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Tariff lift positive for local manufacturers

BY Kaitlin Gebby

kgebby@wabashplaindealer.com

WABASH — Lawmakers are saying Indiana manufacturers will see some relief from the ongoing trade war now that Canada and Mexico have lifted steel and aluminum tariffs placed on the U.S.

A trade deal launched by President Donald Trump in March 2018 imposed a 25 percent increase on steel and a 10 percent increase on aluminum in many of the countries the U.S. imports raw goods from.

In retaliation, Mexico imposed $3 billion in tariffs on pork, cheese and steel. A month earlier, U.S. steel and aluminum tariffs were expanded to Mexico, Canada and the EU. Then, Canada imposed $12 billion in tariffs on products like steel, syrup, licorice, orange juice, ketchup and pens.

Last week, President Trump announced he would lift the tariffs placed on Canada and Mexico, and the two counties announced Monday that they would do the same.

U.S. Rep. Jackie Walorski (R-Ind.) said in an official statement that the move by Trump “is great news for American manufacturers, farmers, workers and families,” and a move in the right direction for the pending United States-Mexico-Canada Agreement (USMCA) that will replace NAFTA.

She said the agreement with Canada and Mexico to lift steel and aluminum tariffs “will allow the U.S. to better target China’s unfair trade practices and pave the way for the USMCA.”

Walorski paid a visit to Wabash manufacturer Oji Intertech in April, where she said Indiana’s Second District and the state itself are “major players” in the manufacturing and trade world. Walorski said 85 percent of Indiana’s exports go to Canada and Mexico, and she and others in Congress were working remove the tariffs placed on Canada and Mexico before the USMCA goes to a vote.

She said Indiana leads the “entire nation now as the largest manufacturing district in the country,” meaning this district is “ground zero” for any and all trade deals and tariff side effects.

“Those tariffs cost the state of Indiana,” she said. “... Ultimately, they either cost jobs, or they cost the consumer on the other end, no matter where they are, or they cost both.”

Scott Buehrer, president of B. Walter and Co., a 132-year-old manufacturing company based in Wabash, said the tariffs act as an extra tax on products that use steel and consumers end up paying the price. Additionally, tariffs mean raw materials purchased in the U.S. and by countries outside of the U.S. drive up the price of steel, affecting farmers too.

“These tariffs from Canada and Mexico being lifted are a good thing for manufacturers and farmers,” he said. “The tariffs imposed have driven the prices of crops down and have driven the price of steel up. So now you have farmers not making enough in profits and needing to buy equipment mostly made of steel, and they end up really feeling the effects … Now that those tariffs are gone, they should be feeling the reverse of that.”

He said tariffs on raw materials and other goods “makes U.S. manufacturing less globally competitive.”

At the time that the tariffs were proposed by Trump’s office, some lawmakers wrote letters to the Trump administration, asking them to reconsider the steel and aluminum tariffs on these countries, saying there will be more lost than gained.

Among those writers was U.S. Senator Todd Young of Indiana. Young wrote to both Secretary of Commerce Wilbur Ross and Trump, asking them to consider focusing on the “job-killing” practices of China’s trade deals with the U.S. over imposing tariffs on domestic trade partners.

“The aluminum industry represents approximately 45,000 Hoosier jobs …” he said. “With that said, I urge you to focus on the job-killing impact of Chinese overcapacity, while considering the important impact that many other U.S. aluminum partners have on jobs in America.”

Despite the lifted tariffs from Mexico and Canada, the ongoing U.S.-China trade war continues to put a strain on Hoosier farmers, manufacturers and consumers. According to the 2019 State Export Report from the U.S.-China Business Council, a private bipartisan nonprofit organization of 200 American companies doing business in China, the trade war is moving “in the wrong direction.”

“More tariffs will not persuade either government to change their positions and will exacerbate the damage being done to American companies and farmers that do business with China,” the organization said in a statement. “Negotiation is the only way to get these issues back on the right track.”