How are EACC Firms Reacting to Rising Global Trade Tensions?
I’m sure each of you are carefully following the rise in trade tensions around the world. It’s clear that rising tariffs and trade restrictions have the potential to significantly impact manufacturers and consumers across our region and around the world. And we’ve been fortunate to host individuals like EU Ambassador to the US David O’Sullivan and Head of Division for the US and Canada of the European External Action Service Richard Tibbels, to hear directly from those policy makers their view of the challenges before us. But I thought you might be interested in my view of the situation based on the input I’m hearing from our members and others in our region.
While there are a handful of companies that have been directly and negatively impacted by steel and aluminum tariffs, for the most part rising tariffs have had a negligible impact on local firms. One or two report negative impacts due to retatilatory tariffs in Canada and elsewhere, but it appears to date that most firms in our region have not yet seen rising costs due to rising tariffs. If that’s true for manufacturers, it’s all the more true for consumers; as one observer told me – unless you’re in the market for a washing machine, you’ve not seen an impact from the ‘trade war.’
That’s not to say, of course, that there’s been no impact. A number of you have told me your company is watching the situation closely. Some are absorbing higher costs for domestic steel. Many are contemplating what it might mean to have to find new sources of supply for a range of raw materials and intermediate goods – including the time and costs of establishing a new supply chain. But to be clear, the message I’m hearing from many of you is not one of panic or even anxiety – mild concern might be the best descriptor.
By now you’ve probably reviewed the most recent announcement by the U.S. Trade Representative imposing a new 10 percent tariff on some $200 billion of Chinese goods (effective yesterday, September 24) and rising to 25 percent as of January 1, 2019. The 194 page list contains nearly 5,750 tariff lines. And while some of the items (HTS Code 8414.59.10 – Blowers for Pipe Organs) probably won’t affect many Cincinnati manufacturers, others may indeed impact our firms either directly or through supply chains, such as chemicals (selected items in HTS Codes 2801.10.00 through 2942.00.50); ink, dyes, and colorings (selected items in HTS Codes 3203.00.10 through 3215.90.50); various kinds of papers and paperboard (4707.10.00 through 4823.90.86); and a broad range of metals and iron and steel products (including things like aluminum rivets; iron and steel bolts and screws; stranded wires, ropes and cables; and even slip-join pliers and band saw blades). Clearly it will take time for many of these increased costs to work through the economy, but if these disputes continue, manufacturers and consumers are both sure to feel the impact in reduced margins and rising prices.
In case you missed it, you may be interested in the August 21 statement made by the Cincinnati USA Regional Chamber on this topic, which “…urges the Adminstration to recognize the detrimental effects recent trade policies have had on businesses within the Cincinnati region.”
If you follow @EuropeCincy on Twitter, you’ll see that we’ve been trying to highlight news articles, press statements, and other factual reports on the state of global trade. I’d welcome your feedback. How is all this impacting your firm?