ANDERSON — As President Donald Trump threatens more tariffs on foreign goods, some businesses in Anderson are already feeling the effects of the broadening trade war.
In the few months since Trump issued a 25 percent tariff on raw steel and a 10 percent tariff on raw aluminum, first aimed solely at China and in June expanded to allies including Canada, Mexico and the European Union, several steel and aluminum manufacturers said they’ve seen prices rise and orders shrink.
Aaron Smith, owner of Centennial Steel in Alexandria and Steel Mart in Elwood, says he’s had trouble competing for customers against foreign companies that can purchase raw resources cheaper and therefore charge less.
“The issue is, we pay the tariffs on the steel, but foreign competitors are not subject to the tariff on the finished product,” he said.
That means some customers have stopped ordering from Smith and instead are buying the finished products, which aren’t covered by the tariffs, from foreign competitors, instead of paying higher prices for American-made goods.
Smith isn’t against tariffs aimed at helping American companies overall, though he said he would have liked to see them implemented differently.
Instead of only targeting the raw material, he would like to see any product containing steel or aluminum, raw, transformed or finished, be taxed at a percentage equal to the percentage of the the material. This plan would help companies like his, which reshape raw materials, from being undercut by foreign competition.
“If you have one, then you have to have the other,” he said. “If not, you put more American jobs in jeopardy.”
One product he purchases is made exclusively in North America by a Canadian company, so Smith has no choice but to pay the 25 percent tax, which has spurred him to start thinking about ways to circumvent the tariff.
“Suddenly we are hit by a $5,000 tariff, an unexpected expense that we have to pay,” he said. “Immediately, as a business owner, we start to think, how can we bring that in not subject to a tariff?”
Though he hasn’t implemented anything, one idea would be to hire a Canadian firm to punch and shape the raw steel enough to make it a transformed product, and therefore not subject to the tariff.
“I am not saying we are doing that, but we are a small company, and if I am thinking that way, they all are thinking that way,” he said.
It’s not all bad, though. Smith said right after the tariffs were announced he was contacted by some customers who wanted to use an American supplier because of the tough talk from President Trump.
“When the tariffs were being threatened in the beginning, we did pick up some accounts…they were worried about comments made by President Trump, and wanted to have an American supplier in case tariffs were put in place,” he said. “There is some good in it and there is some bad.”
For local steel importer Kadet Products in Elwood, the tariffs have been a boon for business.
“We actually are a supplier to that industry, so if we have seen any effects, we have seen stronger demand from our customers,” said owner Eric Fettig.
Fettig added its time to “level the playing field,” against countries that prop up industries with government funds.
“It’s difficult for private industry to compete against state-owned industries in China,” he said. “One has to go to a bank and make their case, the other has to call the head of the state agency and say they need more money, and they get it.”
For the steel dealer, it’s a matter of national security.
“I think that, we can’t be much of a superpower if we can’t make our own basic materials,” Fettig said.
Americans are fairly split on their view of the effect tariffs and the growing trade war will have on their lives.
Nearly half, 49 percent, of U.S. adults say increased tariffs between the U.S. and its trading partners will be bad for the country, according to a Pew Research Center poll released Thursday. A smaller share, 40 percent, say the tariffs will be good for the U.S., while 11 percent say they don’t know how the tariffs will affect the country.
The survey, conducted July 11-15 among 1,007 adults, found attitudes toward the tariffs are deeply polarized along political lines. About seven in 10 Republicans and Republican-leaning independents say increased tariffs between the U.S. and its trading partners will be good for the country. However, roughly the same share, 77 percent, of Democrats and Democratic-leaners say the increased tariffs will be a bad thing for the U.S.
Indiana Chamber of Commerce President Kevin Brinegar also recently spoke out against the tariffs, saying they are hurting Hoosier businesses.
“Products used in our homes every day, and the materials consumed to build them, will simply cost more,” Brinegar said. And the retaliation on U.S. tariffs will lead to lost sales of Indiana products — and ultimately, lost jobs.”