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Steel businesses suffer from Trump's tariffs

By Zhang Ruinan in New York | China Daily | Updated: 2018-07-04 09:12
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An employee pours molten steel into a casting for a church bell at the Verdin Corp production facility in Cincinnati, Ohio. [Photo/Agencies]

When Bill Adler, owner of a metal stamping company in Ohio, prepared to bid on a contract to make commercial sausage stuffers for a company that wanted to replace its Chinese supplier last year, he thought he could by matching China's price.

But with the 25 percent tariffs on imported steel and aluminum imposed by the Trump administration, the price of raw materials increased about 50 percent from last October. Not only did Adler bid fail-the $1 million in new factory investment and the 10 new jobs it would have created evaporated.

"If it wasn't for the increase that came on because of the threat of tariffs, then I honestly believe we'd be supplying these domestically," Adler told the Washington Post. "This directly affects my life, my employees, my investments."

As many US steelmakers recently see growth in business and cheer US tariffs that could encourage more domestic production, Adler's company, Stripmatic Products, Inc is among thousands of small and medium-sized companies in the metal forming industry-including stamping, spinning, fabricating and so on, that say the tariffs are hurting their businesses and cost them jobs.

"People in the metal forming industry are really struggling right now with increasing (material) prices and longer lead-time on material," Roy Hardy, the president of Precision Metalforming Association (PMA)-a trade association representing the $137-billion metal forming industry in the US with more than 800 member companies, told China Daily.

"Many of them are not able to pass those increases onto their customers, and certainly poor delivery makes it harder to deliver their parts and components on time," he added.

Hardy said the association's monthly business conditions report shows that nearly 20 percent metal forming companies anticipate a downward trend in incoming orders during the next three months, with 20 percent predicting a decrease in orders, which increased by 10 percent from May.

"The jump in those metal forming manufacturers who anticipate a decline in activity is related to the 25 percent tariffs imposed on steel imports," said Hardy. "Reports from PMA member companies show that all steel prices have increased, in some cases by more than 50 percent, and delivery times are going from days to weeks and even months."

"For many of our members, the (cost) of the raw material could be as much as 60 or 70 percent of the cost of the finished parts," Hardy added. "So, the increase is significant."

"The US is becoming an island of high steel prices, which will result in metal forming manufacturers losing business to overseas competitors who can buy steel at global prices," he added. "Tariffs are taxes, and if these tariffs continue, any benefit gained from tax cuts and regulatory reform will be wiped out."

According to the report, the percentage of metal forming companies with a portion of their workforce on short time or layoff increased to 4 percent in June, up from 0 percent in May. At this time last year, only 2 percent of companies reported workers on short time or layoff.

Many US manufacturers that use imported steel and aluminum are seeking their way out by filing tariff exemptions, arguing that they depend on imported steel and that domestic producers can't fill the gap.

So far, over 22,500 applications for exemptions have landed in Washington and many more arrive each day. Over 4,000 objections have been filed, which is also expected to grow.

Only 98 applications have been processed as of last week, and of those, only 42 were approved, according to the US Department of Commerce.

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