessions addressing the aluminum market on June 18.

“We really appreciate Kuster’s participation in this letter to Attorney General Sessions,” McGreevy said. “We think the Midwest Premium is an issue the president’s administration and Congress need to address, and the beer industry will continue to sound the alarm about this.”

Future

Canada has already retaliated by imposing $12.6 billion worth of tariffs against American-made products in response to the U.S. action. A U.S. Chamber of Commerce International Trade Administration study states that 87 percent of New Hampshire exporters are small and medium-sized businesses. In 2016, the Manchester-Nashua area exported $1.5 billion in goods, which was roughly a third of the state’s share of exports at 33.6 percent.

Last week U.S. Sen. Jeanne Shaheen, D-N.H., toured Moonlight Meadery in Londonderry, which recently implemented layoffs due to the backlash from the tariffs. She fears this is only the beginning, and that there will be more stories from small businesses losing access to international markets, or seeing their costs go up, if Trump’s “trade war” doesn’t de-escalate.

“There’s no question that we need to address unfair practices from China, but we need to do so in a way that’s going to be effective,” Shaheen said after her tour. “And we need to work with our allies, not alienate them. There is bipartisan concern in the Senate regarding the president’s approach. I’ll continue to work across the aisle to advance bipartisan legislation to stop the president’s reckless and misguided tariffs, and I will keep urging the president to end this trade war.”

Nonetheless, when looking at the way things are in Washington, D.C., McGreevy said, “I think we’re likely to see this tariff stay as it is for awhile.”

Adam Urquhart can be reached at 594-1206 or aurquhart@nashuatelegraph.com.