How Tariffs Impact U.S. Manufacturers - AIM Computer Solutions

How Tariffs Impact U.S. Manufacturers

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Webinar Recap: An Update from Washington, D.C. – December 2018

One of the benefits of our Precision Metalforming Association (PMA) membership is the opportunity to partake in webinars. Earlier this month I participated in a webinar hosted by One Voice, the combined federal advocacy program formed in 2008 when the Precision Metalforming Association (PMA) and the National Tooling & Machining Association (NTMA) joined forces to represent small and medium sized manufacturing businesses in America. I was eager to learn more about the impact of tariffs on U.S. manufacturers.

The Franklin Partnership, LLP and the Policy Resolution Group at Bracewell presented the December 2018 Update from Washington, D.C. The Franklin Partnership, LLP is a lobbying firm representing the manufacturing industry since 2003.  The Policy Resolution Group (PRG) is a Washington, D.C. based public affairs and strategic communications firm that has been representing the metalworking industry since 2003.  The PRG mission is to promote NTMA and PMA in print, digital and other media and to support Franklin Partnership government relations efforts by designing and implementing strategic communications strategies.  If you are a PMA or NTMA member, this is your team in Washington, D.C. that will help make sense of changes that are happening as well as educate you on avenues to pursue if you have questions and concerns about how governmental changes will affect your business.

This first part of the webinar focused on how the mid-term elections and changes could influence the priorities in Washington, D.C., while the remainder focused on the new tariffs and how they affect manufacturing companies.

This single slide tries to summarize the effects of the current and impending tariffs.  There are many elements to the tariffs and the best way to determine how it is going to affect your cost of doing business is to understand the elements and start crunching some numbers.  Here is a bit more background on these four elements:

  1. Steel & Aluminum Tariffs: Imposing section 232 of the Trade Expansion Act of 1962 duty exemptions have ended on Steel and Aluminum Imports from European Union (EU), Canada and Mexico. This means there is now a 25% duty on steel products and a 10% duty on aluminum products from these countries. In addition, Argentina, Brazil and South Korea continue exemptions as those countries negotiated quotas restricting steel and aluminum exports to the U.S., while Australia remains exempt.  Manufacturers should make a list of all raw materials subject to tariffs and quotas.
  2. Thousands of products from China will now have import duty. The tariffs cover a wide range of goods, from minerals used in manufacturing, rubber and latex, iron and steel products derived from metals, copper, nickel, aluminum, industrial items made from lead, zinc, and tin; machinery: steam turbines, engines, fuel injection pumps, air compressors, air conditioning machines, refrigerators; vehicle and parts: axles, driving shafts, gear boxes and radiators.  In fact, there are 194 pages of product classification affected by the China tariff. Some goods (5,745 imports) that started with a 10% tariff will jump to a 25% tariff on March 1, 2019. Manufacturers should make a list of all products / machines imported from China.
    UPDATE: As of February 24, President Trump has put this jump to 25% on hold.
  3. Automobiles and Automotive Parts: On May 23, 2018 the Department of Commerce initiated an investigation to determine the effects that a tariff would have on the imports of automobiles and automotive parts. This investigation must conclude within 270 days of initiation, after which the Department of Commerce will make recommendations to the President who then has 90 days to determine if he agrees and to impose any tariffs. Contact your members of Congress and urge them to voice their opposition of potential tariffs on autos and auto parts; you can even use this form created by MEMA, the Motor & Equipment Manufacturers Association.  Manufacturers should make a list of imported auto parts you further work as well as any automobiles assembled overseas that you supply.
  4. The fourth piece of this puzzle is the retaliation tariffs you will pay on exported goods to China, Mexico, Canada, European Union (EU), India, Turkey, and Russia. A Foreign Retaliation Product Scope Matrix is available via the Department of Commerce International Trade Administration web page. Manufacturers should make a list of any products subject to these retaliation tariffs, as well as a list of any of your customers and suppliers products that are subject to these tariffs.

One Voice encourages you to take some time to make your lists and associate the cost of tariffs to your business.  Do you think the tariffs are the wrong policy to help manufacturers?  A Coalition of American Metal Manufacturers and Users has formed and they have identified ways you can take action so the White House, Congress and the media can hear how tariffs on steel and aluminum affect you.

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