Parts are used inside the Stellantis Kokomo Transmission Plant, where electric vehicles are built. CNHI News Indiana/file
An overview of the Draper Inc. facility in Spiceland. Submitted photo
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Skyrocketing costs. Lower-quality supplies. Fewer workers. Millions of dollars in extra spending.
That’s been the unfolding reality at Draper Inc. nearly a year after President Donald Trump ordered sweeping tariffs on nearly every nation on the planet.
“It’s been a rocky road,” said Terry Faurote, the director of operations for the company that employs 700 workers making high-end window shades, projector screens and gym equipment at its Henry County facility.
Now, the company is celebrating Friday’s U.S. Supreme Court ruling that Trump exceeded his authority by imposing tariffs through an emergency powers act. The ruling invalidates many, but not all, of the imposed tariffs. The 50% import tax on steel and aluminum remains in place.
Faurote said the tariffs imposed through the emergency powers act had a small impact on Draper, compared to the metal tariffs.
“Those are really, really difficult for the manufacturers here in the U.S.,” he said.
The U.S. government could be required to refund the roughly $240 billion in tariff revenue collected since April by the now-void import tax.
Neil Bradley, the U.S. Chamber of Commerce’s executive vice president and chief policy officer, said in a statement that the court’s decision is “welcome news for businesses and consumers” and called for “swift refunds of the impermissible tariffs.”
Trump on Saturday quickly moved to offset the court ruling by imposing another 15% tariff on nearly every country on the planet using the 1974 Trade Act.
However, under that law, tariffs can last for up to 150 days, after which Congress may have to take action to extend them – a major limitation compared to the emergency- powers tariffs.
The new taxes add just another kink for companies like Draper that have scrambled to adapt to the onslaught of policy changes and shifting timelines on tariffs that have generated deep economic uncertainty over the past year.
In that time, the Trump administration has altered tariff rates more than 400 times. That’s more changes in a year than in the nation’s entire 249-year history combined, noted Michael Hicks, an economist at Ball State University.
Trump has argued tariffs will boost U.S. manufacturing, reduce trade deficits, help pay down the national debt and pressure trading partners into more favorable agreements — all of which, he asserted, will help U.S. businesses.
But Faurote said he’s seen the import tax only hurt his company and drag down the economy.
“We definitely would have preferred not to see these tariffs,” he said.
‘A tough year’
Tariffs have caused more financial pain in Indiana than most states. Manufacturing makes up 26% of the state’s economy — the highest in the nation — and Indiana ranks 11th for the number of imported goods, nearly all of which are now tariffed.
Andy Baker, who owns and operates the Kokomo-based combat- robot company AndyMark, said his business imports only about 20% of its supplies from overseas but still ended up paying about $250,000 in import taxes in the past year.
“I could do a lot of other things with that money besides pay our government,” he said.
Domestic goods purchased by AndyMark have also gotten more expensive. Baker explained that many of those U.S. suppliers also import goods for their parts and pass that cost on to him.
Draper has paid significantly more for steel and aluminum, even though the company is buying from American suppliers, noted Faurote. The huge spike in demand for domestic materials has allowed suppliers to significantly raise prices, sometimes as high as the cost of imported metals.
Add it up, and the cost to do business at the Spiceland factory has increased about 10% in the past year, equaling millions of dollars in extra expenditures, Faurote said. That’s led Draper Inc. to purchase a small company in the United Kingdom in part to avoid paying tariffs, he noted.
“If it’s something I could produce in the U.K. as opposed to U.S., it would be a lot cheaper than having to pay the tariffs of the raw material coming in, and then paying to export it as well,” he said.
Similar stories are playing out across most of the state’s manufacturing sector, explained Andrew Berger, president of the Indiana Manufacturers Association. Some companies have pumped the brakes on hiring and held back on new investment as tariffs tighten profit margins.
Many have also stopped community- outreach funding, such as sponsoring local fireworks shows or donating to local nonprofits, Berger noted.
“It’s been a tough year,” he said. “Tariffs are creating real, new, unexpected and major costs.”
Total employment growth across the U.S. shriveled following Trump’s tariff orders, creating just 119,000 new jobs from April to November. During the prior seven-month period before the announcement, employment rose by 1.1 million.
Nationally, the manufacturing industry lost 68,000 jobs, and businesses that support factories have lost another 76,000 jobs, according to preliminary numbers released by the U.S. Bureau of Labor Statistics. Transportation and warehousing jobs slumped by more than 50,000 workers.
Faurote said they’ve stopped filling positions at Draper when workers leave. The company in total has slimmed down about 15% to compensate for tariffs.
“We’ve been in business since 1902, and we’ve never laid anybody off,” he said. “We pride ourselves in that. But our situation did make us look at attrition and whether we really needed to replace positions.”
The current gloomy job growth puts the economy on the cusp of being considered a recession, according to Hicks, the Ball State economist, who noted it was the worst year outside of a recession since World War II .
“It was just remarkable how much help-wanted ads have plummeted across the country since tariffs were introduced,” he said.
Choppy waters ahead
In some ways, the tariff fallout hasn’t been as severe as predicted. Trump quickly backed off some of his most eye-popping threats, such as imposing a 100% import tax on pharmaceuticals. He also delayed the implementation of many tariffs until August.
But those decisions have only delayed their full impact, which in the coming months will likely hit the state’s manufacturing sector at full force and lead to even more financial pain, Hicks argued.
That’s because while tariffs were delayed, companies imported billions of dollars of overseas materials and stockpiled supplies to avoid paying the pending import tax, he explained.
That helped keep prices down last year on many day-to-day consumer goods. Goldman Sachs estimated that manufacturers and other businesses were absorbing just under 65% of tariff costs in June.
Now, those tariff-free stockpiles are depleted, Hicks said, and companies are passing on the import tax to consumers by increasing prices at the checkout line. That’s already happening, Goldman Sachs noted. The share of import taxes being passed on to consumers rose to more than 50% last month.
“Higher consumer prices will have a predictable result,” Hicks said. “It will shave off even more jobs and make households budgets even more stretched.”
Faurote said Draper delayed raising prices on its products for as long as possible, but recently the company has been forced to charge more to bolster its bottom line. Baker with the Kokomo company AndyMark said he’s also raised prices on some of his products because of tariffs.
“Our competitors are still out there … so it’s sometimes difficult to raise a price because, on a whim, we’ve been charged more with tariffs,” Baker explained.
The underlying fear for Indiana’s companies is that, even with the court’s Friday ruling, tariffs will still increase costs for consumers and lead to less spending, according to Berger of the state’s manufacturing association.
Fewer sales means companies could respond with layoffs or cutting out product lines, he explained, and lead to a deepening economic slump.
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